Small Business/Large Business Relationships

Do not be intimidated. The trappings of the corporate world (high-rise buildings, cavernous conference rooms, legions of blue suits, etc.) can be intimidating, but small business owners have to remember that they run viable businesses of value themselves, and they should negotiate accordingly.

Maintain independence. Autonomy is assured if you maintain ownership, so be leery of turning over too much equity in the business in exchange for financial help.

Establish clear and open lines of communication. Good communication practices are essential to all business relationships, both internal and external, and alliances with large companies are no exception.

LARGE BUSINESSES AS PRODUCT DISTRIBUTORS

Myriad small manufacturers rely on major mass merchandisers (regional, national, or international) to sell their goods. Indeed, these distributors can dramatically heighten a small business's fortunes in a matter of weeks or months. But entrepreneurs seeking to establish such relationships will find that 1) competition to secure a place on the shelves of major retail outlets is fierce, and 2) some mass merchandisers will be better suited for the small business's product than others.

Competition

The single most important factor in securing a distribution agreement with a major retailer is, of course, having a quality product that will sell. But small business owners seeking to establish themselves with a major mass merchandiser also need to make sure that they attend to myriad other business matters every step of the way. After all, the mass merchandiser in question has plenty of product options from which to choose; if your company stumbles at any point, there are plenty of other competitors waiting to take your place on the merchandiser's shelf. Given that reality, entrepreneurs have to make sure that they have a dependable production/delivery operation in place. In addition, small business owners should be prepared to provide prospective distributors with information on the firm's management and financial situation.

Compatibility

Moreover, entrepreneurs need to make sure that they concentrate their efforts on finding mass merchandisers that already sell products to the new product's probable demographic audience. For example, an expensive, "high-end" home furnishing product is more likely to be compatible with the existing product lines of an upscale retailer than one of the major discount retailers (Kmart, Wal-Mart, etc.). Conversely, an inexpensive but functional item that would be commonly used might be better suited to discount outlets rather than Nordstrom's or some other high-end retailer.

LARGE BUSINESSES AS CUSTOMERS

Many small businesses, whether involved in retail, wholesale, manufacturing, or services, count fellow businesses as significant or primary customers. Pleasing corporate clients is in many fundamental respects no different than pleasing individual customers. As Richard Gerson observed in Great Customer Service for Your Small Business, "much of customer service comes down to plain old common sense. Simply put, customer service involves everything you and your employees do to satisfy customers. That means you give them what they want and make sure they are happy when they leave. If you just manage complaints, offer refunds or exchanges on returns, and smile at customers, you only provide a small part of excellent customer service. Customer service also means going out of your way for the customer, doing everything possible to satisfy the customer, and making decisions that benefit the customer—sometimes even at the expense of the business [depending on the customer's future potential]."

However, corporate customers sometimes have different needs and priorities than do private individuals, and small businesses that do not recognize these differences are unlikely to provide service that will be acceptable in the long term. For example, delivery deadlines are often far more important for businesses than they are for regular customers. Late delivery of a service or product may constitute no more than a minor convenience to a private-sector customer, but it might mean significant monetary loss for a corporate customer that was depending on that delivery to meet deadlines imposed by its own customers.

Small business owners are painfully aware of the fact that the loss of a single corporate customer often constitutes a much more severe blow to a business's health than does the loss of a single retail consumer. Whereas businesses that provide goods or services to the general public will have many customers, establishments that provide their goods or services to corporate clients will in all likelihood have far fewer customers. The loss of even one such client, then, can have a significant impact because of the percentage of total business that the customer represents. Finally, businesses that rely on corporate clients are more likely to encounter higher levels of paperwork and bureaucracy to satisfy the recordkeeping apparatus of their clients.

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