The $300 billion that the federal government spends every year on products and services is a very big number. But consider this: the revenue of the single largest U.S. corporation alone is over $350 billion. Together, America's large corporations spend trillions of dollars every year for raw materials, components, wholesale goods, and administrative products and services. In fact, they spend so much that indices of their purchasing activities, as published by the Institute for Supply Management, are used by policy makers and economists as indicators of the overall health of the economy.

While large companies make many of their purchases from other large companies, there are huge opportunities for smaller enterprises, too. Several trends are working in favor of smaller companies to get even more opportunity:

• Outsourcing. Big companies are constantly on the lookout for ways to streamline their operations and focus on their core competencies. The result is that many functions that used to be performed in-house are outsourced to contractors. Key functions such as employee benefits administration, warehousing, customer service, travel services, fleet management, legal services - even research and development, manufacturing, and marketing - are being put out for bid.
• Subcontracting. Large prime contractors on federal and state government projects are usually required to subcontract a significant portion of the work to small businesses, including disadvantaged, women-owned and veteran-owned businesses. The growing use of contract bundling, in which multiple requirements are combined into a single government contract, has generated many subcontracting opportunities for small businesses.
• Social responsibility. Many large businesses believe that being a good corporate citizen should involve efforts to award contracts to small businesses, women-owned businesses, and minority-owned businesses. These efforts include outreach and support initiatives, contracting goals, and MOUs with organizations representing these types of small companies.
• Total solutions. As technology and the economy become more complex, large businesses can gain a competitive advantage by promoting themselves as one-stop solution providers to their clients and customers. Often, this means the large business has to round out its offerings with niche products and services. The result: big companies will team with smaller companies with the right expertise so they can better serve its customers. These relationships can take the form of joint ventures, subcontracts, or outright purchases. In any case, they result in increased sales for small firms.

Subcontracting Opportunities with Prime Contractors

Subcontracting represents one of the best ways to obtain business from large firms because on most large federal and state prime contracts they are required to award subcontracts to small companies. Click here for a summary of these subcontracting requirements.

As a subcontractor, your business relationship is with the prime contractor, not the government. But keep in mind that many of the terms and conditions of the prime contract flow down to the subcontracts. It is the responsibility of the prime contractor to include these terms and conditions in the subcontract and monitor compliance.

Winning subcontracts depends in part on your ability to identify and pursue the bidding opportunities. Try using a three-pronged strategy by: (1) approaching the government agencies that award prime contracts, (2) contacting the large firms that get them, and (3) making it easy for them to find you.

1. Approach agencies that award prime contracts. Determine which government agencies are awarding large contracts that have subcontracting possibilities for your offerings. Search FedBizOpps.gov for current and historical procurement postings. Each agency with significant procurement responsibilities has small business specialists or an Office of Small and Disadvantaged Business Utilization (OSDBU). Contact these small business advocates and try to arrange an in-person meeting to describe your capabilities in detail. They can match your offerings with the subcontracting needs of their prime contractors, and - when they identify specific opportunities - they will refer you to the prime contractor. If there is a particular large company that you wish to subcontract to, ask an OSDBU officer for contact information for the Small Business Liaison Officer (SBLO) for that company.
2. Approach the prime contractors directly. Identify contractors that receive prime contracts with subcontracting possibilities for your offerings. FedBizOpps.gov is a good place to start, and the OSDBUs can also tell you who they are. You can find specific subcontracting opportunities by visiting SUB-Net, SBA's Subcontracting Network at http://web.sba.gov/subnet You should also keep up with happenings in your industry by reading trade publications, joining business associations, and attending trade shows and vendor fairs. Networking opportunities like these can lead directly to subcontracting opportunities because you can meet the people involved. Research the company by visiting its website to learn about its operations, needs, and potential points of contact. Try to find links to a corporate phone directory, business partner site, federal markets page, vendor information, small business liaison office, or similar-sounding resources. It might take some persistence to find the right part of the corporation's website because home pages are usually focused on the needs of customers rather than potential suppliers.
3. Make it easy for prime contractors to find you. Make sure you are registered in CCR. Prime contractors search this database when seeking potential subcontractors, particularly women, minorities, and HUBZone businesses. Large contractors also maintain their own databases of potential subcontractors. The OSDBU of the government agency awarding the subcontract can tell you how to get listed in these databases.

If yours is a woman- or minority-owned small business, join associations that represent businesses like yours. A major goal of most of these organizations is to promote diversity in government and corporate purchasing programs. They may publish a directory or database of small businesses meeting certain criteria, which prime contractors search to find potential subcontractors. Some associations that are particularly active in this regard are listed here. Also, there are several publications and websites that are useful to minority-owned firms seeking subcontracts. These include Setaside Alert (www.setasidealert.com), Minority Business News (www.mbnusa.biz), MBE Magazine (www.mbemag.com), and The Minority Business Network (www.mbnet.com).

Who Makes Purchasing Decisions in Large Corporations?

The rules governing purchasing in large corporations tend to be more flexible than they are for federal and state governments, with a considerable amount of authority delegated to division managers. Often, the decision to make a purchase and the decision from whom to purchase are made by the same individual or department, even if the paperwork is put through the purchasing division.

Because the inner workings of large companies are not transparent to outsiders, knowing how your product or service will be used can help you identify the best point of entry when marketing. Chances are your product or service falls into one of three categories:

• Business products and services. These are the things a business needs to do business, and include products and services in categories such as: office supplies and equipment; marketing and advertising; facilities (construction, maintenance, security and repair); human resources; general administrative and management; information technology; travel and transportation; and other products and services dealing with the ongoing operations of the corporation. Generally, these items are purchased at the level they serve. For example, landscaping is usually contracted for a single building, so the decision maker would likely be local. Financial planning and advertising, on the other hand, generally serve the entire corporation and would be headquarters functions.
• Raw materials and components. These are items that are physically incorporated into the corporation's products. Depending on the value, complexity and importance of the item, these may be purchased at the plant level or by headquarters purchasing.
• Goods purchased for resale by a retailer. Except for items of regional interest (such as products with a local sport team's logo), buying decisions for these items are almost always made by buyers at the headquarters level.

Even when you know how the corporation will be using your product or service, how do you find the right person in an organization with thousands or even tens of thousands of employees? The resources listed here are a good place to start; they can help you look in the right place, or may even have a specific contact. Here are some other tips for finding the right decision maker:

• Search the company's website for a company phone directory. These are often organized by division, and include titles and addresses.
• Network. Ask others in your industry whether they have a contact at the large corporation. If you belong to a trade association, find out whether anyone at the corporation is also member, or ask the association's staff for a contact. Your suppliers may also do work for large companies and could provide names. As a courtesy, always ask whether you can use the names of referrers when contacting others they recommend.
• Attend trade shows for your industry. Large corporations may send people from a variety of functions to a single trade show. If you are set up as a vendor, you'll have the opportunity to meet them (and perhaps even make a sale). Or try going to a trade show where corporations are the vendors. Often, the representatives are from sales and marketing, but just as often there are people from the technical side, too. Keep in mind that they are there to sell to you, but they usually won't mind helping you out with a name and phone number of somebody else in the organization you should talk with.
• Simply call the company's headquarters and tell the operator what you are seeking. The operator can probably direct you to a person who can help you.

Marketing and Selling to Large Corporations

Once you have identified good prospects within the organization, you can market to them in any number of proven ways:

• Direct mail
• Telephone
• Face-to-face sales call
• Advertising in carefully selected industry or professional publications
• Trade shows

Using two or more of these methods together may be more effective. For example, you may telephone a prospect to arrange a face-to-face meeting at a trade show you both will be attending.

You may find that marketing to prospects at large companies is not much different from selling to a smaller companies, but with a few key differences.

First, actually getting the opportunity to talk with decision makers is more difficult. They may be flooded with sales calls from other vendors, so just getting your foot in the door is an accomplishment. One recommended strategy is to make the first contact by mail, introducing yourself as a potential vendor and explaining why you believe your products or services will benefit the decision maker. Mention that you will be following up by phone at a specific date and time. When you call back, you might not get through to your target, but you are more likely to get a call back when you leave a message. If you cannot talk with the individual right away, ask the assistant when a better time would be. You could also make the initial contact by e-mail (with a link to your website). This makes it easy for the contact to either respond right away or forward the information to another person who may have a need.

Second, buyers from large corporations are much more concerned about your track record and background than small-company clients. Price tends to be less important than a proven record of reliability and the quality of your offerings. You may be asked for your personal qualifications and those of your staff, multiple references (which will be checked), how long you've been in business, specific technical aspects of your product or service, or your contingency plans in case of a natural disaster, materials shortage, or other complication. This is especially true for products or services that affect the corporation's ability to deliver on its obligations to its own customers.

While your reliability and quality are given great weight, obviously price is always a consideration - you do have to be competitive. Make sure the price is reasonable relative to the value you deliver, especially on products or services for which there are readily available competitors. Keep in mind also that corporate budgets are often subject to internal controls, performance targets, and audits. This is important to you because it is important to your buyers; their job performance will be evaluated in part based on how you perform. If you can convince them that you will make them look good or meet specific targets, your sales job will be much easier.

Another factor that may affect your ability to sell to a corporation is your compatibility with the corporation's supply chain management systems. Supply chain management encompasses the procedures and systems large companies use to coordinate and integrate all aspects of their value-added processes, with the goal of serving their customers needs as completely and efficiently as possible.

A key component of supply chain management is making sure that products from suppliers are available when, where and how they are needed and in the quantities that are needed. To accomplish this, many large companies require their suppliers to use information systems and procedures that allow for electronic data interchange (EDI) with the corporation. Some requirements this may place on you as a supplier include:

• Accepting orders and payments electronically
• Barcoding products according to the specifications of the customer. Barcoding requirements may apply to cartons or pallets, as well as to individual units.
• Packaging goods or shipments in the corporation's standard quantities that may be different from your normal practices
• Having the ability to provide real-time tracking of goods in transit and providing advance notice of estimated delivery times (not just dates)
• Being able to provide your inventory levels or expected availability dates electronically
• Being able to accept Level III purchase card payments (click here for more information)

Other issues that you should be prepared for, depending on your product or service, include:

• Business and professional licenses required in the state(s) where you will be performing the work
• Security clearances for key staff, particularly on subcontracts to the Department of Defense and intelligence agencies.
• Adequate insurance (usually a minimum of $1 million liability and/or professional liability)
• Bonding
• Confidentiality - many corporations require that you sign an agreement requiring you to maintain certain information as confidential
• Security - you may be required to institute specific security measures to protect property in your care, including confidential or secure information
• D-U-N-S number and (for federal subcontracts) CAGE code (click here for more information)
• Product certifications to ensure they apply to applicable environmental, safety and quality standards
• ISO certification. Issued by the International Organization for Standardization (ISO), the ISO 9000 Series Standards are comprehensive management guidelines to ensure product and service quality. Having ISO certification will greatly enhance your standing when marketing to large corporations. For more information, visit the ISO website at www.iso.org, or the website of the American National Standards Institute at www.ansi.org.

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