The Fortune 500 list consists of the biggest companies in the US. The smallest of the 500 companies, Legg Mason, brings in a bit more than 4.6 billion dollars a year, and the largest company, Exxon Mobile, brings in around 442 billion dollars a year.
Download this cheat sheet to get to know why you should not go after the fortune 500.
The Fortune 5,000,000, on the other hand, is composed of small companies. Most of them don’t even generate a billion in revenue, and surprisingly enough, a lot of them may not even have revenues of a million dollars a year.
I know this doesn’t make the Fortune 5,000,000 list seem attractive, but it is. Before I go into why you should target the Fortune 5,000,000, let’s break down why you should not go after the Fortune 500:
- Slow and steady doesn’t win the race – if you want to lock in a deal with a large company, it is going to take a lot of time. These companies move slowly due to their chain of command. You never know if you are dealing with the decision maker, and even if you are, it doesn’t mean things are going to move quickly.
- Time is money – in addition to the time you’ll spend trying to lock in a deal, you’ll spend a lot of money. From wining and dining to making multiple presentations to an executive team, it will all add up. And if you happen to get lucky enough to get to terms, just imagine the legal fees.
- The money isn’t always great – there is a big misconception that you’ll make a ton of money if you lock in a Fortune 500 company. What you probably don’t realize is that the big bucks usually go to other Fortune 500 companies. Your company will usually get a small contract, and even if you happen to provide a great service or product, you’ll be lucky if you get the opportunity for a large contract.
- You’ll be a bitch – whether you end up getting paid a lot or a little by a big company, you’ll be their bitch. They’ll expect a lot from you, and in most cases, you’ll end up doing more work than what was listed in your contract.
- You may not get paid – the bigger the company, the slower they tend to pay their bills. Just think of it this way: if they withhold their money for an extra 30 or 60 days from all the companies they owe money to, they’ll end up earning a lot of interest. Although 2% interest from your bank may not seem like a lot to you, it adds up if you have over a billion dollars.
Targeting the Fortune 500 companies may have seemed like a great idea at first, but hopefully the points I mentioned above show you why you shouldn’t target them.
Now, let’s look at the Fortune 5,000,000:
- They move quickly – small companies move much faster than large companies. Yes, they might not have the big budgets, but it is easier to get money from them.
- You can easily reach them – through normal means of advertising, you can reach the Fortune 5,000,000. You don’t have to build out a sales force and spend thousands of dollars like you may have to if you are targeting the Fortune 500.
- Your income will be recession proof – most of the Internet companies that didn’t get affected by the recession are those that targeted the Fortune 5,000,000. It is much better to have 100,000 customers paying you $10 a year than to have four customers paying you $250,000 a year. If you end up with a client who is paying you $250,000, they own your ass.
- They can pay more – if you are going after big contracts, there are big enough companies in the Fortune 5,000,000. If you want someone to cut you a million-dollar check, they don’t have to be making billions of dollars a year—they just have to be making millions.
- You’ll have more evangelists – as long as you treat your customers right, you are better off having more than having fewer. The more customers you have, the more people will be telling their friends about your company, which will indirectly grow your revenue.
- Smaller valuation periods – larger companies typically want to try things for at least a few months before they make a decision. Smaller companies are fine with short evaluation periods, if any at all. This will help you with your cash flow too.
- Less competition – because the Fortune 500 label looks more lucrative, more companies are targeting those on the list. If you target smaller businesses, you’ll end up with less competition, which will lead to better market penetration.
Targeting the Fortune 5,000,000 doesn’t mean you can’t go after the Fortune 500. If you target smaller companies, sooner or later the Fortune 500 will flock towards you.
But instead of concentrating your efforts on the larger companies, concentrate on the smaller ones. This will cause your company to grow faster, and your revenue will be more stable.
A final thought: every time one of my companies targeted the Fortune 5,000,000, the juice has always been worth the squeeze.
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