Successful serial entrepreneur that has conceived, developed, scaled, and ultimately sold four companies over the past 25+ years. I excel in refining business concepts, especially in the service sector, and designing go-to-market strategy for achieving rapid sales growth.
Being honest with a potential prospect is extremely important. My advice, having been in this scenario before, is to address their concerns head-on. If possible, structure your SLA to provide them with protections that will offer some assurance on your ability to execute to their satisfaction. Focus on what you are able to offer them as a big fish in a small pond and set yourself apart. If they choose someone else just because of your size, then agree to re-visit with them periodically so that they can track your progress and growth. Communication is everything, and lying or misrepresenting your size and capabilities should never be considered as an option.