It’s the dream of leaders and business owners alike: An invitation from a Fortune 500 company to make a sales pitch for a big deal. This could be the defining moment that makes your company. Unless you’re careful, though, this moment also could break your company.
Here are seven questions to ask when big business comes calling. Posing these queries and considering the answers will position your company to win — and more importantly to keep and grow — that new client.
• Are you definitely ready? If you think I mean ready for the sales presentation alone, then you’re not ready. You get only one shot delivering to a big business. They have little patience for stumbles and there are many competitors ready to take your place. Business owners and executives must be honest with themselves when weighing whether they’re truly up to the task. Can your employees, your systems and your processes handle a big surge in orders? What about your suppliers? It’s a bad idea to test your procedures when Walmart is waiting. If you are a good salesperson, you can likely get the big order or contract, but resist the temptation until you have tested your operations with smaller, more forgiving customers.
• Who arranged the meeting? If you were introduced by an SVP, or even a CEO, you’ll need to try even harder to impress the teams under them. The higher the executive, the more removed they are from the process. In some cases, you may be met with suspicion by vendor procurement teams who are wary of possible nepotism. Be prepared to work extra hard with every person who stands between you and winning the business. Large businesses rarely have one person who can say “yes”; instead they have layers of people who can say “no.” Your goal is to get through all of the possible “no’s.” Don’t assume the senior person who opened the door can make your deal happen.
• Is this something you can afford? Yes, a deal with a major household name can give your company instant credibility and a giant jolt to the bottom line. But there are serious downsides, too. Big companies have savvy vendor management programs designed to extract more value from their suppliers. Their demands can be extremely inflexible and levied unilaterally. At the same time, big companies can take a very long time to pay. Not every small business is flush enough to have its largest client take 60 days or 90 days to pay invoices. Are you?
• Do you have enough liquidity? Long wait times for payments can squeeze your ability to meet payroll and pay vendors. A large order may look awesome, but it only makes sense if you have the capital to fully deliver, knowing you will not get paid for 30+ days. Where will you get the liquidity to cover operating costs? Be aware that “net 30” terms rarely mean you will receive payment in 30 days. It is just a suggestion. Most payments arrive well after the due date on the invoice. Also, large companies often change payment terms on a moment’s notice. You’ll have to take it or leave it. Are you ready to go to from net 60 to net 90? What sources of liquidity do you have?
• Can you give up some control? For many entrepreneurs, their businesses are a large part of their life’s work. You’ve sweated, fretted, and built your company exactly the way you wanted. But deals with business behemoths can turn into one-way streets — they call many of the important decisions. You may be forced to adapt to their procedures, their pace, their priorities. Many entrepreneurs have a hard time letting someone else set the plan. Be honest about your willingness to let go.
• What happens to existing clients? The giant new customer may have the largest invoices, but smaller clients offer balance. What happens when your giant client is paying slowly or cuts orders? You need other customers that pay faster or work on different cycles. Existing clients are more than the people who got you there — they are the ones with the flexibility and quicker turnaround times to keep you going. Make sure you keep them.
• Do you have a vendor backup plan? A surge in sales puts pressure on everyone connected with you. What happens if something goes wrong with your key supplier? In this era of Covid-19, when an outbreak can sever key links in the supply chain, small businesses must be prepared to step up with alternative ways to get the job done. You need redundancy in your supply chain and in your sourcing of all assets (capital, customers, capacity).
Getting in the door of a potential blue-chip customer is a dream come true, but the dream will be short lived and followed by a nightmare if you don’t have your infrastructure, suppliers, capital and partners aligned, tested and ready to deliver — not once but again and again and again… Do you? If you answered “no” to any of the above questions then hold off until you can say “yes”. If the answer is yes, you are ready to be the dream supplier to that Fortune 500 customer.