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Businesses are always looking for ways to grow and make more deals, especially in a down economy. One opportunity entrepreneurs should consider when revising or creating a new business plan is making a foray into the business-to-business domain. But before business owners decide to transform a current business-to-consumer operation into a b-to-b entity, they must first understand the risk and time investment required to penetrate that market, urges both Sean Rugless of the Greater Cincinnati African American Chamber of Commerce and Tiffany Bussey of the Morehouse College Entrepreneurship Center in Atlanta. The two recommend that entrepreneurs conduct in-depth research and examine their current business plan to determine if such a move would be profitable and worthwhile. Here, Rugless and Bussey help entrepreneurs consider their options in transitioning into the world of b-to-b.
Leverage the reach. “When you look at b-to-b, because you are only looking at one component that will fit into a larger piece (part of a supply chain), you can specialize more,” says Bussey. “When you’re with a consumer you tend to want to be everything to that particular consumer, that one-stop shop. B-to-b allows you to go deeper instead of wider.”
Pace yourself. To build and reap business from b-to-b relationships it takes much longer than in business-to-consumer relationships. “They have to be aware of you and know that you’re out there,” says Rugless. “After they build a relationship with you, then there’s an exploration of capabilities, both on your side and theirs. And then you have to wait for the opportunity to work together. So if someone is thinking about such a venture, they need to be realistic regarding how much lead time is necessary to build a b-to-b business.”
Find money to make money. Entrepreneurs should remain aware of laws and regulations, particularly on the federal side. “There are federal mandates for certain agencies to meet certain percentages and to do business with certain companies such as small businesses or women- or veteran-owned businesses,” says Bussey. “A good b-to-b strategy is to target those agencies or large prime companies doing business with those agencies.”
Bank on banks before you need them. Solid banking relationships are imperative to access capital. “Banks are lending to existing clients, whose businesses they really know,” says Rugless. He poses these questions to minority business owners: “Who are you banking with now? Do they know your business? Do they know you’re thinking about investing in b-to-b?” If so, Rugless advises sharing your business plan with your banker so he or she can figure out how the bank might be able to support its financial products. “Waiting until the end when you need to make the investment to keep the contract is a big mistake.”
Making bank relationships count is key. Entrepreneurs should have a depository relationship with their bank. “It doesn’t mean you have to have millions of dollars in there,” explains Rugless. “But have the title of a customer. And share your business strategy with them so they know who you are and what you’re trying to build.” He adds that the great part about business bankers is that they know other clients that could come in and help support you, because “it’s their job to grow more successful companies so their banking relationships increase.”