What Now?

Thinking Big

First off, recognize who controls today's market. There are still plenty of opportunities to form alliances with smaller businesses (more on that later), but corporate America looms much larger than it has in recent years.

"The companies that were going to be done in by the dotcoms are calling the shots in this marketplace," says John Rymer, founder of Upstream Consulting, an Emeryville, California, business strategy consulting firm. "If you're going to sell, that's who you'll sell to."

Despite their market power, these giants need your entrepreneurial pep. "Large companies are under tremendous pressure for growth, which is in direct contrast with pressure for immediate financial numbers," says Mark Rice, director of the Severino Center for Technological Entrepreneurship at Rensselaer Polytechnic Institute in Troy, New York.

The CEOs of large companies have felt these demands since the late 1980s, but the 1990s boom made it easier to achieve growth. Now they need small companies to help them grow without dramatically increasing costs.

Corporate America sees entrepreneurs as a fairly inexpensive source of new products and services that it can resell, according to Rice. They also represent a way to quickly put out new products that might otherwise languish in the R&D labs. Corporate CFOs often prefer a revenue stream from licenses for spun-off technologies to lower returns on sunk investments. And, of course, you may be able to take over a service-warehousing products or designing packaging, for example-that isn't part of a larger company's core business.

In turn, you'll find such alliances attractive now because the boom years left corporate America's balance sheets in relatively great shape, despite the current profit crunch. "You can have partnerships with companies where they provide vendor financing or sale of equity," says Todd Dagres, a general partner at Battery Ventures LP in Wellesley, Massachusetts, and senior lecturer at M.I.T.'s Sloan School of Management. "Some suppliers are willing to help their customers. That money is not easy to get, but it's another way to top off the tank."

Funds from partnerships don't just come in the form of direct investment, says Steve Spinelli, director of the Arthur M. Blank Center for Entrepreneurship at Babson College in Wellesley, Massachusetts. "You can get a lease or 180-day terms," he says. "That's cash flow of a strategic nature."

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This article was originally published in the June 2001 print edition of Entrepreneur with the headline: What Now?.

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