Making and enacting strategies is an art and skill. Strategy is also a major component on getting the most from a business and positioning the business to entities outside it. Business owners should be skilled in planning and doing strategies to make sure that every move they make will be beneficial for their businesses.
Like any business activity, procurement demands careful and well-thought strategies. A small business owner should know the steps they need to do to get the most out of the procurement practice. Although procurement is not a guaranteed form of profit or any of its other benefits, developing strategies for this activity can help in other areas of business management and even when dealing with third party companies or a business’ client base.
Participants in procurement are often small businesses or businesses owned by people who have certain disadvantages compared to the convention. These businesses are owned by women, disabled, ethnic minorities, veterans and other individuals who made the decision to become entrepreneurs and pursue procurement as a business strategy.
Two classifications of business owners have been doing a remarkable performance in their procurement efforts. While their latest improvement is comparable to their peers, this can be a sign of a growing and robust profit for small business owners. The entrepreneurs in issue are the women and minority-owned business owners. In general, every business owner has their own strategy but there is a rising trend and particular strategies shown by these groups of small business owner.
Business owned by ethnic minorities and women have gone successfully in area of procurement, according to the research conducted by the American Express OPEN. The data gathered was from 2008 – 2010, using information from small business contractors registered in the Central Contractor Registration and the Procurement Data System (FPDS). The respondents included 740 small business owners who are actively seeking federal procurement from various government agencies and performed contracts fo9r the government within the last five years. They played the role of either prime contractors or subcontractors in the government contracts that they won.
According to the research, minority business owners have one useful strategy: Investment. In this context, investment means that a company submits to a lot of prospective buyers. Majority of the minority-owned businesses in the research showed that the companies/owners cared a great deal and invest in their company and their procurement efforts. For these business owners, they allot 35% more investment to their procurement activities compared to other business owners. Fitting like the old adage, the more submissions that these minority business owners made, the higher chance they got in getting and winning contracts.
Investment can be a good strategy but it also carries risks. Investing or submitting to potential buyers can also be costly. Not every offer will be accepted and every buyer has to be approached in a unique way. A small business will have to invest not just money but also valuable resources like people and time to create proposals that will be considered for an offer. A low morale and repetitive rejection can add to the frustration of not getting a contract.
Minority entrepreneurs also make use of networking or using their personal connections when engaging in procurement. Most of minority business owners place a great value in building relationships with their customers, suppliers and even procurement agents. This cultivation of a relationship can be both short and long-term strategy. Often, minority business owners connect and network using procurement events like a procurement seminar, going to a procurement agency, seeking procurement officials, attended a procurement class or course.
Both investment and cultivating relationships can take a lot of time and effort for the business and the business owner. The time element in these strategies can be both a disadvantage and advantage depending of the outcome of each.
Women-Owned Business Owners’ Strategies
On the other hand, women small business entrepreneurs have their own strategy in getting ahead of their procurement efforts. They go to organizations and join programs that will help them in their procurement goals. One organization is the GSA or the General Services Administration. The GSA is a government-affiliated program that helps businesses, particularly small businesses, in their procurement activities. The GSA is an independent agency but has a very wide scope. It is connected to various federal agencies and supplies them with their needs for daily operations. In terms of procurement, the GSA coordinates with federal agencies that needs procurement The GSA has a GSA schedule with includes the pre-negotiated contracts. By contracting and working the GSA, women small business owners can have a wide range of possible buyers.
Aside from the GSA, women owners also use a procurement program designed for them – the WOSB. The WOSB Procurement Program is a program under the Small Business Administration (SBA) that helps women-owned businesses and responds to their needs or problems regarding procurement. The WOSB is a fairly new program but it has helped numerous establishments run by women to flourish by educating them about procurement. The program allocates various contracts government contracts that are exclusively for women. Being part of the WOSB is currently an attractive strategy because more federal agencies are now seeking products and services from established programs. In addition, the WOSB is part of the SBA, which gives it a more credible merit compared to others.
The advantage of procurement with the GSA or the GSA schedule is that there is a constant amount of bid from the federal agencies. This advantage has a counter disadvantage – the bids on the GSA schedule are generally fixed and might not come as profitable compared to other methods or areas of government procurement.
Another women-based procurement group is Give Me 5. The Give Me 5 program gives training and curriculum, the latest news and policies with regards to procurement. This group is mainly tied with government procurement.
Unlike the ethnic minority business entrepreneurs, women entrepreneurs tend to spend less in seeking contracts. However, they primarily use strategy and target federal agencies as buyer for their products/services. Women small business entrepreneurs are also using more of their label – ‘woman small owned small business’ as part of their company identity and branding. Women entrepreneurs might be spending less on procurement as an investment but the rates are still higher compared to the previous years.
Other Strategies
Another strategy employed by both minority and women employers is their certification. Being certified does have advantages, especially if the certifier is a government agency or program. Certification certainly works in government procurement and can also be an advantage for small business expanding into corporate procurement.
Certification brings advantage to the business by giving their claim validity and measures their competence by an equal standard.
Designations also play a good part in women and minorities’ strategies. Both can claim for an 8(a) status. Minority business owners often claim service-disabled veteran status while women opt for getting in the GSA schedule.
Another strategy that s many business owners are applying is the use of technology in running their business. Technology has played a vital role in conducting transaction (including procurement) but the rapid rise in the technology arena (in forms of programs and gadgets) has paved more options for many small business owners. Today, a business can run from a smart phone or a tablet. Laptops are the new norm, instead of desktops. Large applications are now available in smaller formats and can be used in emerging gadgets like tablets and smart phones. Technology also paved and streamlined process and attitude towards working. A small business owner can conduct transactions outside a conventional office or within their home.
Conclusion
The strategies used by both minorities and women-owned business tell us that there is no one true formula for procurement success. Even the trends reported in the research cannot be exclusively applicable to all business owners in the same group. Nonetheless, the trend shows that there are a variety of ways to get procurement projects. Small business owners, women and minority-owned included, have the resources to pursue procurement. In this case, the strategy and the resource used resulted in a positive result.
In addition, many small business owners are becoming successful in using their own strategies to get to their goal – winning a procurement contract from the government.
In the moment, the results have been good but hardly remarkable compared to the over-all scheme or situation in the procurement industry. However, these trends can inspire other small business owners in their procurement strategy. Plus, these strategies can be included and used with other strategies. Business owners can design their strategies to function in multi-strategy approach when applied to procurement.
A lot or just a single strategy can be effective, given that it is used and executed properly. Of course, business owners should not be complacent and rely on strategies when doing procurement. Strategies can change and it is up to the owner on how to place the business (and its offers) best but the end goal should always be consistent and the same.
