Moving Up-Market? How to Transition Smoothly to Larger Customers

It happens in every growing business. We evolve beyond our initial customer base or our initial business model. When we launch, we have a small infrastructure, and are testing the waters. We don’t want to bite off more than we can chew. We take on smaller projects to create our processes, define our service offerings, and get our business moving.

If we’re successful, we develop momentum. We reach a state of “flow” in which we begin to start functioning like a well-oiled machine. We figure out what we don’t like. We know what we’re doing, we know how we’re doing it, and we know who we’re serving.

We get to a point where we realize our value. We’ve developed the confidence to reach for bigger opportunities. We know this will take more time, more money, more resources, more risk. But we’ve got a track record, and we’re ready.

Different Industries, Same Challenges

In the government contracting world, this often happens when an independent contractor moves to a subcontractor position, and then to a prime contractor position. In the private sector world, this happens when a company launches by serving other small companies, and then is ready to move upmarket to larger companies and compete with the bigger firms. In the nonprofit world, this happens when an organization is ready to evolve from perhaps a national focus to a global focus. In the world of real estate, agents or developers may evolve from small property representation (rental units or condos) to larger units. In all environments, the companies must be prepared to shift everything: people, processes, products/services, pricing, and culture.

Moving up can be daunting, even for the most confident business owner. We are emotionally and financially invested in our market, our models, and our customers. We’re comfortable. Like any other business change, moving up requires a strategy, and is a transitional process.

For one of my CEO coaching clients, we evaluated the sources of his revenue. 71% of his revenue was coming from a single large client. This is incredibly risky. The remaining 29% came from a split between mid-sized and small businesses. Often, small projects constitute the same level of effort. While they require additional manpower to deliver a solution, the level of effort is the same for the project management and client management. Further, the projects end much more quickly so we have to scramble to keep resources billable with new work.

My client created a growth goal to move from $8 million to $12 million. He wants the additional $4 million to come from mid-sized and large projects, rather than small projects. This will result in a smarter use of resources, greater stability, and greater growth opportunities. This additional revenue will also reduce the company’s dependency on a single project from 71% to about 50% – much less risky.

Deciding Which Small Projects Work

Currently my client has several small projects, and opportunities keep coming. We created a decision matrix to determine when it makes sense to pursue or accept smaller opportunities. It’s important to define this criteria because these choices will impact the marketing materials, and will provide direction for the business development/sales team.

Here are the criteria we identified:

• Profitability. My client can’t take on any “loss-leaders” as the company returns to profitability. All projects must have healthy margins at regular market rates and no discounts.
• High profile name that is good for the client list. Some small projects come with big names. If a company can leverage the name for a PR opportunity, it’s worth considering.
• Access to additional potential clients. Some companies are a gateway to additional clients.
• Strong likelihood of follow-on work/ability to evolve into a mid-sized client. Small companies that are healthy and rapidly growing are good prospects.
• Ability to showcase marketing efforts/results publicly. If you can publicly showcase your work, it may be worth pursuing.

Here are some deal-breakers regarding small projects for companies interested in moving up market:

• Conflict of interest with any other clients. Never take on work that is a conflict of interest with another client, unless you can create a complete firewall of assigned resources, and a technological firewall.
• Dilutes the mission/brand. Stick to your core competency. Protect your brand equity and reputation.
• Profitability compromised. Avoid low-margin projects.
• Little promise of growth. Stay away from slow-growing firms.

If you’re still comfortable with smaller projects, then simply file this column for future reading. Wherever you are in your growth, it’s important to have a strong/intentional client acquisition strategy, and also know your deal-breakers. I wrote a previous column on the six questions to identify your deal-breakers. You can find it here.

Your Call To Action

Do you need help identifying your decision criteria as you move up-market? Do you need assistance assessing your readiness for moving up-market? Successful Culture would love to help. Please reach out to me at [email protected] and we can schedule a 15-minute skype call to discuss it.

Keep growing!

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About Successful Culture
We work with business owners, CEOs, and leadership teams that want to achieve their greatest personal & organizational potential. Through coaching, strategic consulting, retreat facilitation, and workshops, we equip leaders & emerging leaders with the mindset, tools, strategies, and processes they need to excel.

Ready to move forward? Email us today at [email protected]

Connect with me on Instragram, Facebook, and Twitter. Engage with me during my morning Periscope sessions as well (@marissalevin).

Please check out my Inc. Magazine columns on my Author Page too.
– In my latest Inc, article, I share The Essential Guide to Avoiding Workplace Text, Email, & Social Media Disasters.
– Learn about the 9 Leadership Behaviors that Lose Employee Trust & Respect here.

~Marissa Levin
CEO, Successful Culture
“Taking Leaders from Triage to Transformation.”

The One Question You Must Be Able to Answer Before Contacting a Prospect

This past week, I’ve had conversations with three separate business owners about how to successfully connect with prospects. Should you connect through LinkedIn? An email? A phone call? The answer is YES – you should do all of those.

However, before you do any connecting, you need to be able to answer one question:

And the Award Goes To…YOU! Six Steps For a Winning Awards Strategy

Visit any business website, and you will likely see a scrolling list of the awards the company has won. Awards for leadership, philanthropy, marketing, design, organizational culture, industry position…there is literally an award for every size company, in every industry. Most awards programs create categories according to revenue size so that every organization has a chance to be honored.

BIG PR on a Small Budget: Five Surefire Strategies to Get the Buzz Your Biz Needs

As a small business owner, I know first-hand how important it is to have a PR plan, but I also know that time, money, and resources are scarce!

So how does a business owner communicate their value – especially in an information-overloaded world, and rise above the noise?

The two questions small business owners must always ask when trying to get good press is:

Living Your (Customer’s) Mission

Only when we understand the motivations and missions of our customers can we create a compelling mission statement that inspires a customer to trust us. There is a big difference between selling a product or service and fulfilling a mission.

Avoiding SP-RH Syndrome

It’s all coming back to me….the early days of building a business, and laying a solid foundation to support healthy growth. I find myself with lengthy to-do lists that require many sets of helping hands. It’s tempting to simply throw new tasks over the fence to those that have already proven to be experts as I grow Successful Culture.

But wait. I’ve been down this road before with Information Experts. I’ve bitten off more than I can chew, and then tossed the overflow to a team mate. Eager to please, they say yes, even though my new request is outside of their core expertise… setting us both up for disappointment.

The Three Things Companies Need to Thrive

I’ve had a slew of podcast interviews over the last few weeks, and virtually all of the hosts have asked me what I think is the necessary ingredient for continued business growth. I speak from a place of making mistakes, and from getting things right over the last 20 years.

The three things I believe companies need to survive are a market niche, relevancy, and a mindset of greatness. I’ve named them in order of difficulty.

It’s Not Personal; It’s Our Values

Values dictate every major decision and action in an organization – from the clients that a company engages, to the people that a company hires, to seemingly simple behaviors such as leaving a door open or closed. Values determine our behavior when others are not around to watch us. They are the core of integrity – which manifests when values are integrated with our actions. Personally and professionally, they frame the most important aspects of who we are, and what matters to us.

The Most Dangerous Four-Letter Word

How many times a day do you mindlessly look at others that are different than you with a “THEM” frame of mind? This could apply to people who look differently, perform different jobs, practice different religions, engage in different hobbies, or any other type of difference. We probably all do it without being aware of it. Even though I strive to come to all experiences and people with an open mind, a blank canvass, and free of judgment, human nature causes all of us to evaluate those that we see based on societal prejudices that seep into our subconscious.

A Higher-Level Leadership Framework & Inspiring Through Adversity

As one who sees leadership and spirituality as two sides of the same coin, I often refer to Deepak’s 7-Step Framework for LEADERS. Deepak describes a leader as “the symbolic soul of a group of consciousness.” He says that group consciousness could be a family, an organization, a community, a country or the whole world. He explains that the leader represents the longings, the aspirations, the deepest desires of the group, so in a sense, “the soul.” This is exactly why the CEO owns the culture of an organization, which is the organizational DNA.