Entrepreneurial

Big business pipeline for small business

September 14, 2010

CORRECTED: the Universal College Application was created by ApplicationsOnline LLC and not the NCAA as was previously stated.

With President Obama’s small business bill stalled in Congress, big business is trying to pick up the slack.

Six of America’s largest corporations – IBM, AT&T, Bank of America, Citigroup, Pfizer and UPS – have banded together to create a “one-stop shop” for small and mid-sized businesses looking to sell to them and take advantage of the nearly $150 billion awarded collectively in contracts each year.

“We figured the major way that large companies could affect growth in small or medium-sized enterprises is through our supply chain spending,” said Stanley Litow, IBM’s VP of Corporate Citizenship & Corporate Affairs, who started the process of developing a Web-based platform where small businesses could apply for contracts two months ago.

Litow said the website – Supplier Connection (www.supplier-connection.net) – won’t launch until next year, but the hope is it will streamline the application process in the same way the Universal College Application allows students to apply to multiple universities at once.

“It’s one-stop shopping,” said Litow, adding the service will be free to applying small businesses and the participating large corporations. “When a small business goes onto Supplier Connection they qualify or become a supplier for the six companies starting this. Hopefully over the longterm hundreds of large companies will come in with billions and billions of dollars worth of spending and make it easier for small businesses to jumpstart themselves.”

The project is backed up by a small study released last week by the New York-based Center for Urban Future that found very few small businesses are suppliers to the country’s largest companies and that helping increase that number would help boost overall economic growth.

“In many cases small businesses are turned off from even applying because of the daunting application process and how time consuming it is,” said Jonathan Bowles, Director of the Center for Urban Future, who added the study also found that small and mid-sized businesses that were able to secure contracts with a Fortune 500 company often doubled their revenues. “We think it (Supplier Connection) could have a real serious impact on small businesses and the economy overall.”

One such business is Thinkso Creative, a small New York marketing firm that caters to small businesses. Amanda Neville, a partner at Thinkso, said her 10-person firm landed a large client during its first year of operation that allowed it to stabilize cashflow and hire more staff.

“We know what a huge impact it can have,” said Neville, adding the process of getting your company on a supplier list can take a long time, especially when each company has a slightly different form to fill out.  Whereas if you have one standardized form it’s actually comforting to know that it has probably been vetted by all the companies that are using it and it gives it a more streamlined approach.”

Dick Griffin, a federal contracting expert who runs his own Arlington, Virginia-based consultancy firm The Griffin Method, said anything that helps small businesses get more access to large corporations is a positive, but it still doesn’t ensure a face-to-face meeting.

“This is going to be a great way for people to find other people to talk to and I think in that sense it’s very good, but it also is going to be a great way for large businesses to screen rapidly that 80 percent of those people they don’t want to talk to,” said Griffin, who added it would likely be a mixed blessing in that sense. “I work with lots of small businesses who try to get in to see those big companies all the time and getting through that filter at the gate is just tough and this might be one way to step around that barrier.”

Comments
2 comments so far | RSS Comments RSS

IBM, AT&T, Bank of America, Citigroup, Pfizer and UPS all need to be applauded for this effort. We need all entities that have a stake in the US economy to find innovative ways of nurturing our economy back to health and it will require us to work together. This is the kind of program that can make a difference.

Posted by ginchinchili | Report as abusive
 

This isn’t exactly a new idea. There are lots of industry-specific versions of this concept, such as in commercial printing. Many municipalities use similar procurement systems.

Before everyone gets all warm and fuzzy about how big business is going to save the economy keep in mind that it is a way for them to significantly reduce costs by awarding work to the lowest bidder. There’s always someone who will do something cheaper. That’s fine, but on a macro level it serves to lower the prevailing rate for work done across the economy.

Perhaps sometime in the not to distant future we can all look forward to doing $10 per hour piece work for mega corporations.

Posted by johnnyjr | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •