Startup, how to do business with large companies

The demonstration of interest from a large company for a startup is one of the events that creates the greatest enthusiasm and adrenaline. Managing the business negotiation with corporate companies, however, is not a downhill process and the mistake is always around the corner.

Once you receive the contact, the question that will spring to your mind is: how to manage the negotiation with a large company without defocusing the entire team from their activities?

Imagine this scenario:

after validating the product, the customer base, the website, and the web marketing campaigns, drafting the contracts, and above all finishing the MVP (Minimum Viable Product), you are finally ready to sell your service and can't wait to issue the first invoices. Several months have passed since the first line of code, and the curiosity to see if the dream has become reality is at its highest level.

The first contacts from the web marketing campaigns and the first sales with small amounts are coming in. But here's the surprise: one of the contacts is an IT manager from a large, important, and well-known company, interested in exploring your services.

Adrenaline is running high and all the company's energies are focused on managing the complicated relationship that is about to begin.

My experience has led me to formulate three tips to try to manage the business negotiation with a large company better:

1.  Ask yourselves if it's the right time

The reality of the matter (unfortunately) is that very often the answer is NO! A large company will hardly turn to and utilize the services of a startup, often too far from the standards required from all points of view: product maturity, legal conditions, commercial strength, and support.

It is more likely that it is only interested in understanding how the market is moving, comparing prices with other competitors, or starting small and localized tests. The risk is entering a flow of commercial, legal, and request for product customizations from which it will be very difficult to emerge unscathed.

Avoid allowing yourself to be too distracted from your activities, try to be consistent with the hypotheses you still need to validate and possibly take the opportunity to refine documents and internal processes.

2.  Look for partnerships with System Integrators

Seek a partnership with System Integrators suitable for your size and used to being a bridge between startups and large companies, so that they can lead the negotiation and preserve your (precious) energies while leaving you behind the scenes. 

They will be the ones to implement integrations and customizations, to commercially follow the numerous requests that will come in, and to address contractual issues.

Finding the right System Integrator to resell your service is not simple. To identify them, start looking for who resells products in your sector, contact several of them, and meet them in person to understand the affinity. Try to have more than one choice. This will allow you to select the best one depending on the negotiations. 

You will also amplify sales through resellers or promoters of your product!

3.  Avoid working for free

If you create a POC (Proof Of Concept), make sure to get paid. Often it is the real first step for companies genuinely interested in using your service.

Be aware that it is very unlikely that the negotiation will be successful. Act accordingly. Consider it a wild card drawn from the deck, not your beacon. Sure, the mouthwatering prospect is great, but the risk behind these types of negotiations is significant.

In the initial phase of a startup, it is essential to recognize the target customers suitable for the service offered and consequently concentrate energies in the right direction: it can make the difference between living or failing.

Sell to those who are ready to purchase your service without too much effort. The big fish will be caught, in the future, with the right net.

Startup Bakery is the Italian startup studio specialized in creating B2B SaaS companies with Artificial Intelligence. We offer aspiring Co-Founders the opportunity to develop a business idea. We create investment opportunities for Professional Investors. We help companies in the innovation process.