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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