There’s no “right” way to be an entrepreneur. In fact, successful entrepreneurship demands outside-the-box thinking and a willingness to challenge the status quo. However, there are some common pitfalls when it comes to making it on your own in the business world. The more awareness you have of them, the less likely you’ll be to fall victim yourself.
One such pitfall is the false notion that business-to-consumer (B2C) markets are the ideal place for would-be business owners to find or create value — as well as personal fulfillment. If you’d like to see two myths debunked for the price of one article, you’re in the right place. Just consider the two following points:
B2B offers more market depth
B2C markets are overrated. Yep, I said it. Yes, of course there’s a lot of money to be made in selling to consumers. However, there’s even more to be had in selling to other companies.
Business-to-business (B2B), which involves exchanging products, services, or information between companies, is actually a much larger market. For example, the e-commerce portion alone of the B2B market is estimated at $12 trillion per year globally. The total market size of B2C e-commerce in 2018, meanwhile, was around $560 billion. That means B2B e-commerce is just over twenty times the size of the B2C market.
Why the dramatic differential? The reason is simple. The majority of B2C products and services are one-time-use. You sell your e-commerce sweatshirt to someone once, and the profit and value to the market are used up.
The majority of B2B goods, on the other hand, are sold on a repeating or subscription basis — for example, monthly or yearly subscriptions. This, then, becomes part of a “value chain.” Since a lot of B2B sales are done as software-as-a-service (SaaS), B2B represents a far better opportunity for entrepreneurs to scale a business at minimal investment risk.
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B2B offers meaning, too
Part of the reason many entrepreneurs might shy away from B2B products and services is that it just doesn’t seem as meaningful. For instance, it’s easy to imagine that setting up a medical practice would feel more personally rewarding than say, selling software over the internet.
It’s all a matter of perspective, however. B2B sales do meet a specific need, and have the potential to positively impact a lot of people. When you create a product or service that helps other businesses, you not only improve the lives of those leading those organizations, but you also make life easier for all the other members of the company in a trickle-down effect. On top of that, consumers also reap the benefits of a more efficient supply chain and better business process. When you smooth things out for businesses, things get better for real people, too.
Marketers should also take note of this information, given that so much marketing education focuses on B2C products (apparently there’s no limit to the number of ways you can market beer, cars, and cleaning products). The fact is, B2B marketing is both more challenging and, many times, more profitable.
Again, there’s no right or wrong path to choose as an entrepreneur — it’s just important to know your options. In this context, knowing your options means not dismissing B2B entrepreneurship as a stale, unfulfilling line of work. You can find your niche there, too, and it can be both lucrative and personally gratifying. Whatever you choose, enjoy the ride.