Small business partnering

Small business owners tend to be very focused in what they do, often concentrating on niche markets where they know what they're doing and can make a name for themselves. What they often overlook are larger business opportunities that they could be taking part in if they partnered with the most available resource out there: other small businesses.

Usually larger contracts go to big companies, because they have greater resources than small businesses and name recognition with the potential customers. Small businesses often fail to realize that they can team with other small businesses to compete for large contracts if they can show the customer that they compare favorably against a big company in the following respects:

• They are highly qualified and experienced in the core areas of the contract.

• Each team member understands his/her role and is well qualified to perform it.

• There is a high level of confidence in the project manager.

• The team is more cost effective.

The key to winning these types of contracts is to recognize when a project is a good opportunity for you. This means that your firm has the capability to participate in the project either as a prime contractor or subcontractor.

The prime contractor is the firm that will be contractually obligated to the customer and has the experience and expertise in the main scope of the project, such as construction, auditing, or engineering. Usually the prime contractor does most of the work both in securing the contract and performing the tasks under it.

Subcontractors are typically utilized when the prime contractor lacks some specific expertise that the subcontractor can provide. In a construction project for instance, subcontractors are often hired by the prime contractor to do work in areas like plumbing, painting, electrical, or dry-wall.

Small businesses are used to thinking only about business opportunities where they are the prime contractor and perform all the work themselves. As a result, they miss out on lots of interesting - and lucrative - projects because they don't think about teaming with other small businesses.

Our firm has been a partner on a number of large projects because we actively seek ones that require considerable specialized resources that even big companies have a hard time providing. By teaming with other small businesses on these projects, we have been able to successfully compete against firms much larger than ours.

How to get started

The key to small business partnering is to establish strong relationships with other small businesses who can provide expertise in areas that complement yours. A few examples are:

• Computer hardware distributor with computer software consultant

• Architect with construction contractor

• Public relations firm with advertising agency

• Financial planner with accountant

Try to work together on a small project or two first. After a good working relationship has been established, begin targeting larger projects, including those that may require three or more partners.

Added benefits

Small business partnering has a number of additional benefits. First, it gets you first hand experience in a lot of projects that you wouldn't ordinarily see, which expands your firm's skill base so that you're not too dependent on one type of work. When business slows down, you want to have lots of ways you can generate revenue.

Second, the more partners that you have good relationships with, the more likely those partners will find other projects for you to work with them on. As we know, marketing is expensive, and this cost can be greatly reduced when partners are finding work for eachother.

The business environment is highly competitive, and we can't afford to pass up any opportunities just because they aren't a perfect fit for what we do. Perhaps all we need to do is find someone who can fill a very specific role on a project. Don't pass on the opportunity - find a partner to work with.