During one of my recent client presentations, I got an interesting question: do you still need a business case when selling to smaller companies?
I’ll always be a big proponent of a business case. However, you need to adjust your approach if you’re selling to smaller companies (which I’d define as any company with less than $100 million in annual sales, that lacks a formal hierarchical management structure, and/or is owned by one person or just a few individuals).
We’ve written before about how it’s important for sales professionals to understand some key financial metrics so that they can talk about them intelligently, know how their offering improves their customer’s income statement, and make sure they present the right financial metrics to the CFO. However, a smaller company probably has a less formal and less hierarchical organizational structure. A detailed business case is still a critical component of the selling process, but be aware that the final decision maker may be the company’s founder or a group of family members rather than a CFO.
You also have to be careful about the implications your offering might represent to a small business versus a large business. For example, your solution might enable your prospect to reduce labor costs. However, if the business owner employs his brother-in-law, he may or may not be so interested in investing in a solution that would allow him to lay off a family member.
You still want to talk about how much it’s worth for the prospect to solve his or her business challenge. But you want to be sure you find out about the kind of trade-offs this person is prepared to make. In some cases, the small-business owner might want to allocate funds to buy his kid a new car rather than buying a system that might help his business. In this case, the decision is personal, so you’ll want to talk about the financial benefit in a way that takes those trade-offs into account. For example, you can talk about the payback period and show the owner the amount of time he would have to defer the car purchase if he invested in your solution now and how much he will be better off after the purchase. Another example is that the owner may be looking to make a sizable investment now to reduce his tax liability now in exchange for a longer-term benefit. You’ll have to conduct some discovery to find these trade-offs, but it will be well worth your effort.
This is what we mean when we say that value is specific to each individual customer. And, as we’ve said before, the way you talk about value fluctuates depending on where you are in the sales cycle. When a company lacks a structured management team, think about how you can narrow the scope of your conversation around value. When composing your business case, simplicity is probably better. For example, maybe you will get a better result if you focus less on a complex financial metric such Internal Rate of Return (IRR) and more on payback period, which is a concept that many people already understand.
The bottom line is that you need to realize that the conversation that tends to get traction with a larger customer might not be the same for a smaller business. Know your prospect’s needs, and tailor your business case accordingly.
Do you adjust your sales conversations based on the size of the company you’re selling to? What are the differences you notice? Share your thoughts in the comments section.