Tue, 01 October 2019
Financial expert Pria Masson Tanwar says: “B2B is the core of an economy and must be strong.
The bedrock of economic activity comprises the varied business models that drive development. This could be in the form of a farmer supplying produce to the consumer (business to consumer or B2C); or the farmer selling to a company that processes the produce (business to business or B2B). All other formats are usually varied modifications of these basic models, such as re-labelling or reassigning roles. Anyone who is providing the services is a business and anyone purchasing the service is a consumer.
With time and globalisation, the world appears to have shrunk. Products are easily imported or traded and, since the various aspects that drive these core products (software, nuts and bolts, services solutions, financing systems and structures), are hidden from our vision, we presume that they take care of themselves. To compound the concern, there is a certain ease associated with B2C products that make them easier to provide. They are more relatable, tangible, trendy and newsworthy.
In the context of our economy today, B2B activity is vital for economic stability. The many aspects of a business, such as the provision of equipment for offices, workplace solutions or even aggregative technology that meets the needs of a business; it all needs attention. What makes something a B2B product is not just who consumes and who provides, it’s also the ‘stickiness’ of that product and the longevity of use. B2B products have a higher probability of creating stability on account of some key variables.
Companies are usually far more focused because when you are selling to a company, it has its policies, procedures and goals already laid out. You need to understand the same and make specific adjustments to your product to fit into their (the purchaser’s) requirements. Once that’s done, for a firm to change policies and procedures is far more difficult than for an individual to say: “I don’t like that anymore”.
Predictable Cash Flows
Payments for B2B products are usually more predictable and companies are more accountable for the same as compared to individuals. If, as a company, I purchase printer products from a given provider, I’m likely to make a certain purchase every quarter. If I purchase a piece of software, I am likely to keep using that software and renewing the same because familiarity for a group is not an easy habit to break. A company has more predictable habits and patterns – and does not change them easily.
Survival and Longevity
Contracts survive individuals. You sign with a company, not with a person. So, managers can come and go, but your contract with the company, the stickiness they have to the same and interaction with the company may be independent of organisational changes. This works for both the supplying and consuming business.
When economies try to move directly to targeting consumers as the primary focus, the core work can suffer. On the other hand, when businesses work to strengthen each other, it’s like working on the core of your body. Once that is strong, a lot of things become easier. In a business context, this means that the end consumers of whatever product is being provided to the final consumer (you and I) is stronger, which sets off its own chain of stability. It’s a spiral of strength that begins with a conversation between two businesses. This communication is essential to the learning curve of progress.
You can follow Pria on Instagram at money_cues or visit http://www.i2d-consulting.com to know more about her professional experience.