When contemplating starting a business, a majority of prospective entrepreneurs will think of starting a customer-facing business. These businesses - known as business-to-customer business, or B2C - are the most familiar form of business; after all, we’ve all been a customer at some point.
While B2Cs are common and profitable, there is a second type of business that is worthy of attention: business-to-business (B2B) businesses. These businesses seek to sell their services and products not to the general public, but to other businesses.
If you have been contemplating the type of business you wish to start, B2B is an option well worth considering - not least because these businesses can actually be easier than the more conventional B2C route. Below, we have put together an overview of why B2B may actually be the best choice for your entrepreneurial ambitions…
#1 - Outsourcing is commonplace
Once, businesses would operate as self-contained entities, with a variety of different in-house departments working together to complete business operations.
However, modern business relies heavily on outsourcing. Rather than in-house departments, more and more businesses have noted that they can usually save time, and money, by outsourcing these departments to separate companies on a B2B basis. In fact, outsourcing has been described as the "new normal", and is likely to be a staple of how businesses are run for many years to come.
By choosing a business that can supply services or products to other businesses, you are able to make the most of this change to how businesses are run. Furthermore, you can also be certain that you are opening a business type that is in demand and genuinely popular, which should in turn help you to ensure a continuous supply of clients.
#2 - Simpler identification of needs
If you open a business that sells directly to customers, you can spend a huge amount of time trying to identify what your customers want and need. After all, it is vital you understand these needs to ensure you are offering a product or service that is genuinely beneficial. B2C businesses have to dedicate resources to understanding their customers and, even then, major brands can still get it wrong.
With B2B businesses, however, identifying the needs of your target clients is far simpler: all you have to do is think about what a business needs to operate. For example, you can expect most modern businesses will require:
These needs are fundamental and, importantly, they are relevant to every potential client. There’s little subjectivity involved in B2B businesses, as the core needs are the same. This is vastly different to trying to appeal to individual customers, many of whom will fit an identical demographic but still have vastly different wants, needs and preferences.
As a result, appealing to B2B clients is far simpler, because their needs are static. Businesses need good accountants, so you could seek to qualify and open a business that provides this service. Businesses need human resources departments, so you could obtain reliable human resources software and provide this service. Businesses need SEO, so you could sharpen your skills in this area and open an SEO agency… and so on and so forth. Simply put, the entire process of understanding your clients is far, far simpler when you run a B2B business, which means you will have more time to focus on other operational areas.
#3 - Fewer clients to manage
If you sell a product or service B2C, your customers can quickly number in the thousands. Individuals purchase for their own, individual needs, which tends to mean you need to ensure you have as many customers as possible in order to achieve a decent profit.
B2B businesses, however, are not dealing with individuals: they are dealing with entire companies. Companies have far deeper pockets than individual customers; they can buy in bulk; and they are more likely to commit to a long-term relationship. As a result, you will likely only need to work with a handful of clients to achieve the same profit margin.
The impact this has on the everyday running of your business is huge. You only have a few clients to keep happy, rather than spinning potentially thousands of plates at once. As your focus is more narrow, you can commit to providing the best possible product or service and enjoying a continued relationship - which is far preferable to the relentless chase for new customers that B2C companies have to engage in.
#4 - More empathetic clients
When a B2C business does something wrong, they have reason to be nervous. Their customers have a plethora of different platforms to share their opinion on; one mistake, and a company can find themselves being publicly criticised for their faux pas. Given that customers are more likely to share negative experiences than positive ones, this can be genuinely harmful to a company’s reputation.
Customers tend to broadcast their issues for two reasons: genuine grievance, and a simple lack of understanding as to how a business functions. To a customer, the business process probably seems incredibly simple, with little comprehension of the operational logistics required to fulfil orders. This is understandable, of course - you don’t need to understand the mechanics of how a business works to order from them - but can be frustrating for the B2C business on the receiving end of negative online reviews.
If you open a B2B enterprise, you can avoid the problems described above almost entirely. As you are working B2B, you can be confident that your client does understand how a business is run and the many, many steps involved in fulfilling an order. As a result, if you do run into problems, they are far more likely to be empathetic and understanding - and they’re far less likely to broadcast the difficulty to the outside world.
If you have previously only focused on B2C options when considering starting your own business, the points above demonstrate that widening your thinking to B2B possibilities could be incredibly beneficial.
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Walter G. is a software engineer, startup co-founder, former CTO of several tech companies and currently teaches programming for a coding bootcamp. He has been blogging for the past 5 years and is an avid BMX rider, bio-hacker
and performance enthusiast.