Moving upscale, part 2

Philip Morgan

Earlier today I wrote that moving upscale and focusing your services of Fortune 500-sized companies can increase profitability, essentially because you can charge more for the same stuff.I laid out a few reasons why, but each one of those reasons has a potential negative flip side:They will pay for “insurance” because they’re phenomenally risk-averseThey want robust experience and process-driven insurance. They may also want shitload of meetings and over-communication-driven insurance with a heavy dose of ass-covering in the mix for good measure.**They are more used to the idea of assembling a team of specialists, some of whom may be purely advisory.**They might not hire if you’re a small generalist. They’ll hire larger generalists for staff aug, but that changes your value prop vs. a specialist who might lead or advise on the project. And there’s a LOT of competition from the Accenture’s of the world on both the generalist and specialist end of things.**They can be less price-sensitive.**While rolling in the dough from one or two high-profit projects, you can easily and unexpectedly leave yourself open to a client concentration death-blow that kind of sneaks up on you. Whale clients are fun at first, but they can weaken your business long-term.**They often have a larger “buyer surface area” - larger number of people who can make sizable discretionary spending decisions.**Despite the larger buyer surface area, those buyers can still be very difficult to get in front of unless you have "door-opening" levels of credibility.None of these reasons, individually, are a reason to focus on F500's or not focus on F500's. But you should consider them all together when making a decision about what size company you focus on working with.

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-P