For years, small business owners and managers have struggled to get on the radar of big organisations. The objective, of course, is to bag that big company as a customer, so why is it so hard to achieve, asks business mentor Bronwyn Reid.
Why put in so much effort?
Because the rewards can be substantial. Having a big ‘name’ as a customer confers great credibility. Marketing types call this ‘social proof‘. If a big and well-known company is happy to buy from a particular small or medium-sized business, the supplier must be good.
I couldn’t even estimate the number of times I have seen one first big-name contract lead to another, and another, and then another. It is also well-known that having big and small businesses trading together is equivalent to an economic vitamin shot. This is particularly so in Australia’s vast regional areas.
So why doesn’t it happen more often?
There are three primary reasons:
- Big companies have a whole raft of prerequisites that must be implemented before they deal with you.
- Cost and time. Implementing all the prerequisites is a time-consuming and costly exercise.
- As mentioned, most small and medium businesses struggle to get on the radar of large corporations and be visible.
The funny thing is that the big companies they are trying to attract cite the same three problems – but from their point of view.
- Small companies just don’t understand how supply chains work. They don’t understand the concept of risk and why big companies vet their suppliers thoroughly.
- Small businesses don’t have good enough systems that will allow them to reliably deliver a consistent, quality product.
- Big businesses and governments have strict procurement procedures and protocols, and can be restricted in who and what kind of businesses they can purchase from.
The end result
The result of this is effectively a stand-off. But unfortunately, it’s an uneven stand-off. The power between big and small companies is decidedly on the big side.
I found this when I first started researching the topic for my first book Small Company, Big Business. Everything I found – from short brochures to academic articles – was written from the big company point of view.
The underlying tone of all this material was this:
‘SMEs just aren’t up to the task of supplying big companies. They need to lift their game and get skilled up. Until then, we won’t engage them, unless we really have to.’
Small Company, Big Business was published in 2017. Since then, I have had a lot of time to talk with business owners and managers, observe business relationships from the sidelines, and present my findings in keynotes, articles and workshops.
My conclusion is that it’s not all our fault!
Yes, some small to medium-sized businesses in Australia need to make changes to be a part of our major supply chains. But there are thousands upon thousands that have. I have myself been a part of many successful projects, workshops, presentations and funding initiatives … with that exact goal. (I’m happy to talk about the best of the best of these if anyone wants to know).
I have concluded that the disconnect is not all our fault. Big organisations need to play their part as well. Complex procurement procedures, built for multi-million-dollar projects, are applied equally to small and medium businesses seeking much lower value (and much lower impact) projects. For example, does the supplier of coffee cups really need $10 million Professional Indemnity insurance?
I could provide many more examples of unnecessary, big-company obstacles to productive commerce between big and small. For the moment, though, I merely want to throw that thought out into the business universe.
Whose fault is it that we can’t do this better?
This post first appeared on https://www.kochiesbusinessbuilders.com.au on July 6, 2023.