7 reasons to do business with small businesses

As a business owner or new business manager, getting business from bigger companies sounds tempting. Large businesses are often more stable, financially attractive and it pimps your client portfolio as well. However, there are certain advantages if you dare to do business with smaller businesses. But before we bring on the good news, we would like to share one disadvantage as well:

Fear that a small company will not pay

The main reason many companies prefer to focus on “large” customers rather than smaller ones is the fact that they are afraid they won’t get paid. Small businesses are usually a higher risk when it comes to paying their bills. A small company is often a start-up without a reputation (good or bad) so you do not know exactly with whom you would be doing business. However you can limit the risk by using a factoring facility. A factoring company will take the responsibility for chasing payment of your invoices, while paying you for them up front.

Now that risk is settled, let’s discuss 7 advantages to choosing SMEs as customers.

1. Small businesses grow

Many large multinational companies started in the famous attic or garage. Think Google or Steve Jobs’ Apple. Neglecting small businesses means missing an opportunity to jump on the train of growth.

2. People who work in small businesses make good long term contacts.

An employee who works at a smaller company often ends up getting a better job at another larger company. If you have a good relationship with this employee, the chances are high that this will continue in this new and bigger company.

3. You can directly communicate with those who make the decisions.

At a small firm you can negotiate directly with the person who makes the decisions. You get more impact. Projects with small businesses are usually processed a lot quicker.

4. Small businesses are often taken less seriously.

Unfortunately, this happens often. Because many companies think small projects with small businesses are worthless, they simply don’t take the SME seriously. It’s a deeply rooted prejudice. SMEs are often registered at the Chamber of Commerce, have small business insurance, pay their business taxes and are usually just as stable as bigger companies. So take small companies seriously. They will appreciate this and spread the word to other businesses and when your customer is growing; your business will grow as well.

5. Everyone knows someone

Even if you do business with someone working for a small company, this does not mean that this person only knows people that work for other small businesses. Their friend, neighbour or a family member could be a major decision maker in another larger company.

6. Because it is a ‘small’ company does not mean it has no money.

A start-up or small business may be based on good idea. Once a major investor sees the opportunity and invests, the company will grow. Your account will grow as well.

7. Use it as a USP

Doing business with small businesses and start-ups means that you have the chance to be a part of new business ideas because the small business customer wants you involved in the project. In addition, the fact that you do business with smaller companies can work as an USP that attracts many more promising new start-ups and small businesses.

Tips for working with small business customers

  • Do not negotiate on your hourly rate. Don’t give a discount to an SME because you think they can’t pay more. Take yourself seriously and set your rate.
  • Consider working within their budget. You can make special arrangements to suit the budget of your ‘small’ client.
  • Offer work in phases. This often helps smaller companies to persuade it to outsource a major project without much cost out of hand. In this way major projects are realized step by step and the client keeps a tighter control on the costs. It will also improve the cash flow of the customer.
  • Offer to help draw up a roadmap for the project. Work with the client draw a roadmap that is tailored to their needs. Provide good information and give consultation for free.

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