Major Leagues

Now that you're prepared to take on a subcontract or supplier contract, what's your next move? "First examine who your customer should be," Blue advises.

Setting your sights on big companies that sell to the government may be a smart move because these companies are required to meet federal goals for utilization of small, minority- and women-owned firms. But keep in mind that this does not mean they have to do business with you if your services or products are subpar. You also need to be sure your business can handle the large orders these firms make.

"Many of the companies approaching us are not [equipped] to deal with a Dupont or any of the Fortune 100, but they spend a large amount of resources trying to penetrate that market," says Blue. "Whereas, if they looked at one of our suppliers or even a couple of tiers below that, they might find a better match."

Thousands of smaller, privately held companies spend billions on purchasing each year. According to a 1996 survey of 3,000 members by the National Association of Purchasing Management, 54 percent said their purchasing dollars were between $1 million and $10 million, 23.9 percent spent $10 million to $25 million, 11.4 percent had purchasing dollars of $25 million to $50 million, and 10.4 percent pegged their budget at more than $50 million.

Selling to smaller entities requires understanding their businesses, stresses Rene Yates, materials manager at jewelry manufacturer B.A. Ballou & Co. Inc. and former president of the National Association of Purchasing Management. "[Suppliers and subcontractors] have to come to us and shown how they can add value to our process--and that's not just price," he says. "It's quality and even far beyond quality." Adding value means showing how your business can help reduce costs or streamline an administrative process.

Both large corporations and smaller firms want quality and consistency of products and services. They also need suppliers who are proactive and will take time to offer solutions to current or potential problems, says Yates.

How do you find companies to target? There is no one national organization dedicated to helping small firms navigate the waters of private-sector purchasing. However, individual chambers of commerce, Small Business Development Centers, and Service Corps of Retired Executives offices nationwide are good sources of local help.

In addition, the U.S. Department of Defense through its Defense Logistics Agency funds procurement assistance centers. While they primarily help entrepreneurs learn the ins and outs of selling to the government, these centers can also help you target the private sector. According to Morris Hudson at the Missouri Procurement Assistance Centers, assistance varies among states, but in general, entrepreneurs can get how-to counseling, client referrals and a directory of the names and contacts of all the prime contractors working with Uncle Sam.

The government also operates the computerized Procurement Automated Source System (PASS) registration program. This free online listing enables small firms to put their companies' names before corporations selling to the government.

This article was originally published in the January 1997 print edition of Entrepreneur with the headline: Major Leagues.