A Step-By-Step Guide on How to Build a B2B Startup

Why do you want to build your startup?  

Do you like working on things and building something meaningful out of them? 

Do you want to improve other people's lives? It can be as simple as putting a smile on a customer's face. Or, you want to make money and become rich. It's ok, nothing wrong with that.   

Maybe, you want to escape the 9-5 jobs.  

It could also be that you like solving problems and learning new things. 

A startup is the best place to learn something new. It's all about learning quickly and staying updated. Building a startup will be an exciting journey only if you enjoy learning. 

Whatever your reasons are, building one will be a rollercoaster of emotions and quite fun too.   

In this blog, I will share a step-by-step guide on how to build your B2B startup. For aspiring entrepreneurs like you, this blog will help you get off the right start. And trust me, you will need this because the startup failure rate is 90%. 10% of them fail within the first year. 

So, a good start is essential, and this blog will help you achieve that. Let's start with the most basic question.  

What Kind of Benefit Will B2B Buyers Get From Your Products or Services?

When you approach a B2B buyer with your product or services, the first question that will come into their mind is: 

"What kind of benefit will I get from this product or service?" 

"Is it better than the One I am already availing to right now?" 

For B2B buyers, your product or service should fulfill the following four things: 

1. It should save them time (eliminates any time-consuming tasks) 
2. Save resources and generate additional revenue (everyone likes profits!)
3. Integrating your product or service should be easy for their employees (compatible with their existing workflow and doesn't feel frustrating to use) 
4. It brings additional awareness through data (to help them make better decisions) 

The most successful businesses fulfill the above things. Uber is a perfect example of it: 

1. A person doesn't have to call the cab company and hope they show up. They know where the driver is at the moment. 
2. It saves them money as prices are fixed, and rides are subsidized. 
3. Easy to use as one has to only download the app on the phone and add their cc number to get started. 
4. The person will be informed where their ride is, how long until they reach the location, and how much it will cost. 
5. It is a reliable and easy way to get a ride without worrying about parking. 

So, focus on the four things I have mentioned here, and you will get clients and funding in no time. 

Now, let's come to the management part. 

How to Handle Situations at Management Level

Managing everything is complex, and it's not everyone's cup of tea. Someone can be a high-level executive, but that doesn't mean they will be an exceptional communicator. A great employee doesn't make them an excellent manager. There will be differences in communication, and it’s best to acknowledge and respect them.  

To manage everything better, break down everything into small goals. Ask yourself: 

"What's my goal?" 

This question applies to calls, emails, outreach, posting, hiring, meetings, etc. Distill everything down to the simplest form it can be possible. 

Communication should be clear and short throughout all interactions. Everyone is in this together, and the company's goal is to help everyone articulate "What's my goal?" at a micro level for better communication.

Record all your processes from day one. The process you choose will determine whether your startup will succeed or fail. So, please don't take it lightly. 

Don't get too comfortable with your process. Keep improving it until you find a way to automate them. Keep records of your approach and document what worked and what didn't. It will be invaluable as your startup grows and you want to scale up and build systems to streamline everything. 

You will find a tool for everything, but that doesn't mean you should use each one. Find what works for your team and has the highest level of adoption. Create good habits around using the tools to maximize its benefits. 

The next thing you need to do is focus on generating revenue and creating a monetization plan.

Suggested Reading: Top 10 Software Every Company Needs 

How to Create a Monetization Plan and Generate Revenue

You might have some ideas about generating revenue and setting up a monetization plan. Here are some questions that you must ask yourself to weed out the bad ideas: 

1. Is there a market demand for your product or service? Are people willing to pay for it? 
2. Is your product or service a cost center or a revenue generator? 
3. Does your product or service depend on undercutting the competitors? Or is it empowered by data research? 

The answer should be, Yes, revenue generator and data research. These are your best chances to achieve success. 

Reducing costs isn't the solution all the time. Compare your support budget to your marketing one; everything will become more evident.   

Here is a story to explain the cost center v/s revenue generator: 

"Derek and his two companions were using a series of three tools to automate tasks that they all hated. The entire package cost around $1500 per month. But the specific tools used for automation were less than $200. They had to use the other tool either way. But, for only $200, they could automate 80% of their work. So, Derek and his companions didn't mind paying 10x for the solutions because it was worth it. 

There is a gap as they didn't have other options to accomplish their needs.

William, an entrepreneur, wanted to develop a tool or system that can automate anything you add for less than $200 per month. He hoped to attract buyers due to his product's low-cost nature. But there was a problem. People are used to seeing automation tools as a cost center and are willing to pay more. So, the idea was great on paper. But, it was not marketable."

When developing a product or service, always be a part of revenue creation, as people are willing to pay more every time. 

Even if you have a great idea, it won't be worth pursuing if the market conditions don't support them. 

To validate an idea, here are the steps that you should follow: 

1. Market Knowledge
2. Competitor Research 
3. Niche 

Market Knowledge

Have a thorough knowledge of the industry before jumping on it. I suggest starting a company only if you have the required domain experience. Otherwise, there is a high chance that your startup might end up in a disaster. 

If you are experienced enough, then go for it. But if you are entirely new in the field, then there are two options: 

1. Recruit someone who has excellent domain knowledge in your field. 
2. Get some experience in the field and then come back later. 

Don't take a project or product that is outside your sweet spot. It will lead to utter chaos and waste time and money. 

Lack of domain-level experience can create problems early on, like problems with market validation and a lack of understanding of business principles and market conditions. 

Without the expertise, you might misjudge the market and fail to provide the appropriate value. You will often have to play catch up, not in a good way. 

Learning an industry on the fly is great, but it's best to do it when you are getting paid by someone while you are learning. 

Competitor Research

Here are a few things to keep in mind when researching your competitors: 

1. Luring someone on a new concept or idea is difficult. Selling an existing solution is much easier and cheaper too. 
2. You can build entire spreadsheets from the client list of your competitors. 
3. Look for industries within those client lists. Build case studies around them. 
4. The content you create should be resourceful to your customers.
5. Qualify potential consumers by using their opinions in your content marketing. 
6. Use existing platforms for the distribution of your content wherever possible. 

You cannot avoid cutthroat competition no matter what field you focus on for your product or service. But don't feel demoralized, as it's all about playing smartly. 

Talk to people, see what product or service they are using, and ask questions on social media. It will help you understand the customer's needs.  

Identify your most important markets or competitors and track their strengths, weaknesses, strategies, and characteristics. 

You can also check out GoodFirms, where people talk about all types of products. Check all the reviews with pros and cons.  

There is so much data out there. So, please make the most of it. 

Suggested Reading: What digital marketing services do your business need to be successful online?

Find Your Niche

Next, narrow down to the ideal customer profile, then slowly expand your target audience. 

Most companies struggle to do this and try to make their product for everyone. You cannot please everyone. Concentrate on doing one thing better than everyone else. Go through the data that supports a 10x uptick. It's essential if you want others to give your product or service a try, as moving everything from an existing system is a chore.

Your product or service needs to be very narrow. Here is an example:

"We are a helpdesk product."

" We are a helpdesk product for eCommerce companies." 

"We are a helpdesk product for eCommerce companies using Shopify."

See, keep going deeper. You will have less competition, making it easier to do the sales pitch and have meaningful conversations. 

How to Build a Strong Reputation of Your Startup

GoodFirms survey revealed that the reputation of a business is the most critical factor influencing 30.2% of B2B buyers in choosing a specific B2B service.  

So, here is another story: 

"Arthur started a small company specialized in IT outsourcing (development, testing, and support). He saw a demand in the local market and decided to jump in. But, when he tried negotiating with the clients, none of them were eager to sign contracts since Arthur was not well known in the market, even though they liked the pricing he offered. The clients feared Arthur might be unable to deliver the project in time. He needed a portfolio of completed projects to gain his client's trust. But this leads to a closed circle; no portfolio leads to no reputation, and no reputation because clients want to see a portfolio of completed projects first. 

Clients also preferred big companies.       

So, in such a situation, what can Arthur do to increase the reputation of his startup? 

For any startup, the first problem they need to confront is: 

"What is your competitive advantage in the market?" 

There are three fundamental competitive strategies that you can employ: 

Cost leadership - The cost structure may prevent you from offering cheaper services than your competitors. At least it's not enough to compensate for the lack of reputation preventing you from gaining traction. Clients might take a chance with you if you are providing cheaper services.    

Differentiation - Are you providing something that your competitors are not? If your product or service has something unique and innovative, the clients will be more than willing to overlook your lack of reputation. 

Focus - You need to narrow down the competitive scope within an industry. Identify your target audience and exclude the rest. 

If you are not cheaper, better, or more focused, then your startup is not set up for success. Take a step back and re-evaluate your strategic plan in such a situation. If you don't bring anything new to the table, your startup will fail against an already well-established competition.   

Don't use a pricing strategy on clients that aren't price-sensitive. The focus shouldn't be on becoming a low-cost provider. Instead, it is about becoming a reliable one that people seek after. 

What's the Best Approach to Generate a Pricing Plan 

GoodFirms survey revealed that 81% of B2B buyers consider price when making a purchase decision. The B2B audience is price sensitive. 

When generating a pricing plan, three is the sweet spot: 

Tier 1: Provide a sample of features to users. It will help them decide whether your product or service is worth it. You can even break down the incremental operating costs in this tier. The aim here is not to focus on profitability but on generating meaningful customer engagement.    

Tier 2: This will be the bread and butter tier. It will be the main revenue generator for your business. This tier will unlock the set of unavailable features from the first one. The psychology behind this is that potential customers will often believe that tier 3 is too much and they don't need it, whereas tier 1 is not enough. So, tier 2 will be your core offering. 

Tier 3: This tier is icing on the cake! The cherry on top! Be conservative regarding how many customers will sign up for this tier when creating a summary of your finances.  

Here are a few more things you should iron out: 

1. Perform user testing. Take some wireframes or even a tight elevator pitch and gather feedback. It should include questions like, "Would you pay for this? If so, how much?" Getting a reliable sample set would be informative for setting the middle tier and working from there.   
2. Determine the true benefit of your product or service. Will your product or service help customers generate more revenue, save time, and make their lives easier? Figure that out and set it aside. After that, break down your product or service into its core functional offerings. Then group your feature sets into three categories:  

A) Proves to the customer that we can deliver the benefit 

B) Delivers the core benefit 

C) Delivers the core and then some more additional benefits 

1. Determine the variable costs as a business. The features and usage of your product or service that increase those variable costs are what you should limit/increase with each payment tier. 

Building a startup is no easy feat. It isn't easy to find people who will execute your vision as you would. Nobody will be as invested as you. 

You will experience self-doubt. It will be like a swinging pendulum between "this is the greatest idea ever, to why am I wasting my time on this" 

You will sometimes struggle to stay motivated when nothing is going your way. 

It will not be a typical 9-to-5 job. You will get the chance to create innovative products and solutions. Also, You will have the freedom and ability to have your ideas heard. 

B2B startups are an actual agile workplace. Faster pace, more significant opportunities, and better responsibilities. 

For Further Reading 

I suggest checking out GoodFirms research on B2B services. It has in-depth information on the factors that matter the most to B2B buyers, competition in B2B services, and critical challenges in this field. You will get a list of tools that will aid you in building a successful B2B startup and additional knowledge on the future of B2B services.