Every business industry has its big-name white-label companies that everyone hears about, and when it comes to choosing, they seem to be the most obvious choice, because they have rightfully earned their name, have many years of experience, and the success stories of companies that have worked with them number in the tens or even hundreds. But is this really the best option for startups and small businesses?
In this article, we’ll break down the pros and cons of working with both large companies and startups in detail. We will try to look at this interaction from different points of view to allow you to form your own objective opinion.
Let's start with pros and cons of working with large companies
Working with big corporations can be more challenging for startups and small businesses due to several reasons:
- Established Relationships: Often large corporations have longstanding relationships with similarly large businesses that they have been working with for years. Obviously, it’s more profitable for them to prioritize larger clients over smaller ones, who not only bring in more income, but also are established, well-known companies that have a proven track record. While startups and small businesses typically have limited brand recognition and may struggle to compete with competitors. As a result, small companies may simply not receive the attention and support they need to develop.
- Stringent Requirements: Big corporations tend to have strict requirements and standards that businesses must meet before starting any interaction. These requirements can include certifications, insurance, legal compliance, data security protocols, and more. Startups and small businesses may face difficulties in meeting these requirements, especially if they have limited resources or are in the early stages of development.
- Complex Decision-Making Processes: Big corporations typically have complex decision-making processes, involving multiple stakeholders, layers of management, and lengthy approval procedures. This can slow down the integration process and make it more challenging for startups and small businesses to secure contracts. Thus, small businesses find themselves waiting months for an answer and losing real opportunities for development.
- Brand Perception: Some big corporations may perceive working with startups and small businesses as risky due to concerns about their stability, reliability, and ability to handle large-scale projects. Overcoming these perceptions and building trust can be a significant challenge.
- Poor UX: Corporations are built over years, and so are their products. As a result, we can very often see cumbersome and somewhere outdated software that meets the needs of long-term customers, but does not always keep up with the latest technology and features that emerging startups need.
- Lack of customization options: Nowadays user-friendly interface plays a crucial role in the success of any business, especially when it comes to payment processing, because this is the stage of interaction when customer trust is most vulnerable. For example, not being able to customize the payment page to match the brand can cause customers to doubt that the transaction is fraudulent and lead to customer churn when they have one last step to make.
- Disappointing customer support: Last, but definitely not least. If you google reviews of any very large company in your industry, you will definitely find reviews of problems with customer support. And the list of problems is endless, from support responses to customer emails that take weeks to suddenly getting your account banned without any explanation. Also, in order to save money, big companies often offer sluggish support, which is ticket systems and automatic answers. But if you have an urgent problem for which there is no solution in FAQ, you very often waste your time, and time, as you know, is money, especially for business.
However, along with the difficulties of interacting with large companies, they also provide great opportunities and advantages for those who work with them.These opportunities can provide significant benefits and growth potential:
- Increased Visibility and Credibility: Collaborating with a well-established big corporation can enhance the visibility and credibility of a startup or small business. It serves as a validation of the quality and capabilities of the business, which can attract other potential clients and partners.
- Access to Large Customer Base: Big corporations often have a vast customer base and established distribution channels. Partnering with them can provide startups and small businesses with access to a larger market and exposure to a broader audience. This can lead to increased sales, brand recognition, and accelerated growth.
- Learning and Knowledge Transfer: Working with big corporations offers opportunities for startups and small businesses to learn from their expertise, processes, and best practices. This knowledge transfer can enhance the business’s capabilities, improve operational efficiency, and support future growth.
- Financial Stability and Resources: Big corporations generally have greater financial resources compared to startups and small businesses. Collaborating with them can provide access to funding, investment, or financing opportunities that can fuel the growth and expansion of the smaller business. It can also offer stability and consistent revenue streams through long-term contracts or partnerships.
- Innovation and Technology Adoption: Big corporations often invest heavily in research and development, innovation, and technological advancements. Partnering with them can expose startups and small businesses to cutting-edge technologies, tools, and resources that can enhance their own offerings and competitiveness.
- Scale and Growth Opportunities: Working with big corporations can enable startups and small businesses to scale their operations more rapidly. The large volume of work or contracts from a big corporation can drive expansion, increase production capabilities, and help achieve economies of scale.
- Industry Connections and Networking: Collaborating with big corporations allows startups and small businesses to establish valuable industry connections and networks. This can lead to partnerships, joint ventures, or other collaborations with other players in the industry, opening doors to new opportunities and markets.
- Networking opportunities: Large companies often hold events ranging from training video conferences to real physical forums and even accelerators, where businesses get opportunities to gain new experience and demonstrate their abilities, as well as showcase their unique value proposition, find like-minded people, and much more.
Now let's look at why it's more profitable for young startups and small businesses to work together
- Flexibility and Agility: Small service providers are often more flexible and agile in their operations. They can adapt quickly to the specific needs and requirements of startups and small businesses, offering customized solutions and personalized support. This flexibility allows for more tailored and responsive service delivery.
- Personalized Attention: Startups tend to have a smaller client base, allowing them to provide more personalized attention and dedicated support. They are often more accessible, responsive, and willing to go the extra mile to meet the unique needs of startups and small businesses.
- Cost-Effectiveness: Small service providers are generally more cost-effective compared to big corporations. They may offer competitive pricing structures, flexible payment options, and be more willing to negotiate contracts to accommodate the limited budgets of startups and small businesses. This cost-effectiveness can be particularly beneficial for businesses with limited financial resources.
- Collaboration and Partnership: Small service providers are often open to collaboration and partnership opportunities with startups and small businesses. They may be more willing to share expertise, provide guidance, and establish mutually beneficial relationships. This collaboration can lead to knowledge exchange, networking, and potential growth opportunities for both parties involved.
- Niche Expertise: Small service providers often specialize in specific industries, niches, or services. Their focused expertise can align more closely with the unique needs and challenges of startups and small businesses. They may have a deep understanding of the market dynamics, trends, and best practices relevant to the specific industry, offering valuable insights and tailored solutions.
- Speed and Efficiency: Working with startups and small businesses can often result in faster turnaround times and quicker decision-making processes. Without the layers of bureaucracy and complex approval procedures typically found in larger corporations, startups and small businesses can benefit from streamlined communication, faster project execution, and more nimble decision-making.
- Building Relationships: Partnering with small service providers allows startups and small businesses to build strong relationships and establish a network within their industry. These relationships can lead to referrals, partnerships, and potential growth opportunities as both parties support and collaborate with each other.
In fact, the key to the success of such interaction is simple – it is understanding each other’s ways. You know how parents often forget how they were children, learned everything and made mistakes, so they demand phenomenal results from their child in everything at once. That’s how big corporations often treat small businesses that can’t make them big profits right away.
When you grow together, in mutual understanding, you build a special bond, and the human attitude in business is very important.
Of course, working with startups is also not a breeze and is fraught with various potential challenges:
- Limited Resources: Startups and small businesses often have limited resources compared to larger, more established businesses. They may have constraints in terms of financial capabilities, workforce, infrastructure, or operational capacity. This can affect their ability to deliver products or services on time, meet quality standards, or handle larger volumes of work.
- Financial Stability and Reliability: Startups, in particular, can be more vulnerable to financial instability or failure. Their limited track record and uncertain market position may raise concerns about their ability to fulfill contractual obligations or maintain long-term partnerships. Small businesses should carefully evaluate the financial health and stability of their potential startup partners. However, we have to be honest here and admit that even the largest companies have gone bankrupt for various reasons. Anything can happen in business.
- Lack of Experience and Expertise: Startups and small businesses may lack the depth of experience and industry expertise that larger businesses possess. They may still be in the learning phase, refining their processes, or developing their market knowledge. This could impact the quality, efficiency, or consistency of the products or services they deliver.
- Scalability and Capacity: Startups and small businesses might face challenges in scaling their operations to meet increasing demands or sudden spikes in workload. They may have limited capacity to handle large-scale projects or serve a growing customer base. This can lead to delays, quality issues, or difficulties in meeting the expectations of their partners.
- Potential Instability and Uncertainty: Startups and small businesses often operate in a dynamic and rapidly changing environment. They may undergo organizational changes, pivot their business model, or face unexpected challenges that could impact their ability to meet contractual obligations or maintain consistent service levels.
- Limited Brand Recognition: Startups and small businesses may have lower brand recognition compared to more established businesses. This could affect their credibility and trustworthiness in the eyes of potential partners or customers. Small businesses should assess the impact of partnering with less recognized brands on their own reputation and market positioning.
As always, to make the best decision for your business you need to determine your priorities, weigh all the pros and cons. And we, as a startup, can only give you a hint and tell you that if you choose your cooperation correctly, the risks justify themselves, and the initial efforts spent pay off doubly.
Introducing Rainex
Rainex is a relatively young product on the market, but it is designed and developed by an experienced team with over 15 years of hands-on experience in FinTech.
Rainex is a billing and subscription management platform which offers you:
- Fast and easy integration, which allows you to access the system in the shortest possible time and immediately start accepting payments from customers;
- Extensive platform functionality, including a flexible rate builder with any frequency and currency, attachment of addons and charges, automatic invoice generation, credit note creation, and more.
- Ability to integrate with multiple payment gateways, including creation of integrations at your request.
- Dedicated support team that won’t make you wait more than 12 hours for an answer, providing assistance in setting up the system and if you have any difficulties working with the platform.
- Personalized approach to you and your business needs.
