How to select the best company size
It would be interesting to know if certain departments will grow faster in different growth phases of an organisation. When an organisation grew from 50 to 100 employees, did this growth come from growth in the production department alone? And when an organisation grew from 100 to 200, was this due to the growth in the administration department? To find that out we looked at LinkedIn and gathered the information on the number of people: 1) In Europe 2) In a company with a specific size 3) In a department. This was put in a graph and the result is shown below. Hover over the graph to see individual lines. We can assume that organisations grow equally in all departments.
When your software is ment for a specific department and this department needs to have at least X number of people before they start buying, then the size of the department seems to correlate directly with the size of the organisation. You just need to find the ratio. LinkedIn Sales Navigator has a search option “department headcount” as well as “company headcount”. This will help discover the ratio.
The management theory on company growth patterns
Harvard Business Review posted the below image on the five stages of small business growth in 1983. It shows that organisation restructure now and then to keep up with the growth. An underlying aspect is the “Span of Controle”. When it exceeds 30, the group needs to be split up.
Why is this relevant? Firstly it is possible that due to the new organisation structure the processes change. Is you software able to support this new way of working as well?
Secondly, when responsabilities and powers are split up and hustled, there is a good chance that more people have to be involved in the sales process. The owner of the problem is not the same person as the person who decides.
Country size and company size
One of my principles from Germany aims for larger technical wholesale companies. These companies typically have an establishment in every large city. As a result the size of a technical wholesale company depends on the size of the country. The larger the country, the more cities, the larger the company. Germany is much larger in size compared to the Netherlands. As a result the number of large technical wholesale companies is bigger in Germany.
Something similar goes for paper mills. Due to the cost of transportation a paper mill`s service area has a radious of 400km. This means that a larger country will have more establishments which will make the mother company larger.
Can you define such a relation for your specific situation? If so, have a look again at the topic of “the number of companies in a country” so you know what to expect. Next you have some options.
- Do you have a competitive advantage due to this difference?
- Can the software and price be adjusted to fit the sizes of the country?
Company size and reachability
When a company with 20 or less employees is called by phone, it is very possible that the CEO of the company or another owner of the company will pick up the phone. With a size of 50 employees or less the CEO is still pretty reachable. When the company gets larger the inbound calls get more organized, from a sales point of view “blocked”. Here are some examples:
- Is mr… expecting your call?
- You can send an email to info@
- You can send an email to the purchase department
- I am not allowed to forward this call to anyone at the IT department
- We can’t provide any information
- The general phone number is removed
- The horror of phone menus
- The client service team is the new reception and they do not have the phone numbers of staff
- Company policy forbits to respond to any kind of sales approach. This includes LinkedIn (Especially applicable for Banks).
Company size and support
When I visited a board member at Philips to present the software solution of my principle, this boardmember told me that Philips is very openminded towards startups and smaller companies. But these companies tend to forget that Philips is not one company. It is a group of 800 companies spread arround the world. And they will all call for support. This requires a 24/7 support team. Can your support team handle this, or can you set it up? Else, select a smaller company size.
Select the best company size
When your software has a competitive advantage for larger companies, or the most experience with larger companies and the country you are going for has a large enough market for this group then this is the group for you.
When you want clients fast you need a short sales cycle. When companies are larger, more obstackles are in the way and will make the sales cycle longer. You can still select a mid-size or larger company but have to manage your expectation and expect a longer sales cycle.
Now select the best company size to focus on.
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