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Competing on a National Scale

What to consider before you do business with large corporations

Q: Before your company grew to have a national presence, how were you able to successfully persuade large corporations that your offering was competitive with larger, national competitors? Some companies tend to relegate companies like ours to the "minority subcontractor" category.

A: As we all move toward becoming bigger businesses, we must first accept the need to add technology so that our partners, customers and sometimes even our employees can gain easy access to our services.

To compete with big companies, we have to be where companies need us to be, when they need us. That doesn't necessarily mean having hundreds of offices, but it does mean implementing the technology so you can have a virtual presence anywhere worldwide. Many large corporations demand this sort of technology from their suppliers. In fact, they may even require you to implement Virtual Private Network (VPN) technology, to participate in an e-marketplace or to comply with their own technology platform so that you can communicate electronically with them on their own terms. Is it worth it to implement technology and change how you do business just to accommodate one or two clients? If those few clients represent most of your business, then the answer is yes. The first step toward growth then is to have the technological capabilities that your larger customers will require of you, or at have least the willingness to implement them when they become necessary.

The other major factor in growing to accommodate larger clients has little to do with technology. Oftentimes, business relationships with large clients are built on networking and face-to-face conversations. Get out of the office as much as possible. Join business groups and associations. Talk to existing clients. Some of them may have relationships with the larger companies you wish to target, and they may even be willing to facilitate an introduction.

But before seeking out relationships with larger corporate clients, you need to consider whether you really want to do business with them or not. It may seem obvious, but the decision to take on a large client must be carefully considered, and you must look at whether your business is ready at this time to address the unique problems and issues that will come up when dealing with this type of client. To be sure, having a few Fortune 500 clients in your stable does bring advantages. But also be aware that your margin will become much lower with these clients. Larger corporations want to leverage their size to get the best pricing possible. Besides offering them pricing based on razor-thin profit margins, you may also have to implement specific technology just for the purpose of doing business with this one client, often at your own expense. You may need to hire extra staff, and you may even need to send staff members to the client site for an extended period of time.

In positioning myself to handle larger contracts, I also tried to surround myself with knowledgeable and well-connected individuals as much as possible. Building a business is not a sole effort, and it takes a team of dedicated people who share your vision. I've grown my company with the help of four family members who had already been in the business world, so they understood how these large corporations work. Having this help and insight was of tremendous value to me, and it would have taken me much longer to achieve my goals had they not been there for me.

Janice Bryant Howroyd is founder, chairman and CEO of Torrance, California-based ACT-1 Group, the largest woman minority-owned employment agency in the United States, with more than 70 offices, 300 full-time employees, 65,000 temporary "stars" and annual revenues exceeding $500 million. Founded in 1978 around Howroyd's personal philosophy of "Keeping the Humanity in Human Resources," ACT-1 is today a multidivision conglomerate serving such clients as Ford Motor Co., Gap Inc. and Sempra Energy and meeting demands for well-educated and well-trained temporary, full-time and contract employees. She has twice been honored by the Star Group as one of 50 Leading Woman Entrepreneurs of the World.


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.

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