Opening up a new startup company comes with many decisions. Where are you going to work? Who is going to be working with you? How are you going to sell your product or service? It is this last question that is the focus of this article.
When it comes to selling your product or service, you typically have two primary options — you can sell it directly to a customer, or you can sell it in bulk to another company and let them sell it to their customers. It is a major decision for your new company to make, and as such it is not one that should be taken lightly. Below is some basic information going over Business to Business relationships (or B2B) versus Business to Consumer relationships (or B2C).
What Is a B2B Relationship?
A B2B relationship is one in which a company sells its products or services to another company. With this system your company would primarily be focused on things like creating enough products to meet the other company’s demands, and developing long-term relationships with their executives. With a B2B relationship you do not have to focus much on attracting new consumers, or marketing towards them.
Let’s look at a real-world example. Nextran Corp is a trucking sales, parts, and maintenance company from Jacksonville. They work with several trucking companies, like the Mack Truck Leasing company, that provides them with leasing and rental agreements for their trucks. Nextran, then, in turn leases out or rents to other businessesthat are in need of a truck. Nextran is working with businesses on both sides of the system to provide both of them with a service.
What Is a B2C Relationship?
The other option, rather than working with other businesses, is to sell directly to consumers. This includes doing things like developing a marketing plan to draw in new customers, identifying your target niches, and growing your business as demand increases. B2C relationships are typically more focused on the short-term, as you are simply trying to convince a customer to make a quick purchase.
As an example, let’s say you design custom T-shirts. You decide to sell them directly to the consumers. You may do this if you are very familiar with a specific niche, or if you feel that you don’t have the infrastructure in place to meet the demands that may come with a B2B partnership. You would then produce the shirts, and sell them directly to your consumers.
Which Is Best for a Startup?
If you are just starting out, the best way to go may be a B2B relationship. There are a few reasons for this. To start, by selling your product to another company, you can simply focus on manufacturing the product. You don’t have to worry about how many sales you are currently making, as the orders from another business will be consistent.
In addition, you do not have to spend your time developing a marketing plan to find new consumers. The business that you partner with will already have this infrastructure in place, and they will be able to market your product along with sell it in different locations. This gives you a wider reach than a new startup will typically have.
Lastly, with a B2B relationship, you can just focus on your one relationship with your partner, rather than trying to forge new ones all of the time. B2C models require that you generate new customers, and form good relationships with them. As a startup you are going to be very busy as it is, and so focusing on only a few business relationships will help to make things a little simpler.
Do What Is Best for Your Company
All of that being said, only you can decide the best path for your company to take. Many startups find that a B2B relationship works best for them at the beginning, but this is certainly not the case for all.
Take the time to weigh all of the pros and cons, and see which method will work best for you. Much of it will depend on the relationships you are able to form, the infrastructure you have in place, and the vision you have for your company. Remember that while this is a big decision, it does not have to last forever. You can start out as a B2B business, and transition into B2C as your company grows. There is no set rule that you have to follow, so just do what you think is best for your business.