Business to Business (B2B) is a term where a business sells to other businesses and Business to Consumer (B2C) is where a business sells directly to consumers. As a business owner, you can choose to do B2B, B2C, or a combination of the two if you can manage your operations to support both. This applies to all types of businesses, from cleaning services to farms.
A cleaning company can offer janitorial services for an office building or to companies where they come in once or twice a week for B2B services. It is a larger scale job that involves multiple offices, bathrooms, and potentially floors and likely needs a contract for a set price over a fixed period of time. Maid services are also cleaning companies but are considered B2C as they clean private homes and do not require ongoing contracts. A janitorial service may have an upsell of floor polishing in a large lobby or elevators, while maid services may offer to clean the inside of an oven or refrigerator as an upsell.
Local farms that sell proteins can provide bulk orders of steaks or chicken to restaurants and grocery stores, or they can sell direct to consumers through farmers’ markets, meat subscriptions, or retail shops on their premises. The bulk orders to a retailer are B2B sales, and the individual sales are B2C.
Contractors can use their skill sets to furnish, rehab, and remodel a large office building or a kitchen and bathroom in a home. The skills for a contractor of an office building are like those of a home renovation contractor, but the office tower is considered B2B and the home remodel is B2C.
If you’re a business owner and deciding whether to go B2B, B2C, or want to do both, here’s how to know which to begin with and when to make the change. It all starts with defining more clearly what each is so you can create a strong business plan to get there.
What is B2B?
Business to business (B2B) is where you sell goods or services to other businesses instead of the end consumer. B2B companies have a longer sales process. The price points tend to be higher, and there are normally multiple decision makers in the process.
Two examples of B2B-only companies are:
- A landscaping firm providing its services only to property management companies, not residences.
- A trucking business transporting goods for a regional distributor of auto parts.
B2B is based on creating relationships between individuals in business, typically emphasizing return on investment and cost savings. These relationships are also more stable and less affected by changes in the economy. However, with a B2B business structure, you might only have a few business customers vs. thousands of consumers, so losing one could be a serious financial setback.
This is why B2B companies invest in account managers and dedicated service teams rather than a clerk in a store who greets customers but doesn’t need to know each person’s name or build a strong connection with each one.
What is B2C?
Business to consumer (B2C) companies sell directly to the end user like a restaurant or a retail clothing store. This can be online, in a store, or both. Brand awareness and creating an emotional connection are crucial since the average sale is smaller and B2C companies rely on a larger volume of customers than B2B companies.
Some B2C companies have a long sales cycle including car and large appliance dealers, which resemble a B2B decision timespan. Meanwhile, others like convenience stores are quick where customers can buy goods in moments.
The quick sales cycle and lack of needing contract renewals are advantages for B2C companies, because an individual customer leaving doesn’t break the company’s bottom line. The drawback is less predictable revenue without the long-term contracts of B2B sales.
You can start out with a B2C model and then switch to B2B, or you can do a hybrid where you sell to both consumers and businesses. This is similar to an infomercial company that sells their products directly from TV, radio, and online advertising to consumers, and then uses the demand to get retailers to buy their products in bulk and sell in their stores.
B2B and B2C Hybrid Approach
Both large and small brands can take a B2B and B2C approach. UPS and FedEx offer individual package shipping for consumers as well as corporate accounts for ecommerce retailers to ship multiple packages. Amazon offers a suite of web services for corporations and small businesses, while consumers know them as a marketplace for pens, clothing, and other consumer goods.
The hybrid approach isn’t limited to big companies. A photographer can do holiday portrait sessions in the fall and weddings in the summer for consumers. Then, during their seasonal consumer lull, they can do corporate headshots and holiday parties as well as tradeshow and event photography as B2B work.
Bakeries can have a brick-and-mortar store where they sell to consumers, while they also produce baked goods in large quantities for coffee shops and restaurants. They can also cater corporate breakfasts or events.
With a little adaptation, many things you already do (like marketing) can work for both B2B businesses and consumer-focused companies. Items like payment processing, however, will take some larger adjustments to support a B2B and B2C strategy.
Marketing
Your marketing strategy for B2B and B2C can use the same channels, like social media or email. But the wording, formatting, targeting, and landing pages will change.
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B2B |
B2C |
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Social media landing pages |
Landing pages may encourage the customer to get a white paper, so the company gets a lead that they can nurture into a sale. |
Product and service pages are better landing pages for B2C companies as their goal is to get a direct conversion. |
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TV advertising |
Financial news and specialized programming that attracts a niche audience of executives and decision makers are smart choices. |
Large-scale programming or niche shows that cater to an audience demographic and geographic region may make more sense. |
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Email marketing |
Informative or long-form emails that educate or encourage a conversation with a business representative are more common, as the purchase is likely a larger decision. |
Strong sales messages that entice a click and a purchase on the spot are important for consumer emails. There’s normally less wording and more action items and incentives. |
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Print ads |
Industry publications, financial news, and association newsletter sponsorships can be good options for B2B brands. |
Magazines in supermarkets, billboards, bus stops, and places that reach the company’s audience in mass may work better for B2C companies. |
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Sponsorships and exhibitions |
Displaying in a booth at industry events with corporate executives and sponsoring industry publications and tradeshow events can help you reach decision makers at a company. |
Paying for influencers and ambassadors with matching audience demographics, community events for charities, fundraisers like a walk for a specific cause, or displaying at consumer houseware, cooking, and travel shows can reach consumers where the brand exposure or readiness to take action are highest. |
Payment Processing
There are a few differences in the payment systems and terms when it comes to B2B and B2C businesses.
Going from B2C to B2B
Payment processing might require completely new systems and people with different skill sets to do both B2B and B2C. If you have been selling to consumers only, you’ll need invoicing and accounts receivable software for business customers that don’t pay cash or credit on delivery. It’s also a good idea to learn how to negotiate payment terms (like net 30 versus net 90) that determine how long a customer has to pay (30 vs 90 days after delivery).
Because there will be fewer products or services that have already been delivered, you’ll need to manage a lack of cash flow while waiting for payments to come in, and you’ll still need to cover the B2C and operating costs like payroll from your business.
Going from B2B to B2C
When you have been selling to businesses and collecting through check or ACH payment, you’ll need credit card payment processing for consumers. You’ll also need a point of sale (POS) system for physical locations to avoid the hassle of creating paper invoices for every single consumer that comes through the door.
Depending on which credit card processing company you use, you may get faster payment disbursements than the net 30 or net 90 you’re used to in the B2B space, helping you to fund more projects and go after larger accounts.
If you’re just starting out and are stuck between a B2B and a B2C strategy, go with where your skills are. If you’re a people person and know you can reach the masses, B2C may be a better bet. When you have the stamina to do multiple calls and a personality that’s good at building strong bonds, B2B may be the better option. You can always try the other or take a hybrid approach in the future.
And when you’re ready for financing to start your business or go to a hybrid model, we’ll be here to help you with a tailored small business loan. We can assist you with equipment financing, so you can scale up production for B2B orders, or inventory financing, if you’re ready to stock a retail location or a new ecommerce/brick-and-mortar shop.
