Posted by: DrAlanRae | March 3, 2009

Trading with larger companies

At a certain point in a company’s growth it has to stop playing at it and become a “proper” company. For growth companies that are planned from the outset, this is from day 1. For lifestyle businesses, however, it may take several years to get to this point.

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Then one day they may get the opportunity to trade with a larger organisation. Or they may decide that they need to secure a base load of business which can come from a larger player rather than continuing on knocking over small deals. This is likely to precipitate a “formality” crisis if the organisation is not prepared for it.

If we remember our model of how companies grow this is what we have come to call the dawn of formality transition which typically happens at the 5/6 employee level.

Because the truth of the matter is that larger organisations, particularly public sector ones will expect you to behave formally.

I had the good luck to work on the Supplier Development strand of the national e-procurement project or NePP (as Research Director) a few years ago. It became obvious that unless the business has someone at senior level that not only understands but likes doing process the business will not succeed at this game. There are lots of independent consultants around who are great at what they do but who are always saying- “oh I can’t be bothered to do tenders – it takes too long and they always have a preferred supplier.” While there is some truth in this there are ways round it. One is to become part of a gang which we’ll talk about later.

Another is to get someone on board if you haven’t already got one who likes doing process. Because if you haven’t you’ll go no further.

On the NePP we used to have a joke one question diagnostic as to a company’s capacity to play with the big boys. You were to look the MD squarely in the eye and ask “can you tell me what a KPI is and why it’s important”. If he didn’t know what a Key Performance Indicator was, you could be sure that it was game over.

Traditionally the company accountant fulfils this role – or in a smaller company, the office dragon. Office dragons can be set up to hold the boss to account – within certain limits. This can be particularly useful in dealing with a key crisis of growth – the first salesman. Better to get an office dragon to work with the boss/salesman over a 6 month period to pioneer a strict sales monitoring regime so that the suit when finally employed can be held to account than employ and endless series of “real” salesmen who need to be liked by the customer more than they need to get a result – but I repeat the message of “Telling it face to face”.

You can’t ignore this and hope that it will go away. If what you do is rare enough you can still get parachuted into a corporate and pick up a £100k contract on little more than a diagram and a handshake. However increasingly the private sector too is in the government supply chain. And government procurement is about implementing government policy as much as it is about placing orders. Hence the hoops.

Anyone registering for anything these days needs, for instance a sustainability policy. This conflates a number of ideas of what constitutes the good. So you will no longer get away with recycling toner cartridges, using low energy light bulbs and taking public transport wherever possible. You also need to have policies about making sure that your own suppliers behave themselves – and to spell out how you monitor them. If you want to know the full extent of the what you’re in for you could do worse than look at the Olympic supplier site http://www.competefor.com

You need to be able to demonstrate that you’re aware of your Carbon Footprint and are actually taking concrete steps towards doing something about it. This is on top of all the usual elf and safety, equal ops and various accreditations that you need to display to operate in this space.

This will force you to get organised and is probably a good thing for the future survival of the company.

You really can’t hack this unless your IT systems are up to scratch. You need to have all your evidence of policies, accreditations, financial stability and sales arguments all together in one place where they can easily be deployed. You have to write the bid in the right language and focus on what’s actually asked for. And you have to remember that monitoring the way its delivered and providing for KPI audit is actually more important in the eyes of the procurer than the content of what you offer.

I’ve won a few bids in my time but I’m still not good at it. I’m just too interested in what will be actually delivered and what it will do for the ultimate beneficiary to play this game well. But we get by.

Just remember it’s not going to go away anytime soon. In our Abandoned Heroes research project, we found that compliance with the demands of government and suppliers was the biggest driver for IT installation and upgrade in small companies. When even a Sandwich Maker employing 6 part time staff has to demonstrate complete food traceability under the regulations you can see the need for system. And as for what we have to do for the Soil Association…………..Even the manure has to be certified!

 

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Responses

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  2. Great post I really enjoyed it and will be coming back shortly and linking back to your site from mine.

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