Supplier Diversity’s Recession Demands
Facing unprecedented budget pressures as the worst recession since the 1930s continues to roil the economy, public and private-sector institutions alike are slashing costs to the bone, taking such measures as consolidating supply chains to favor larger suppliers who can offer greater bang for limited bucks. While this recession-driven thrift spells trouble for minority enterprises, most of whom fall in the “small” to “smallest” categories of supplier databases, those enterprises and their advocates refuse to be counted out of the sparring for contract awards.
“If you’re not financially stable and not one of the companies that can continue to be competitive in the bidding process and offer a service that a corporation will still find value in, it will be difficult to stay in the game,” says Lynda Ireland, president and CEO of the New York & New Jersey Minority Supplier Development Council in New York City. “We try to encourage our smaller MBEs to look at strategic alliances and joint ventures with each other so they offer a package that is inclusive, and provide greater value for less money. They have to be creative and know how to stay alive during this downtime.”
Ireland says the council to date has certified 1,300 business enterprises as “minority” owned, a classification that gives them special consideration in contract letting by corporations and government agencies.
As the council gears up for its annual networking expo in June, Ireland is hoping that collaborations among minority firms will help such firms continue to win contracts both from the organization’s 200 corporate members and from public entities. In 2008, council members spent more than $10 billion with New York metro-area minority businesses alone, Ireland says.
Beverly White, founder and president of BKW Transformation Group, a management-consulting firm in Piscataway, N.J., agrees that collaboration with peer vendors is desirable, but says she approaches such a move with extreme caution. “[A potential partner has] to be a peer vendor that is low-risk in terms of competition. In terms of trust, respect and capability, they have to be a near-perfect balance,” she says.
To protect her company’s interests in the collaborations she forms, White always insists that BKW be the sole point of contact between the peer vendor and the client. She also establishes different levels of nondisclosure agreements, each of which details the period of time that must elapse before the peer vendor can work with that client again.
With the right partners, business owners agree, small enterprises can move to the next level.
“I’ve focused more on outreach efforts with other suppliers, especially MBEs,” says Lanre Olotu, president of Printing Methods, a commercial printing company in Rochester, N.Y. “Building partnerships with other MBEs for the ancillary services needed to complement our print production allows us to provide a full offering of services seamlessly and efficiently. It’s these business partnerships that provide for growth and stability.”
Collaboration can even lead to the creation of new products to attract new categories of customers.
Rodney Evans, president of Skyline Connections Inc., a New York information technology provider of creative and innovative digital solutions, knows this firsthand. He partnered with a longtime friend and fellow entrepreneur to develop DBE Certification & Tracking System, a proprietary software package that helps corporations and agencies track their spending with minority-owned and women-owned businesses. Appropriate for both the public and private sectors, the software tracks the entire procurement process, from the request-for-proposal stage to ensuring that the vendor is paid within 30 days of the project’s completion. It even helps streamline and generate procurement reports.
“It’s an ongoing process, but we hold their feet to the fire,” says Evans, who is currently marketing his product to the airline industry. His client list already includes the Dormitory Authority of the State of New York, the Birmingham-Shuttlesworth International Airport and the Philadelphia International Airport.
To the same end, White is developing a product for Green business operations, which she hopes to roll out by 2011. “We want to have a real broad-range marketing strategy to get this product to market,” explains White. “Due to cash flow, we won’t be first to enter the market, but we will be first with the approach that we’re taking. It would be price competitive and more holistic to a client’s other business solutions.”
A slow economy is a good time to consider options that would help a company reinvent itself, both to stay alive in the harsh climate and in preparation for better times. Cherise TrahanMiller, president of Ashay Media Group, a 14-year-old marketing and creative agency specializing in digital media, in Brooklyn, N.Y., says it’s also a great time to dust off projects and ideas you may have put aside for implementation at a later date. “For one thing, your vendors are cheaper and it’s a good time to get new ideas and new thoughts into the market,” she says.
Ashay Media is developing a new product which, like White, TrahanMiller hopes to launch in 2011. She estimates the new product will increase business by 30 percent. “Being an entrepreneur is about being fearless and trying as many strategies as you can to procure new business,” she says.
A large part of being “fearless” has to do with knowing when to strike at an opportunity. Using that knowledge is precisely how Nigerian-born Olotu built his business. In 1995, he purchased the assets of a commercial printer in Rochester. Six years later, he acquired majority ownership in a heat-set web printer located in a neighboring county, which he absorbed into his expanded company. He became sole owner of the printer in 2009, about a year after he added a digital print division to meet the demands of his growing clientele. Today, Printing Methods is one of the largest black-owned printing companies in the country.
“We continually stay focused on the opportunities for growth and expansion, realizing that advancing technologies can open doors to helps us remain competitive,” explains Olotu.
Being an entrepreneur sometimes means following your own instincts and taking steps that may make good business sense to no one else but you. White’s friends, for example, thought she had lost her mind when she offered her services pro bono to one of her clients.
“I was able to parlay the offer to do pro bono work into potential billable hours, which created an enormous amount of goodwill with that client. We increased our knowledge capital not only of the corporation, but also in a new competency area,” White says. “Could we afford it? Absolutely not. But I didn’t view it as an expense. I viewed it as an investment.”
Olotu adds, “The greatest advice I can offer any young entrepreneur is to have strong faith in God and to focus on your strengths. It is important to stick to what you know best and are exceptionally well at doing.”
TrahanMiller agrees. “It’s important that you have fun and love what you do. You put in a lot of work, so at the end of the day, I hope you love it,” she says.