What Is a B2B Company?: B2B Business Model Ultimate Guide

Are you looking to start a B2B business?

We think that's a great idea! B2B businesses have been growing faster than ever, especially online businesses selling on a b2b ecommerce platform.

We can give you the tools and information you need to start your own on the right foot.

Read on to learn what is B2B, see some examples of how they work, and get advice on creating a business plan and proposal.

What Is B2B Business?

Business-to-business, or B2B, is a company that sells its products or services directly to another company. This is in contrast to the B2C model where they sell directly to individual consumers.

B2B Business Model

The B2B business model features the exchange of products and services between two or more businesses. These businesses include product manufacturers, wholesalers, distributors, retailers, and more.

Advantages of B2B Business Model

The B2B business model comes with a number of advantages that make it a worthwhile endeavor.

Here are just a few:

• Bigger order volume and value. B2B sales leads have consistently high value and orders are made in bulk. You can also use bulk shipping for them. This means you can make a large amount of revenue with far fewer sales than comparable direct to consumer brands.
• Repeat business. Once a B2B relationship is established, customers tend to reorder the same products regularly. That makes revenue more predictable and means B2B marketing can focus on winning and keeping accounts rather than constantly attracting new one-time buyers.
• Stronger relationships. It’s much easier to build lasting relationships with business consumers than with individual customers. You can grow your business with a much more selective group of clientele. A good way to find clients is by looking for businesses that work with hospitality software, a wholesale directory, or both.
• Streamlined business structure. Selling to businesses can be much simpler than selling to individuals. That’s because communication between businesses happens regularly and you don’t have to guess as to what they want.

Disadvantages of B2B Business Model

Though there are many benefits to the B2B business model, there are also a few drawbacks.

Here are five of them:

• Slow buying decisions. B2B consumers take a long time to make purchasing decisions. This is because multiple stakeholders are involved and sales often take a series of meetings and discussions to be approved.
• Limited market base. There are far more individual consumers in the world than businesses. That means you have fewer potential customers and the ones you do have are very important. If you lose even a single customer you can really hurt your bottom line.
• Inverted structure of power. In the B2B model, the power rests with the buyer. They can be demanding, drive changes in the sales process, and have very specific requirements that the business must meet to make the sale.
• Very competitive. Since the market is much smaller, competition is more fierce in the B2B model. You need to be ready to react to any marketing or discounts offered by your competitors. Providing superior service is a necessity.
• Difficulty forecasting. B2B demand is often concentrated in a few large customers, so gaining or losing a single account can swing demand sharply and make forecasting harder. That’s why regular physical counts of inventory and close communication with key accounts matter.

B2B Business Examples

There are a few different models for B2B businesses. To help clear things up, here are a couple of examples.

One model:

Let's say a farm raises chickens for their eggs. Each day they collect the eggs, clean them, and then sell them in bulk to local restaurants. These restaurants then cook and resell the eggs for a profit. Both parties profit from selling to their intended consumers.

Another model:

A regional food distributor buys proteins, produce, dairy, and dry goods from manufacturers and growers, stores them in its warehouse, and delivers them to restaurants several times a week. Both of its relationships are B2B: it buys from businesses and sells to businesses. Some distributors also sell through a B2B wholesale marketplace to reach new accounts.

B2B Business Plan Sample

A B2B business plan is a roadmap for the goals, funding, and strategies you intend to use. To build a business plan you need to ask yourself a number of questions and conduct research to determine the answer.

Questions like these:

• What is your purpose? The goal here is to come up with a firm statement as to why your business should exist. This will be the prime selling point to customers and investors.
• Is B2B the best choice? You should seriously compare B2B vs B2C models for your industry to determine which is right for you. Don't force a model that won't work.
• What value does your product/service bring? Your business should directly fix a problem or add additional value to your target consumers. If not, you'll have a hard time convincing businesses to start a relationship with you.
• What capital do you need to start? This is a vital question to ask, especially if you'll be seeking investments. You should err on the side of caution and plan for high starting costs and a lack of profits for the first year.
• How will you market the business? Marketing is more than just advertising. You need to know how you'll get your business in front of others if you plan to make sales. A good marketing plan can let you start growing your business from day one.

B2B Business Proposal Sample

After developing a business plan, the next step is to come up with a business proposal you'll share with prospective clients. If you answered all the questions above, you're in a great position to get started. There are many templates available online, but they essentially look like the outline below.

Here's what your B2B business proposal should look like:

1. Title page, cover letter, and table of contents. No proposal will even be looked at if you can't provide this simple set of pages. Make sure to include your company name and logo here.
2. Proposal summary. Give a quick synopsis as to why you've given them a proposal and why they should read it. Keep it short and save actual data for more important sections.
3. Statement of issue. Here you'll outline the perceived problem that the business has in your eyes. It could be a set of issues or even something they aren't aware of.
4. Business approach. Next, you will outline how your business can fix those problems.
5. Methodology. This section is the full strategy you'll use to fix the problem in detail. Timelines, numbers, and firm plans are paramount in getting the point across here.
6. Who you are. Outline why you are qualified to help them. Include past wins and testimonials if possible.
7. Costs. This section is the most important and likely the one that will make or break a deal. Include as much detail as possible and separate each service or product you are offering.
8. Terms. Finally, it's time for the legalese. A net 30 schedule and PCI-compliant B2B payments methods are a few factors that should be included here.

Business to Business B2B eCommerce Websites

B2B eCommerce websites are sites owned and operated by individual companies to sell their products or services to other businesses. These sites make B2B transactions with eCommerce credit card processing and are more streamlined than the traditional model. B2B business play a major role in eCommerce growth. They can be run on a company's owned headless eCommerce platform or through an online marketplace.

Business to Business B2B Wholesale Marketplaces

B2B wholesale marketplaces have become some of the largest and most profitable sales platforms in the world. These sites and apps allow businesses and individuals to increase their sales and reach markets that they could not otherwise. They're also a great way of knowing how to find vendors and how to buy wholesale products. Alibaba and Amazon Business are among the best-known B2B marketplaces.

Some marketplaces also let companies lower their inventory carrying cost by participating in dropshipping or kitting.

B2B Companies in the Food and Beverage Industry

Most of the food supply chain is B2B. Before a meal reaches a diner, it usually passes through several business-to-business sales: a grower or manufacturer sells to a distributor, and the distributor sells to a restaurant, café, hotel, or grocery store.

Common B2B companies in food and beverage include:

• Broadline distributors, which supply restaurants and institutions with thousands of products across every category.
• Specialty distributors focused on produce, meat, seafood, dairy, or other single categories.
• Coffee roasters that sell wholesale to cafés, restaurants, and offices.
• Commercial bakeries, which are both buyers and sellers — they buy flour, butter, and ingredients from distributors and supply bread and pastries to restaurants and cafés.
• Beverage distributors supplying bars, restaurants, and retailers.

B2B selling in food looks different from general wholesale. Customers reorder the same items every week, often on standing orders. Each account usually has negotiated pricing. Deliveries run on set routes and days, with order cutoffs. And most accounts pay on invoice terms rather than at the time of order.

That’s why more food distributors are moving their accounts from phone, text, and email orders to online ordering. BlueCart gives food distributors digital catalogs with customer-specific pricing, standing order management, route management, and BlueCart Pay for invoicing and payment collection. See how BlueCart’s B2B eCommerce works for food distributors.

Starting or Growing a B2B Business

The B2B business model is a tried-and-true form of commerce. These businesses continue to grow as more buying moves online. Armed with the information above, you're well on your way towards starting or growing your own B2B business. Make sure you know what is an LLC first and then get your eCommerce license if it applies so you have all your legal ducks in a row. You should also make sure to set measurable eCommerce KPIs, so you can continuously improve your business and increase eCommerce sales.

Frequently Asked Questions Related to What Is a B2B Company

As the B2B sector is vast and has multiple opportunities, there are many things you might be curious to learn about it. In the paragraphs above, we mentioned the advantages and disadvantages of B2B companies. Check out our answers to commonly asked questions regarding the business-to-business model

Can a Company be Both B2B and B2C?

Yes. Companies can offer their products and services to both other businesses and individual customers. For example, an accounting firm can work with corporate clients and people who need tax preparation services. 

Many companies successfully combine these two models. However, it’s important to understand the different needs and expectations of individual and business clients. That includes distinct marketing approaches, proper customer service, and a well-adapted team. If a company is both B2B and B2C, it’s more resilient to market shocks, it has higher revenue and profit potential, and an expanded market reach.

What Are the Different B2B Business Models?

Although the question ‘what is a B2B company’ can be easily answered, there are different B2B business models that such companies follow. Here are the main ones.

1. Product-based B2B companies focus on selling goods to other businesses. That includes primarily manufacturers and wholesale distributors.
2. Service-based B2B companies are the ones that offer marketing, consulting, finance, and other professional services to businesses.
3. The software as a service (SaaS) model has become increasingly popular. It includes providing cloud-based solutions like accounting software, an eCommerce platform, or wholesale management tools like BlueCart.
4. Franchising or licensing is another B2B model that includes a business selling the rights to operate under a specific brand name to other businesses.

What Is a B2G Company?

B2G stands for business-to-government companies. These businesses specialize in being suppliers or providing services to one or more government bodies. B2G is also known as B2PA (business-to-public-administration) and B2PS (business-to-public-sector). The growing role of local and national governments has led to a growing number of B2G companies. A lot of companies have a hybrid model that makes them both B2B and B2G.