The splashy logo.
The instant credibility. “You worked with THEM?”
Project budgets that careen into $100k+ territory.
Playing bigger.
This is the promise of landing enterprise clients.
I thought the biggest barrier to securing enterprise clients would be closing the deal… but it turns out the real barrier is a helluva lot more structural than sales.
It’s your operations, cash flow, and team that need to uplevel first — or risk landing an enterprise client … only to lose them and ruin your reputation and maybe even go bankrupt when you struggle to deliver.
Have you ever considered enterprise clients as a pathway to 10xing your revenue?
Then keep reading this interview with David “Ledge” Ledgerwood, the managing partner of Add1Zero, an agency that handles B2B sales for other agencies, including enterprise deals.
(He also runs two other agencies where he practices what he preaches to close and keep enterprise clients of his own: Riggg, a video content agency, and Listen Network, an agency-podcast company.)
Krista: Let’s start with the basics. What is your definition of an enterprise deal?
Ledge:
I want to think about what enterprise means to you. That’s why I say “big logo,” because if I’m in a niche, a big logo to me might not be a household name. So: what is the aspirational big company logo you want on your website? Let’s call that enterprise.
Maybe it’s 10x bigger billing than what you normally do.
Krista: That makes sense. When you only serve SMBs, you honestly can’t really show those logos in a meaningful way (unless you’re in a hyper-niche space where everybody knows each other). People are like, okay, but who the hell is this? And so you just rely on testimonials and case studies for social proof.
Ledge:
Right, if I showcase SMB logos, nobody cares, nobody knows who that is. It doesn’t matter. It might have been a good company. I did good work for them. They’re happy. But nobody looks at that and goes, man, I want to be them when I grow up.
Krista: Can you give some examples from clients you’ve worked with to show the range of what an enterprise client could be?
Ledge:
We’ve had a long-term relationship running sales for Content Allies. If you look at contentallies.com, there’s a big logo bar there. I closed almost all of those deals—probably like 80% of those. So that’s a good example.
Krista: If somebody is an agency owner and wants to pursue enterprise clients to 10x their revenue, is that a pivot of the whole business or more like starting a separate service line?
Ledge:
A separate service line. The way we service SMB clients is not the same as enterprise. So it’s like I’m adding a business line to deliver to one of these things.
It uses the same skills; it doesn’t use any of the same infrastructure, financing, operations, delivery, or sales. People think: “We can win this deal,” and then they get devastated trying to deliver it. It takes ten times as much attention. You need to be ready. If you’re not, you’ll get slaughtered.
Krista: It seemed to me like the hard part would be landing the deal, but you’re saying no, it’s more the delivery?
Ledge:
If you know how to sell, getting the yes from those people is about the same as getting the yes from anybody else. (Even if there are more layers to get through before the final sign-off). Everything that happens after that is what’s different.
Krista: Where do you advise people to start? What’s the first thing an agency founder should do if they want to get their first enterprise client and succeed?
Ledge:
The key area is going to be finance, which is to say, do I have enough cash to cover the difference between when I’m going to get paid and when I’m going to do the work?
So let’s say enterprises have, at best, net 45 payment terms. So, where you’re normally used to collecting that money up front to pay the people to do the work, you need to have enough money in the bank to cover the difference between those amounts. So that’s the biggest thing. It’s almost always a cash flow problem that’s the biggest issue.
Then you have a personnel and capacity problem. Am I adequately staffed right now to deliver to the clients that I have and our new enterprise client? Enterprise clients are more demanding and need hand-holding. They want regular updates, they need reports, and they need constant communication. They’re paying you a lot of money because they want your attention.
So all those processes you have built that allow you to deliver a productized service to a small business, they very often won’t follow those systems because they want their own sort of custom, handheld version.
Then you have a skill mismatch. Typically, the founder, who knows the business best, especially in B2B services, gets deeply involved in the sale to secure the enterprise client. Or the enterprise client wants the founder’s attention, which means the founder becomes more of a worker again than actually running the company, and takes their eyes off the strategic direction, cash flow management, operations, and all the things that make the rest of those clients work. So we have an attention deficit problem.
Krista: That sounds impossible. You’ve done a fantastic job of convincing me to never try this.
Ledge:
But you prepare. That’s the whole thing. You build the muscles and systems to serve this new business line before you jump in. It’s like entering any new market. You don’t just show up and hope it works.
At Add1Zero, my white-label sales company for agencies, we figured this out backwards. We sold so many big deals that we broke our clients. That’s how we learned there has to be a playbook for delivery … before you think about landing the deal.
Krista: Are there guidelines for how big that financial cushion should be?
Ledge:
Six months of fixed costs in the bank. Think: what if I didn’t get paid for six months? Would you be able to pay your team, overhead, all of that?
Krista: If your current team is working on current clients because you need that cash coming in…but you still need capacity to service a new enterprise client, what’s your recommendation for preparing for the team gap?
Ledge:
Way ahead of time, think: what if we needed to free up our three super badass anchor employees? I need somebody ready to step up in an organic fashion that doesn’t feel jarring to existing clients. You need to train second-tier people to run those accounts. Otherwise, clients will feel the attention drop and leave. You have to keep investing in those relationships.
Krista: So—bring in junior-level staff ahead of time and slowly train them to take over your SMB clients?
Ledge:
Yeah. Some people need to stay as small-client handlers. Others will run the enterprise-level ones. Typically, the enterprise lane runs parallel. You need enough staff to run two lanes.
Krista: In your experience, how long should the whole runway be to prepare your company before pitching enterprise clients?
Ledge:
Six to nine months.
I mean, maybe you’re wildly cash-flow positive and already have lots of savings built up… but a lot of times what happens with these businesses, the founders say, “Hey, we’re throwing off a lot of profit. This is cool. I’m going to take more money. I pay myself a really good salary.”
What’s really happening is you’re paying yourself in excess of what maybe you should be, instead of banking that money to invest in the future growth of the business to handle that next-level-size client.
It’s almost always the case that founders don’t bank the money along the way, which would allow them to take on an enterprise client. They take on a mortgage and a car loan that’s too big. So you get into a personal finance thing. A lot of founders of successful agency founders have what we call lifestyle inflation, because they took future growth capital off the table and gave it to themselves.
Once you start doing that, it’s very hard to stop, because you already took on the infrastructure of: I have a mortgage, I have all these expenses. You started acting like you weren’t planning to invest in growing the business—you were planning to treat it like a lifestyle business.
Krista: It sounds like some founders might be looking at a pay cut, then. If you take a pay cut to prepare, does it pay off?
Ledge:
Yes. When you start getting those clients that are paying you ten times as much—once you win one, they start falling like dominoes. When we booked Meta, the next year we booked ten more.
But when the big ones pay you, don’t take all that money home right away either. Invest in growing the business.
Krista: Got it. But you still have to want that. You have to be ambitious and not content with a lifestyle business.
Ledge:
Exactly. Maybe you have a really nice $250,000–$300,000 lifestyle business. You could be a million-dollar business, but it’s an order-of-magnitude leap in all these things. Are you sure you want that?
But if you want to sell the business someday, then let’s build it in a profitable way and maybe look to pursue enterprise clients. But there’s no free lunch. One way or another, you’re paying for this.
Krista: Let’s end with this: What are clear-cut signs someone is not ready for enterprise deals?
Ledge:
The quickest: look at cash in the bank. If you don’t have six months of fixed costs saved up, or anywhere close, and you’re running month to month on payroll, I’d be very suspect.
Then headcount—if your team is already fully utilized, who’s doing the enterprise work?
And founder capacity—are you ready to get dragged in? Do you actually want to do this? Because you’re going to get pulled into the weeds at the beginning.
***
Ledge has an “Enterprise Readiness” checklist that walks you through prepping key areas of your business to secure and scale with enterprise clients — grab it for free, here.
And if you’re already serious about pursuing enterprise clients, his course on this very thing is worth exploring.
xoxo, your favorite website freak,
Krista
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