Corporate Outsourcing: How to be the Right Small Business Partner

So you have a successful small business.  And you want to expand your business by becoming a supplier to larger corporations.  Try to look at your small business the way a larger company will and see what they will look for.  We have talked with a number of experts in this area and they say it will be easier to convince the corporations if you follow these steps:

1.   Strong financials.
It is not enough that you have been in business for ten years, what is important to your prospective corporate customer is whether you will be in business next year.  So the strength of your past operations as evidenced by your company’s financial performance will be important in analyzing how well you might perform with this new contract.

What kind of financial information will corporations be looking for?  It ranges from copies of contracts detailing statements of work to financial statements and corporate income tax returns.  Usually one or two years at most are all that is required by any serious corporation.  But most small businesses are privately-held and not willing to provide their most intimate financial details to just anyone.  Initially, try providing summary financial information and referring more detail questions to your accountant.  If the prospective relationship moves closer to fruition and more detailed information is required, ask the corporation to sign a basic non-disclosure agreement.  This will help protect your information by controlling its dissemination.

What happens if you have a financial past with a few bumps and dips?  You do not want to hide anything, but you should put any negatives in as good a light as possible.  Remember that many corporations will have their controller or CFO review your financial information, so you can expect that these professionals will find anything unfortunate in your company's financial past.  The best thing you can do is disclose these items and show that your company has made positive progress since that time. For more serious misfortunes – like a bankruptcy in your recent past - you may want to consider holding off on any outsourcing deals until you get several strong quarters under your belt to show that you are back on track.

2.  Previous work.
You may be asked to submit  a sample of your product for examination by the outsourcer.  Sometimes just supplying a list of past projects is not sufficient .  For example if you are a supplier of bullet proof vests, the agency or outsourcer will want to see a sample of the product for their own in house testing.  This may seem like an obvious point, but outsourcers usually want more than a simple list of past projects. They usually want to examine the products or see the technical documentation. If you develop software or interfaces, they're going to want to see the source code.  Even more likely, they will want to see your product in use in the marketplace.

3.  Satisfied customers.
It is good business practice to ask your customers for testimonials.  You should keep a file and update them yearly.  “Happy Customer” letters are very important and are a good additional marketing tool for your company. You will probably be asked to provide client phone numbers and addresses. Most contractors will want to call on one or two of your past or present clients and customers.  Expect that they will want to speak with your customers out of your presence Don’t be insulted, this is nothing personal or out of the ordinary.  The contractor knows they can find out more about certain aspects of your operation in fifteen minutes with your customer than by spending a day in your plant.  Customer support, especially with technical or complex products, is a critical component of your business.  Large corporations need to know they can count on your support team, even if it is a small one!

4.  Geographic proximity.
Where your business is located matters in some contracts. A corporation may want to hire a local vendor, especially if it is outsourcing order-fulfillment services.   However there may be instances where you are still a better value than their “neighborhood vendor”.  You should do your homework on your competitors that are in proximity to the outsourcer so that you come in well educated on your competitor.  For example your competitor may be located in their geographic area, yet not have a presence there.  You should check out other outsourcers in that area to see if they are using the “neighborhood vendor”.  If they are not, that is an important marketing tool for your own company.  Perhaps that vendor lacks sufficient funding?  Perhaps this might be a good introduction to the neighborhood vendor to see if your respective services compliment one another and rather than look at him/her as the “enemy”, you may pick up a new teaming partner and expand your horizons!"  Many jobs, however, don't require much client contact. If you're developing a Web site or designing an advertising campaign, for example, one or two conference calls or in-person meetings should suffice.

5.  Contingency plan.
Let's face it. Corporations spend a lot of money outsourcing jobs to small companies like yours. They want to know that the job will get done – no matter what. So they're going to want assurance from you that you are anticipating fluctuations in the business. From great news to bad, they will want to know your plans for handling certain conditions – like if volume suddenly doubled or if they lost their biggest customer. Your answers may play a major role in whether or not you get the contract.


So what is the bottom line? Outsourcing is supposed to make life easier for corporations. The right small business vendor makes sure that it does.