Whereas most entrepreneurs love the idea of being able to sell to a large company and admire the stability of consistent sales and cash flow, the reality is that developing such a relationship is lengthy and faces many challenges.
Most importantly, if your company’s service or product is not unique with a very distinct competitive advantage, the large company prefers buying such product from another large company, due to the warranty and liability limitations. As a matter of fact, pricing very often is not the most important concern in vendor determination.
Moreover, developing such relationships are often driven by personal relationships the owner of a small vendor company has with some employee in a large company. It will require consistent work to maintain this relationship in the best standing, as the employee in the large company faces many internal objections to dealing with a small vendor.
Finally, in line with industry trends across all market segments, a reduction in the number of vendors outright, or by channeling purchases through distributors, will make it hard to “get a foot into the door”. There needs to be some significant cost and service advantage for the large company in order open a new vendor account.
All in all, as enticing consistent cash flow and sales sound, it takes a lot of effort to develop and maintain vendor relationships with large companies.
Written by Achim Neumann, NJ
President, A Neumann & Associates, LLC