Speaker 1: Is it better for my business if we get larger clients? If you were not born in Canada, but you're doing business in Canada, you are in the right place. Click here the subscribe button, set up the alert. If the content of this video is useful for you, let us know by clicking the like button. So large clients in Canada tend to be a very natural ambition, especially for companies that already achieved some degree of success in other countries, right? Maybe even back home, your company already had very large national clients in the country of origin, or even some multinational clients back home. So it seems to be, well, we had top one client there that had $2 billion in profits, or in revenues, I can sell to a $2 billion company in Canada. It's only going to look like a natural fit, right? This is the first thinking that people sometimes have. Second thought that people have is like, well, if I sell to a large client in Canada, if it's a recognizable name in the market, this is going to be good for my brand and for my marketing. People are going to say, wow, look at them. They sell to this big one, so they must be good. Sure, that's true. And also the other thought that people have is like, well, selling to large clients are going to be good for me, for my business financially. In which ways? It means larger sales, larger revenues, so my business is bigger. And also I gain faster traction, especially if it's a business that is just starting in Canada. Well, lending large clients right away means that you already go at a full speed in the beginning. I gain traction more quickly, right? These are all true, but there are some blind spots here that people don't think about when they follow this line of thinking that we just discussed here. So the first blind spot that people don't think too much is like, we already talked about this in other videos in our channel here. Experience from back home is usually seen as local expertise, not necessarily as a transferable skill. It's not because you had success with large clients back home that people are going to automatically think that you're prepared to have success in Canada. The other thing that is different in Canada from emerging countries especially is that large clients are not very impressive to have large clients. What do I mean by that? Oh, of course it is. If it's a large client, it's a testament of my competence to a degree. What happens in Canada is that large clients are only going to be really impressive if they're in the same industry. Of course, if I'm a restaurant and your business sells to a large chain with 87 restaurants, then you understand my business. Oh, if you're ready to sell to them, I can be your client too. That, yes, but because there is industry expertise. Or let's say you sell to a big telecom company and I'm a food manufacturer, or you have to be solving a very commodity problem, a problem that they have and a problem that I have, that has to be more generic in business terms. Because people don't think automatically just because you sell to large clients. Therefore, you have a level of competence and expertise and resourcefulness that you can solve anybody's problems of any size, of business of any size. That's not how Canadians think. They look for fit, right? For similarity on the type of solutions you have delivered before to similar types of clients. So what's another blind spot here that we see? Remember that when you have a larger client, you're going to have to provide a more robust overall operation, right? And with that comes larger costs for your business. With things that are as simple as a larger insurance policy, right? Suddenly, you know, like for you to be a supplier of a large client, they want you to have a certain infrastructure, an anti-harassment policy, an environmental policy, and many things that your business may not have yet, right? But again, these things are costly and more complicated to obtain the short term. Are they good for your business in the long term? Absolutely. So the other thing to consider when you're looking to sell to a large client in Canada is that typically you're going to have some asymmetry in pricing power, right? And you know what that means, right? It's big fish, big client, they dictate the price to you. Unless you sell something that's so specific that only you sell, which in most cases, it's not very likely. But like the very large client is going to dictate, say, yeah, this is my price. And because they know that smaller suppliers really want them as clients, they have this power over you. And typically, that is a lower price that they are dictating that will squeeze your profit margins. So typically selling to larger clients typically means having lower margins of profit, right? Typically, another thing you're going to see is relatively asymmetric payment terms. What does that mean? A large client has their very well-established policies and their buying policy may be we pay our suppliers in 90 days. I have seen 180 days. So you have to be ready to deal with that type of working capital situation. Because remember, you incur costs to be able to deliver that product or service. You have to pay for stuff so you can deliver that to your client. And then they're going to pay you 90 days after you deliver that to them. So who's paying for that working capital? Typically, it's going to be some type of financing line. And then you're going to spend more interest in a larger working capital line. So that again, large working capital needs will reduce your profitability a little bit, right? So it's important just to... I'm not saying selling to a large client is something to be avoided at all. I'm just saying you need to be open-eyed so that you don't get caught in all these blind spots, right? So we have, of course, a situation here which is people will think, well, but that's complicated. How do I navigate this? Well, good news here is we have our Your Business in Canada platform, right? Where we're going to be here by your side to guide you through the process. And you are going to be with peers, with other immigrant business people in Canada that are also building their success in Canada. So click here on the link and come on board. But let's look at the other side now. What happens when you focus on smaller clients, right? It may or may not be a good fit for you. You're the judge. But here are a few things that derive from having smaller clients. Typically, smaller clients, they will be more flexible in adapting to the needs of a new supplier. So you're a new supplier to a new client, but you can negotiate better conditions and even prices, right? So also remember that the majority of businesses, they are not super large. You have some very large companies, but most of the businesses are smaller. So let's say, I don't know, pick a number, $10 million. So if you sell to a client that has $10 million in sales a year, they're not a super large company. But remember, there's many more companies within that sales range, let's say 5 to 10 million, than there are $5 billion companies, right? So a success case that you build by having a relatively small client, that's going to be more relatable to other prospects that you talk to. They will see themselves more in your small client. They see, oh, that guy is like me. Then if you try to name drop names of very large corporations that you have as clients, right? Success seems to be more tangible, more relatable, right? Also, for you internally, if you start to get smaller clients, very likely it's going to require a smoother adjustment of your internal operations. Not like, oh, you have to do everything different now to comply with these needs of the very large clients, right? Also, less client concentration, meaning that big David Goliath situation is not present, right? The large client is not squeezing you for the prices. You have better pricing negotiation, and you may have even more favorable terms, and all these help increase your profit margins, or at least not reduce your profit margins, right? But of course, only you know what's good for your business, but it's very smart to weigh your options carefully and not fall for that default thinking, which is, well, I'm an immigrant business person, and what I have to do is to chase the big clients, and I was at this event with the CEO of this large company, that's where my focus and energy is going to be, because it may not be what's better for your business in the short term and in the long term. There are two other videos here that are helpful with this topic.