Alliances between small business and big business are forged as a matter of course. But often, the small business is unable to position itself as a strategic partner of big business. This usually results in the big business taking advantage of the small business.
Drawing from the experiences and feedback shared by AIM’s master entrepreneurs, we note that they have successfully positioned themselves as strategic partners of big businesses, not merely as suppliers or contractors. They have become the strategic partners of big business by going B2B or back to basics.
Let me walk you through a typical mentoring session for entrepreneurs doing business with big business at our Asian Center for Entrepreneurship. The objective is to guide entrepreneurs in discovering strategies that would make their small businesses strategic partners of their customers, which happens to be big businesses.
The following are the B2B or back to basics questions we pose to the master entrepreneurs: 1) Who are your customer’s customers? 2) What are the needs and wants of your customer’s customers? 3) How does your product and/or service make a difference in your customer’s ability to satisfy its customers?
The entrepreneur must be able to show the big business customer that his/her product and/or service is critically and strategically significant to the customer’s ability to, in turn, satisfy its customers.
For example, a master entrepreneur who supplies labels has shown his big business clients that his product and process innovations are the bases of their own competitiveness. Spending time to understand the needs of both his big business customers and their own customers, he has come up with information on how his clients’ customers use the labels as well as the best fonts and colors to use.
Of course, what is best is defined by how the big businesses’ customers want it. The knowledge has then been used for products innovations that has made the products of the big businesses more appealing to their respective customers.
This master entrepreneur has further used his knowledge of the big businesses’ customers to determine which elements of his labels are inconsequential and can be removed. This has lowered the cost of production and, consequently, the selling price to the big business.
This master entrepreneur has, thus, transformed his b2B relationship from that of a simple supplier to a strategic partner for competitiveness.
Another master entrepreneur – a supplier of generic chemicals to big businesses – has replicated this transformation, using a different formula. Instead of understanding the needs and wants of the customers of his big business clients, however, he looked at how the chemical process and the inputs of his clients contribute to the competitiveness of his clients’ products.
Because of what he learned, the master entrepreneur has been able to advise his clients on other generic chemicals available in the global market that could enhance their competitiveness. His knowledge of the global supply trends and his clients’ basis for competitiveness has made him a strategic partner for competitiveness of his big business clients.
Another budding entrepreneur has asked for advice on his venture. A technical person in the field of agronomy, he is in the business of maintaining big gardens. His markets are golf courses, parks, memorial parks, botanical gardens and farms. He is a small business dealing with big business. This budding entrepreneur and his two partners are technically competent but, just the same, I advised them to apply the three questions earlier mentioned.
The results? First, they found out that their big business clients’ needs and wants vary and, therefore, require a different technical response. Second, they also found out that their big business clients’ needs and wants are determined by their respective customers. In the case of golf courses, the desired quality of the playing field is determined by the character of the membership or owners of the course. The golf course managers want to satisfy the needs of the owner. If the golf course is maintained and pleased the players, the golf course managers will be happy.
Because of this discussion, the budding entrepreneur and his partners try to understand not only each of their big business customers but also the needs and wants of those whom the big businesses want to satisfy. They have now become the strategic partners of the golf course managers in ensuring the satisfaction of the golfers. If they further apply the same process to every client relationship, they will end up becoming the strategic partners of all their big business clients.
When small business becomes a strategic partner of big business, then the relationship is truly B2B, not b2B. However, graduating from b2B to B2B requires another B2B – back to basics – and entrepreneurial artistry.
(Alejandrino Ferreria is the associate dean of the Asian Center for Entrepreneurship of the Asian Institute of Management. For further comments and inquiries, you may contact him at: ace@aim.edu.ph
Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at http//: www.aim.edu.ph).