Watch any business reality show and you'll notice one question almost always comes up: Does the pitching business have a product or service that is scalable and a regional or national customer they can take the product to?
This process of one business selling to another, or business-to-business, can be a game-changer for small businesses. In fact, developing a business-to-business strategy can be critical for any business looking to scale and grow. Unfortunately, for many small businesses, the thought of doing business with a large customer can be intimidating, sometimes leading them to think, “We don't want to get too big." However, the truth is, you often can stay as small as you're comfortable with—or grow as large as you want—with the right strategy.
As a small-business development strategist, I believe every business should have a business-to-business strategy, if appropriate. One of the most obvious benefits is that it allows small businesses to gain consistency in their receivables. Another significant advantage is the ability to leverage this relationship to the smaller business's advantage. Whether trying to acquire working capital through loans or venture funding, or trying to secure new business customers, having an established relationship with a large business can demonstrate that the small business is fit and sound, with sufficient processes in place.
One of the tools small and diverse businesses can use to develop this strategy is supplier diversity programs. Within a larger organization, the mission of these programs is to increase the pool of small and diverse businesses available to do work with. This is achieved by finding small and minority-, women- and veteran-owned businesses that can supply many of the goods and services needed to operate. Today, most corporations, higher-education institutions and, of course, the federal government, have programs specifically designed to increase their utilization of and spend with small and diverse businesses. Many of these organizations want to ensure their business partners are reflective of the communities in which they operate. These organizations understand that it is no longer just a “nice thing to do" but a business imperative and integral to their own competitive advantage.
Here are some ways to start utilizing these programs, in an effort to scale and grow:
1. Leverage your status.
Businesses must fall into a specific business enterprise classification, such as minority (MBE), small (SBE), woman (WBE), veteran, etc. Determining the classification that best suits your business and learning the priorities for the organization can help you identify the best classification for your business. Also, becoming “certified," usually through a third-party certifying organization, confirms that your business falls into one of the designated classifications and that you are the majority owner of the company. This can further make your business desirable, as many programs hold themselves accountable and report how much they spend with small and diverse businesses.
2. Start small.
Until your business builds capacity—the professional ability and expertise, infrastructure and financial stability, to adequately support contract terms—it is best to start on small contracts so that the organization can build a level of trust and rapport with you. Once a history of satisfactory performance has been established, it can become easier for key decision makers and influencers to advocate for your business, allowing you to be considered for progressively bigger contract opportunities.
3. Engage in the program and events.
Most supplier diversity programs offer numerous opportunities to connect and engage with key people within the organization. Organizations do business with those that they know, like and trust. In order to build relationships, small businesses should actively engage in the programs, attend events and use available resources. Often, this will provide your firm with opportunities to get valuable one-on-one time to communicate the full breadth and expertise of your business, making it easier for them to advocate on your behalf. Some programs even offer free opportunities for small businesses to sharpen skillsets and build business acumen through workshops and networking events.
4. Learn what, how and who.
With any potential customer, in order to service them effectively, you should understand what they buy, how they buy and who the correct people are to engage. Depending on the complexity of the organization, there can be several touchpoints for entry, including subcontract or second-tier opportunities, where you contract to perform work for another company, or prime contractor, that has a direct contract with the organization. These are great stepping stones and provide an excellent (and faster) opening to build capacity, absorb how to do business with a large organization and get a contract.
As with any business strategy, making a large, complex organization your customer does not happen overnight. Truthfully, it takes significant time and investment of resources to build relationships and demonstrate you can perform on a large contract. If you think this strategy is right for your business, it should be researched carefully to fully understand if the risk (outlay of resources, time, etc.) for your business is, indeed, worth the potential reward. But the steps above can be a great start.