"You're too small" - Strategies for innovators who have faced rejection to reach their customers

By Sang Nkhwazi, Technical Director, Sanrixa.

You've probably heard it before: "We're not sure about this", "I don't see it flying", "It's a lifestyle business which can't be scaled", "I don't think I will ever get my money back", "It doesn't look like a goer to me", "Our marketing department doesn't think it will sell", "We've decided that it is not for us", ... 

These are the kinds of discouraging statements provided by some investors when talking themselves (or their cash-rich businesses) out of a potentially lucrative and high-growth investment opportunity, often accompanied by thinly veiled scorn or pity directed towards the person asking for the investment, in the process pouring cold water on an entrepreneur's many years' worth of hard work and enduring hopes. 

And while any investor can refuse a request for investment if they so wish, and for any  number of reasons, unfortunately some of those investment opportunities indeed never see the light of day. But not because of the reasons the investor or his assessment / marketing team give, such as a poor product idea or a doubtful mass market. No, instead more often than not, those innovations die simply because the entrepreneur or inventor  doesn't get the exposure they need quick enough. And unfortunately, the demands of life can mean the entrepreneur runs out of steam and / or money.

About eight years ago, I was sat in a boardroom in Northamptonshire, with a client and  who I had accompanied to meet top executives of what was at the time an £15 million+ turn-over division of a German conglomerate. The place had a welcoming and lush ambiance and was quite impressive, with large open-plan offices, modern glass partitions, opulent high quality furniture, air-conditioning and greenery planted in large colourful plant pots. Even before we entered the boardroom, I found myself daydreaming, imagining how transformative the investment - if it were successful - would be to my client's business. 

My client, a seasoned inventor with 30 odd years' worth of experience in his industry, had insisted on using a luxury car that belonged to a member of his family (because according to him, it was more prestigious than both his own car and my car), believing that he needed to make an unflappable first impression. He was suited, sported a fresh haircut and was cleanly shaved. 

In my diary that evening, I noted his estimates that a company of the size of the conglomerate could produce the tool he was proposing to the conglomerate's management cheaper than he did, maybe by as much as 40% to 60% cheaper than what he was paying in manufacturing costs.  He also deduced from the surveys he had conducted, and from the weekly customer feedback he received that if adopted and sold to their large network of downstream distributors, they could sell between 4,000 and 7,000 units a month, maybe more, across the UK alone, and make a substantial profit. And it would cost them less than between 1% - 3% (including packaging), over and above the logistical costs of the closest product they sold to major DIY outlets; their closest product being a generic product which wasn't adapted for the specialist function which my client's tool performed effortlessly. "It wouldn't make a dent in their purse." he said.

So when the company decided not to take up the proposal, after 3 long agonising months of deliberations, in which they requested more technical information and said they were consulting with their marketing teams, we were somewhat disappointed. But we were not surprised. 

Ruthless? Cut-throat?  Some people will say No? You should develop a thick skin...
Still, so much wasted effort for very little result. 

There may have been other reasons influencing the investment climate of the time. This was the period following the Global Credit Crisis of 2007 - 2008, and there were legitimate fears about the state of the economy which led some companies to postpone or scrap investment decisions altogether, a sentiment which probably lasted until as late as 2012, and which today is being echoed in the UK, partly because of Brexit. But the toll on innovators was the same (as it would be now): crushing disappointment.

However, this encounter wasn't the only one I witnessed. Indeed, in a space of about 5 years between 2008 and 2013, I met two or three small business owners each year who encountered such obstacles, or who complained about their struggles in securing investment, for one or more innovative product's they had spent years developing. We went and sat in meetings together. We gave well-researched presentations, We attended numerous workshops, some given expertly by rather polished public bodies, the likes of Technology Strategy Board (now called Innovate UK), we wrote hundreds of letters. ... we wasted relatively significant amounts of resources for small businesses, it was inefficient & time-consuming. And I doubt it was worth it.

One client who had invented a brilliant product for use in the haulage industry (a product similar to this) told me of an encounter he had with a company that owned 2000+ trucks. If adopted he said the product had the potential to greatly reduce spinal injuries, which are common to drivers of heavy goods trucks. "They didn't want to buy it from me" he said laughing at the absurdity of it all. "I sat in a meeting room with five of them, and they told me they liked the product, but that they couldn't buy it from me. You're too small, they said." 

Unconventional methods

These days, those bittersweet lessons are particularly instructive in my dealings with both inventors and potential joint venture partners. They helped create a blueprint which innovators can follow in the pursuit of their ideal customer base. And it is with Sanrixa that I will be rolling out that strategy.

It seems to me that in growing small companies from the ground up, the growth strategy should take into account, not only unconventional sources of funding, but also adopt unconventional methods of reaching customers. For example, if you can't get your product into an outlet such as B & Q or ScrewFix (if that is the prized sales route for your product(s)), maybe you should start selling online, on platforms such as on Amazon - an exercise which  has its own challenges/ difficulties. 

This can put you firmly in front of your customers (cutting out the middle man - even when in the short-term, the middle man could help you reach more people). But if you do get onto such platforms , a large part of the challenge changes to become your capacity to quickly learn and implement the effective marketing techniques which work on those platforms. 

The good news is some of the high-growth opportunities I have met over the years have had incredible and profitable runs on platforms such as Amazon, often achieving higher profit margins per item, than if they partnered with a middle-man. But such platforms are not for everyone, and cannot be used for all kinds of products.

Joint Venture Partners

If your company is designing software for use in the FinTech sector, or you are making an accessory for use in leisure boating, Amazon may not be the ideal outlet. A specialist industry event or even an industry magazine may be a better fit. It may be a case of pitching your product in the kinds of places where your customers congregate. Here, you may have to understand what certifications, or what legal or safety requirements your customer will need your product to comply with. This means that the first line of attack becomes: 'We have this certification', or 'We use that industry standard...' which I find makes a big difference in a customer's perception of your company.

Further, unlike 10 years ago, these days start-ups have a lot more on offer in terms of how to find who to collaborate with. Start-up accelerators, Co-Working Spaces and Angel Investment Networks are all great environments that are more readily available these days, and where you can meet like-minded people who may be potential joint venture partners, and who you can work with in building your business(es) and pursuing your ideal customers. Often these partnerships can have synergies which weren't anticipated at the inception of the partnership, but which can propel your business forward.

Smart Marketing

Your offering / technology may be great and may solve an important problem, but essentially, most small businesses are in the business of marketing, and if you can't sell the offering effectively, it will struggle to fly.
It can't be overstated that if you are only talking to 100 people, that number (and its associated network) is how small your potential market will be. But if you are appearing in front of 10,000+ people your prospects can be significantly better. The trick is to find one of many ways which maximises your exposure, while at the same time keeping your costs relatively low. This means it is important to be picky, and to prioritise resources towards those modes of marketing that have a proven record of reaching your core customer base (which doesn't necessarily have to be large). The good news is there are many tools available today that provide intelligence, and automation, which can help even small business to get in front of crowds of their ideal customers. If you sell your products or services online, tools like Ahrefs and Buzzsumo can help you customise your marketing to reach a wider audience in shorter periods of time.

Sanrixa is working with a number of start-ups and small businesses, some with innovative pioneering product innovations - helping them developing bespoke solutions for their clients, and assisting them to build partnerships that maximise their reach, impact and success.

Similar Links:-

• 3 reasons your startup is struggling to raise venture capital
• Top tips for accessing finance – a guide for UK SMEs