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This is the third episode in our “Pathway to Success” series.  Pathway to Success is about helping you to discover the small business growth opportunity with the biggest companies in the world. I am covering topics like corporate contracts versus government contracts; how to use corporate contracts for legacy business growth; why the time is now for small business owners to get into this game; and how to go about financing your small business so that you can play to win.

I want you to think about something for a second. I want you to think about gifts that keep on giving. Have you heard that phrase? “It's the gift that keeps on giving.” In the current climate it is often said about politicians as certain politicians have a knack for putting their foot in their mouth. In those cases, their political opponents say that it is “the gift that just keeps on giving”. Every time politicians make a faux pas, they create political advantage for their opponents.

Similarly, if you're in business, you'll oftentimes hear people say some companies just have the knack for picking the wrong markets. So, whatever those companies do, their competitors will do something else. That's the gift that keeps on giving. A couple of other examples of gifts that keep on giving are pocket camcorders, pocket cameras etc. because you can record a moment and you can relive that memory every time you see it with just that investment in that pocket camcorder or camera. Another gift that keeps on giving: how-to books. Think about this for a second. A how-to book can teach you a new skill or way of doing things which, for that small investment, can be a gift that gives back 10-fold every time you apply that learning. If you're trying to build a legacy, then what would happen if you got into a market where it turned out to be a gift that just keeps on giving.

Many business owners don't think about corporate contracting that way, but when you have the right mindset and you know how to go about it, then that's exactly what it is -- it's the gift that keeps on giving - unlike government contracting where there are set asides and you're competing against other small or diverse businesses and you may not graduate to the bigger contracts.

If every few years your government contract is put out to bid and you don't have the lowest price, or it turns out that you decide that the one level of government is no longer an opportunity for you, then you're starting from scratch going to the next government -- whether it's local or city or in a different state or jurisdiction.

Corporate contracting is the gift that keeps on giving in several different ways. The first thing is once you get in, they have a vested interest in keeping you there. If you continue to demonstrate that you know how to show value, there's a good chance you're going to have that contract for years upon years. I’m primarily talking about three-year, five-year contracts, because it's critical that corporations have predictability and stability in their supply chain. They do everything they can to make sure that the companies they have in their supply chain continue to add value. This level of sustained vendor performance means the least amount of disruption to the company’s operations. Disruption is the enemy to the corporate supply chain. So, when they have great suppliers, they want to keep them -- but you have to know it's not a giveaway. You must earn your spot. You must make sure that you're adding value. Once you get in, they're going to give you additional opportunities, because it's easier to give business to an existing supplier than it is to bring in a new supplier.

You must be smart about which opportunities you take, but they will offer you additional opportunities. So right there if you can get in and demonstrate value, there's a good chance it's going to be a contract that helps you to build significant size and profitability once done right. There are some companies out there who still have suppliers who have been with them since day one -- and these are companies that have been around for 50 years, a hundred years.

As a matter of fact, some of those suppliers grew with them, and the corporate client and the supplier are now both in the Fortune 500 list of companies. It's not by accident that some of these companies have grown with their clients. Pick a corporation – HP, Dell, IBM etc. and if you see that their tier-one supplier is in the Fortune 500 (tier one meaning the first-tier supplier to a Fortune 100), there's a good chance that that supplier has had longstanding contracts with them, and they all grew together.

You will frequently hear me say “A big business is nothing more than a small business that did a lot of things right.” Most all of them at some point started out a small business, so there's absolutely nothing for you to fear. This is a great, great market for you to get into.

Let me tell you another way that this is a gift that just keeps on giving. Once you know how to successfully sell your product and service into one of the big boys, it's easy for you to go and sell it to another one, because now you've got a case study that talks about what you did and the value that it brings. Now, each company is different. They have unique supply chains and they may have a cost advantage from the way they go about buying goods and services.

They don't really want their competitors to know but once again, because you know what you're doing, it's easy enough to adapt what you're doing to the next company’s systems. There is a lot more similarity in these systems than a lot of the big companies would care to admit. Once you get a contract with the first one, you will have plenty of opportunities to get additional business. Not only will you have the opportunity to do that, you can take the same product and service and, with just a slight modification, offer it to a company in the exact same industry.

Additionally, you will have the opportunity to sell it across industries. A huge marketing and business development strategy is to look at different industry segments -- health care, oil and gas, energy, automotive, banking, consumer durables, technology, farming, agriculture and then focus on one industry first because a lot of the sales and marketing language is going to be the same to all of the Fortune 500 in that industry. You know what their plan is -- you know how they go about assessing value. You've proven that you can do it with one, so it’s highly probable you can do it with the next one. Just take one industry segment at a time and then once you feel like you've got a decent market share for that industry, then go to the next industry and do it all over again; and then go to the next industry and do it all over again. That works.

The final gift that keeps on giving in this space is that working with the top companies in the world is going to constantly change your business model and your products and services, so that you are always leading the pack. You will be able to create opportunities for your other customers and - if you do it right - at higher profitability because they probably won't buy in the same volume as your big corporate clients. They probably won't be as demanding, which means there is really and truly a good chance that you can sell at higher profit margins to those companies. For example, if somebody is buying 100,000 widgets from you and somebody else is buying a hundred widgets from you, you're probably going to lower the price on the 100,000 widgets but not on the hundred widgets.

Once you have a good book of business with a big corporation that's helping you to stay sharp, stay innovative, pushing you to the edge to deliver value, you can pass that along to your other customers. In which case, once again, it's the gift that keeps on giving and it's one of those things that builds legacy.

If you get past being a small business, and actually do become a medium size business or large business, then you now have put your mark on the world. You've left something that can take care of your family. The companies that you hope to work with are the ones that have a charity or a passion or a cause that they know can really and truly make a difference in the lives of their family members, their community, the globe, the environment.

Now we all can do that in some form or fashion in our everyday lives. We don't need legacy businesses to make that kind of difference. But if you have the gift and the desire to start a business and you can not only provide a living for you and your family, and jobs for the people that work for you, but you can set the business up where it's programmed and it's systematic that it provides funds for a charity and philanthropic work that you want to accomplish, think about the impact that you will have at that point. That's why corporate contracting is the number one way to build legacy for a small business owner. Corporate contracting is “the gift that keeps on giving”.


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