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Does Size Really Matter?

Does size really matter? Yep, the question is “does the size of your company really matter regarding getting contracts with the big boys”? The short answer is “yes”. The longer answer is “maybe”, if you're talking about the six, seven, eight, nine, ten figure contracts. If it's a large  manufacturing plant for example, you might be able to get that larger contract servicing one location, but more than likely for these types of contracts with the big boys, you're going to be covering multiple sites, multiple locations, multiple business units, and so you have the issue of what is reasonable for your company to handle. Ask yourself “would they give a $10 million contract to a company that only has one, two or three employees”? What if they thought you could ramp up and service the contract? Maybe, but more than likely that's going to be a push. You'd have to work really hard to convince them that you could handle the job with only a staff of three - even though the size of the staff may have nothing to do with your ability to perform.

The perception of how large your organization is sales-wise does matter. It speaks to what types of systems and processes you have in place.  It infers your sophistication around billing, and addressing customer service issues. It speaks to - if you have to be in two or three places at once - what's your organizational capacity to do that? So yes, size matters on five figure contracts, six figure contracts, etc. In smaller cases, maybe not so much. If you have less than five people in your business, you might be able to service a contract - assuming it's not a consultancy where you really and truly are doing a diagnostic location by location
Your business will forever be at risk If you only have one contract with a large corporation. If they drop you, you're done, and you don’t have the bandwidth to service two or three $500,000 contracts with a large corporation. There's just not enough of you. You're actually going to have to hire at about $250,000, but the five and six figure contracts are possible with a small company. If you get a hundred thousand dollar contract, a $500,000 contract, even a $50,000 contract, you want to be able to prove that you can do it again,  and again and again, in which case you end up building out the capability to handle larger and larger and larger business.

Now that you have that as a backdrop, let me  tell you a story, a real life story of something that I went through. I started out with my electrical wholesale business; my utility pole line hardware. If you look at a utility  pole - pick any city anywhere in the world that has electricity - there are as many as 5,000 different items that can be on that pole. And there's an industry surrounding this. In the U S that industry is easily a five-to-fifteen billion dollar industry. Who knew? And I'd gotten into that industry and I knew I wasn't going to go after the big contracts with the local utility companies just yet. I had to really and truly get my feet wet; get some things going; establish myself in the market and build up to going after the big boys.

That is what I was thinking when I first got started, and so I was looking to bite off a smaller piece of business where I knew I could be successful. I knew that within every refinery and chemical plant they spent somewhere between a hundred to $200,000 per year doing utility work. It wasn't their main activity. They hadn't really focused on it as a major opportunity because it's just something they absolutely had to have. It wasn't an activity that really drove their top line. I thought, “this is a great carve-out for a diverse business and/or a minority business owner”.
One day I was at a business council meeting conversing with a friend of mine. I was on a committee with her and I said, “hey, I'd like to actually come in and talk with you about a business opportunity. And she goes, ”okay, Randall, what do you have?” I responded “well, I want to come in and talk with you about providing utility pole line hardware for your refineries and oil fields. She looks at me and she says, “Randall, if you're honest with yourself, you'll realize you're not big enough to do business with us.” I was so taken aback. I was hurt - truth be told -  because I was thinking,”Whoa, you know who I am, you know my background. You know that I know procurement. I'm here teaching about strategic alliances and you know what I'm capable of doing. Why, why would you tell me something like that”?
I went home that night and I started thinking about what she was really telling me. Was she actually telling me that I was too small, or was she actually telling me that - based on everything that she knew about my business - the perception that she had was that I was a really, really small company that was asking for an opportunity that I hadn't demonstrated to her that I could handle. After I thought about it, I realized she was right. I really hadn't had a chance to talk with her about my capabilities; what all we could do; why I was comfortable asking her for the business; and representing to her what I thought we could do across the country at all of her locations. Was she telling me I'm not big enough? Was she telling me wait your turn? Was she telling me, you know, all of these things that had been programmed into me - that happens to diverse suppliers - and the reasons why we hadn't been able to get where we thought we should have been.

This wasn't 30 years ago when 70% of the reason why we didn't get opportunities is because we were black or women or Mexican or Asian or whatever. This was much later - in 2005. A number of minority and women businesses were getting contracts. What's, what's wrong with my company? Why can't I get one? And so I really and truly had to go all the way back to my archives as a buyer and back to my archives as a seller and kind of think through what I did wrong in that transaction. After carefully analyzing  our conversation, I realized that what I did wrong was I hadn't done my homework. I hadn't made clear to her that I was ready to perform at that level that I was talking with her about.

There was nothing about my pitch that had differentiated my company from any other company, and a lot of the companies that she spoke with really and truly just weren't ready. In this case, not ready meant they hadn't provided credible proof to her or anyone in her network that they could perform; that they could handle the work; that they could meet and exceed expectations. Oftentimes the issue of size is are you a one, two, three, four, five person shop trying to go after the super big contracts. If that's the case, you're going to have to come up with another solution.

It's going to be difficult - extremely difficult - to get the super big contracts with a shop that small. It can happen, but it is rare. You can bet your company's future on it. The bigger challenge then becomes, well, what do you need to do? If a large portion of the money is concentrated to the bigger, bigger dollars, but my company isn't quite ready to play at that level, what do I do?
That's when you need a Business Partner Bueprint, which helps you learn how to effectively work with other companies by creating Strategic Alliances to meet the complex demands of larger corporations. It's not that hard, not that difficult. It is the secret that no one's telling you, but it's something that you need to figure out and you need to learn. Yes, size matters, but size is a solvable problem and not only is it a solvable problem, it's a solvable problem that you should keep in your tool kit from this day forward in your business. Strategic Alliances can effectively solve the size issue.
When you start seeing that you're in a market that's quickly changing and you are losing market share, you need to be able to figure out how to quickly adjust. How do you quickly seize upon opportunities to go into new markets or new geographies - especially when you start looking at international and global business. In this case, under the category of does size matter, I want you to actually spend some more time thinking about “if I'm honest with myself, if I'm practical, if I'm realistic, how much business can I really and truly take on”? And what provisions do I have in place where - if I land a big fish - I'm comfortable that I can handle it with more than just a hope and a prayer.

That'll get you a long ways, but you're going to actually need to have some operational efficiency and proficiency behind you. So how do you add that to that hope and prayer? What I want to encourage you with is that this is a solvable problem. It speaks to the long-term viability of your business - the legacy portion of your business. I mentioned to you that you're going to need a business partner blueprint to handle this specific issue, and with that business partner blueprint, you will actually start setting yourself up for a legacy business.

It is possible that you could say, “Hey, really and truly, I don't want a big organization. What I really want is a good 150, 250, $300,000 a year business, where it's me and maybe an admin or a clerk or something like that”. I want to design the business around that. You can do that as well in the corporate space. You just have to understand that when you do that,  there are going to be good and bad years. And when you come across one of those bad years - where the management team swaps out and your opportunity dries up - hopefully you've saved enough to withstand that downturn and you have a good Rolodex that you can bring in another client quickly.

Corporations really and truly are looking for people who can grow with them. So, most of them have the grow or die model. We're seeing this happen with Sears right now in the corporate world. If you're not growing, you're dying, so all of them are looking at how to increase sales. Whatever market says, you know, whether it's 2%, 3%, 5%, 10%, 20%, whatever it is, year over year, that's just the way that organism works. It's been working that way since the beginning of time. It should be the way that your company works. If you're a for-profit business and you're not growing, you're dying. You start withering, and as you wither, you die. You get left behind. We see this with Sears and Montgomery Wards. As a matter of fact, General Motors had to get rid of the Pontiac and Oldsmobile to improve their bottom line. We see this in so many different markets where things just disappear. Consequently, if you have a small business, but want to eventually do business with the large corporations, you must have a plan to continuously stay relevant and grow your business accordingly.

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