Situation: The CEO of a software company has been presented with two opportunities by a large customer – international expansion to support their sales and creation of a data warehouse facility. The company has the option of pursuing either or both. The customer is not offering up-front cash to support either opportunity. Should they pursue either or both? How do you choose between opportunities?
Advice from the CEOs:
- Keep pursuing both opportunities and establish a series of decision points which will yield either a Go or No-Go decision on each. The big question is to determine how either will support company growth.
- The customer is interested in both opportunities so ask them for assistance such as: removing barriers, client referrals, or some form of cash or investment.
- For either opportunity to succeed requires a high level of internal buy-in and support from the customer.
- If the company can afford to be aggressive now, this is a great time to move.
- Look carefully at the ROI on each opportunity under different scenarios.
- Do background work with potential clients to validate each market opportunity.
- Specifically to International Expansion
- Buy-in from the customer’s head of international sales is essential – without this it will be difficult to establish a solid relationship with the international sales team. Lack of this support will be a No-Go sign.
- Can the customer provide office space, access to their infrastructure, administrative support, assistance in gaining necessary licenses to do business, etc. during start-up?
- Could this venture be undertaken through a joint venture with an established international company? This would save start-up costs and allow validation of the opportunity before risking the company’s investment.
- Execution will require a large-scale effort – both time and money. Include both in the Go/No-Go calculation.
- Specifically to the Data Warehouse Facility
- A competitor’s right of first refusal on this business is a barrier. However, the opportunity may be viewed as too small for the competitor. Is it possible to buy rights from this competitor?
- Ask the customer to transition their customers to your company and its product.