A discussion on how collaboration can help you achieve growth
If you are the owner of a small or medium enterprise you might consider larger companies to be your biggest competitors. But this is not always the case – big business can be a powerful partner that you can leverage to achieve more growth in your business.
Entrepreneurs and business experts share their insights on why partnerships can work, their value for both small and big business, as well as some of the practical considerations when structuring such deals.
- Ntombie Nonxuba, owner of Phakamile Industries, trading as Rise Uniforms. She turned her small township business into a profitable enterprise that supplies uniforms to Pick n Pay stores around South Africa.
- Suzanne Ackerman-Berman, Pick n Pay director of transformation.
- Francois Adriaan, head of corporate affairs at financial services provider, Sanlam.
- Andre Fourie, director of operations and Legal at ICT services provider, Network Alliance.
- Sivu Maqungo, CEO of OPENTENDERS, a South African business social networking site that matches small and medium enterprises (SMEs) with procurement opportunities.
Why is it important for smaller businesses to consider partnerships?
Fourie: I don’t think that small, medium and micro enterprises (SMMEs) necessarily need their larger counterparts to be successful, but I do believe that engagements with large corporate enterprises present SMME’s with unique opportunities to demonstrate their expertise and unique skill set to a much wider audience.
“Access to the market is the greatest assistance that a big corporation can give an SME”
Ackerman-Berman: It is absolutely vital because no one can do it alone. Access to the market is the greatest assistance that a big corporation can give an SME because there are a lot of hurdles along the way.
Nonxuba: It is very important for a small business to have a mutually beneficial relationship with a big corporate, not only to gain access to a market but also for ongoing mentorship.
Adriaan: Regular income and cash flow is always a major challenge for smaller business. This is why a partnership to supply a retailer can offer certainty in terms of revenue. Corporates also benefit as services or products sourced from external suppliers can be more cost effective.
How can the partnership work for both the SME and the large corporate?
Maqungo: Corporates and SMEs both exist to grow their businesses. A corporate will play a more active role in the growth of SMEs to the extent that they are able to see benefit for growing their own businesses.
This is why SMEs must offer a value proposition that adds to the growth of the corporate. For example, access to a market segment big business would struggle to enter without a small business partner. A good example is the relationship that South African Breweries has with SMEs via tavern owners to access consumers in townships.
How should entrepreneurs go about cultivating relationships with big business?
Ackerman-Berman: Networking is the best way to start. Business owners shouldn’t be scared to reach out, make connections and share their new ideas.
Adriaan: Build a solid track record for your business and demonstrate your willingness to be cost competitive. I always tell entrepreneurs that they should do business with a person, not with a website or on email. Establish an in-person relationship with potential partners and make sure that you are talking to the right people so that you know exactly what it takes to get onto supplier databases.
“Always ensure that you are adding value to the partnership”
Fourie: For a partnership to succeed both parties need well-defined roles and responsibilities, measurable outcomes and clear deliverables. Often partnerships can fail because these aspects of the agreement were not discussed upfront.
While access to more lucrative markets and increased revenue are often driving forces behind partnerships, I believe that SMMEs must think beyond short-term gains. A partnership can help to build the credibility of a smaller business and offer access to a much larger consumer base.
How do you maintain good relationships with business partners?
Nonxuba: You have to be realistic about the partnership. As a small business you need to have a clear vision for your business and never forget that you are not their only supplier. As much as they are there to hold your hand, you are still solely responsible for the growth of your business.
Constant communication is the key factor. Be honest about your capabilities and shortcomings and be clear about the role you want the big corporate to play.
Adriaan: Always ensure that you are adding value to the partnership and think about the long-term benefits of the alliance. Be ahead of everyone else in your area of expertise and familiarise yourself with how the corporate business works.
BY WILMA DEN HARTIGH