The Most Overlooked Market for Small Business
Landing a fat, ongoing contract can be a small business owner's ticket to financial security. But many companies don't want to go through the red tape of becoming a government contractor.
That's OK, because there's another kind of big contract -- the kind you get from a Fortune 1000 company.
Contracting with big businesses is probably one of the most overlooked opportunities in small business. Four in ten small business owners view other small and medium-sized businesses as opportunities to win contracts -- but only one in ten saw big businesses as a possible customer, according to American Express small business survey data.
Fortunately, there's a new online tool that's designed to help entrepreneurs make that big-biz sale.
Ariba Discovery is a business matching service offered by software vendor Ariba. The site's been in beta and recently officially launched. Last year, AmEx reported the site saw 15,000 small-business sellers conduct over $1 billion in business with big firms like Home Depot, Nestle, Office Depot and Tupperware. Half the Global 2000 are signed up. The secret sauce here is that much of the Fortune 1000 already use Ariba's procurement software, so, for these businesses, it's a familiar name.
The upside for small business owners is Ariba Discovery is free. The downside: It's a marketplace atmosphere where competing bids will be weighed and the lowest bidder often gets chosen. The site brags that the average sale represents a 15 percent cost savings to the big-company buyer. So beware of driving your price down until the sale no longer makes financial sense.
The new site's model is fairly similar to that of global-trade portal Alibaba, which has been around since 1999. Ariba seems to have more of a U.S. flavor to it on the buyer side. But both sites provide an alternative channel for accessing major companies and making your pitch.
American Express Partnerships and Business Development Vice President Rob Ganjon says AmEx a site sponsor, as well as a buyer on Ariba Discovery. He likes how the online platform lets the company broaden its vendor pool. In the past, he notes, only existing vendors would see AmEx's requests for bid.
"On this platform, any supplier can bid," he says. "That's where we saw tremendous opportunity, to demystify and streamline this process and involve more small businesses."
It can be a daunting to penetrate the maze at a major corporation the old-fashioned way -- on the phone, at trade shows or on email -- and find the right decision maker for your product or service. You can also waste a lot of time standing around at open-bid days -- trying to introduce yourself to corporate buyers. Online platforms make the process simpler, but the bidding more competitive. So, each business owner will have to decide on their best method for selling major companies.
Will you sell to a big corporation this year? Leave a comment and tell us what type of customer you're targeting.