B2B stands for “Business-to-Business”, or simply, a business that sells to other businesses. Starting one up is quite easy, however, maintaining it is the most difficult part. Statistics show that 50% of small businesses are out of business in five years. Fortunately, knowing exactly why B2Bs fail can be a great learning tool, as you can always keep in mind what can go wrong or what is probably going wrong in order to compensate.
There are a few things to know and benefit from. For example, not making your potential partner(s) skiddish from working with you by either making the buyer’s decision too difficult or too risky. It’s best to start slow and steady when establishing a new business relationship, especially when a business does not quite know how you operateÂ or how effectively you use your experience. Ensuring a money-back guarantee is also a surefire way to de-risk any business venture.
No-Nos for B2B Startups
Other (more obvious) business no-nos is of course spending on the wrong things in your B2B startup. Some of the most common and disastrous mistakes begin with how you decide to spend your money and what mindset you have with your startup money. Instead of equipping your new B2B business with swanky office space and expensive equipment, it would be best to focus on ensuring more income than outcome. Businesses that sell to consumers (B2Cs) have no choice but to start spending in order to eventually make money but B2Bs have the flexibility to be more frugal. That is because the infrastructure required in a B2B business, mostly at the beginning anyway, has the potential to not be all that expensive if things are taken slow and methodically. When hiring eventually becomes a factor, the slow and methodical process helps as well. Hiring too fast and paradoxically can incur great costs to your business almost immediately.
These are just a basic rundown of two out of the five major ways B2B businesses fail within the first five years. This is not to discourage anyone from attempting to start up a successful business but rather, as mentioned previously, to give more awareness which will ensure that you do not fall into the harsh 50% failed statistic.