Buy From Your Own: Building a Strategic Advantage and Size Through Collaboration

Some years ago I heard the then-head of the US Hispanic Chamber of Commerce make a rather important comment about the nature of commerce within that community.

He said that a dollar typically circulates some eleven times before it heads out of the Hispanic community, which speaks to how much folks buy from each other. Food, services, products. A little of this, a lot of that.

While it’s overly simplistic to state the obvious, that we tend to buy from those we like and trust, there is a much larger argument going on here. Spending within your community- think veteran to veteran, Black to Black, woman to woman, especially in the small business space, is a key to growth. It’s also just good business.

When you and I discover a small local vendor with something special, then we share the good news, others start buying, that small vendor might, just might, have a shot at something larger- assuming that’s part of their dream.

For companies that hope to do business with much larger firms, one of the inevitable challenges we all face is capacity. That is, how much can you produce, how many units can you get into a huge container, how large an area can you service?

For the many millions of American companies (30 million in total) there are many who fall into the small category. This moniker can be extremely confusing, especially because of the Small Business Administration’s rather weird ways to establish small. To wit:

A business must make between or below $750,000 and $35.5 million and have between or below 100 and 1,500 employees depending on the industry. For example, a business that generates $1 million in revenue in an industry with a $750,000 size standard would not be considered “small.”

A great many of us would do a happy dance to be in the $750k range and over, as so many of struggle mightily to reach the magic $100k mark. That would make us more “micro.” My consulting firm was regularly hovering at this level. However, as my favorite Shakespearian comedy Midsummer Night’s Dream states,

Though she be but little, she is fierce!

Damn right. I was, and so are a great many millions of very small companies just like mine. And so are all the hamburger makers, hair colorists, hot dog sellers, jewelry designers, house cleaners that quietly and determinedly ply their trade day after day all around you and me.

Those folks — like you, like me- depend a great deal on the daily, weekly and monthly sales that allow us to keep our doors open. Most of us, especially women, people of color, many veterans and the like have a tough time getting the cash and/or loans to expand. Perhaps even more telling, those with the dream to get a little bigger, don’t get the support from the very communities who know them best which would allow them to grow, hire and expand in their towns and hamlets. Too many of those companies get the itch to go big, and forget about the communities that support them. That strategy can be disastrous.

Working in supply chain for huge corporations, buyers see small and micro operations all the time. One of the most consistent messages they give these folks is to collaborate in your NAICS code (https://www.naics.com/search/) The idea is that by legally “joining hands” with similar companies, you broaden your range and your capacity. This makes you more marketable to those large businesses who would honestly like to give you a shot- especially if you’re in a protected class.

The problem that I saw was that far too many of these entrepreneurs had gotten far too fond of their logos and branding. Unable to see the larger picture, they wouldn’t budge. Even if there was a multi-million dollar contract in the offing, these folks were so intent on being the top dog, they couldn’t give up the short-term gains in order to grow much larger, and reap greater benefits. They could only focus on what they might lose. Ultimately, those corporations chose other suppliers, who were happy to work out a mutually-beneficial deal.

This was particularly true of women businesses, whose organizations I joined, spoke for and participated in for some years.

Based on what I saw and heard for nearly twenty years, there seemed to be a deep and abiding belief that there wasn’t enough to go around. The same belief holds for high level jobs for those same protected classes, which leads to back-stabbing, infighting and an inability to work across boundaries. Actually there’s a great deal of business to be had. Those high level jobs might be a little harder to score, but when it comes to the supply chain, business needs for innovation, creative solutions and new and interesting consumer products are endless. But those opportunities can dry up in the catfighting that undermines potential deals.

Here’s a great Fast Company article which goes right to the heart of the point https://www.fastcompany.com/3039014/what-teaming-up-with-another-company-can-do-for-your-business.

Not for one minute would I argue that any kind of partnership is easy. There is a great deal of legal wrangling and ego dangling that has to be negotiated. In the long run, though, it can pay off large.

However, as the Fast Company article points out, there are endless ways to create a win-win where both parties benefit from product placement, access to new clients, or any one of a number of new opportunities.

My friend Jill is launching a new soup spice line. She makes sure that her brightly-colored packets are displayed with the kitchen shop’s top of the line pots, which promotes both. She could even do a deal where the pan purchaser gets a free packet of her soup mix, which is guaranteed to bring them back for more. You are limited only by your fears, and by your imagination. When we put a few smart heads together and ask how we can ALL win, it changes the conversation. Of course, if you happen to be the music industry and this results in price fixing, that’s another matter. But I digress.

As part of creating solutions to offer more opportunities, many of the big corporation supply chain execs began to require that their top tier female- and other- corporations do business with more suppliers in similar categories. This is typically called Tier Two spend although it goes right down the chain. Most companies only measure and report down to Tier Two. Doesn’t mean opportunities don’t exist. It means you’re not large enough to play with a multi-billion dollar Kraft or GM or Seimens. Not yet anyway.

For an example of what’s available see: https://www.forbes.com/sites/nextavenue/2018/03/16/women-entrepreneurs-get-certified-as-a-woman-owned-business/#2fc29f8c4db2;

There are similar organizations for disabled, minority, veteran- it takes a bit of research, then work, to get certified. However once certified you still have to do the local work. People often forget that part as they chase the Big Boys- when something smaller, which pays faster, is right in their own backyard.

A friend of mine who was at the time Director of Supplier Diversity for Office Depot said to me once: I see women business owners elbow each other out of the way to get to me at these conferences. I can’t give them any business. The very women they’re shoving out of the way are the CEOs who have the contracts for them, but all they can see is that I’m corporate. I represent big money. Actually, no I don’t. It’s a waste of their time.

This narrow approach to trying to pry one’s way into the supply chain is both useless and frustrating for both parties. Many of the top women suppliers in the car business — and many others — could easily purchase all kinds of goods and services from small and micro businesses like mine. Yet we tend to blow past them to bang on the locked doors of Lockheed Martin, who can’t use us at such a small capacity.

For a perfect example, I would offer the inimitable Andra Rush, who built her way into a power position in the logisitics industry — and only just stepped down: https://www.crainsdetroit.com/article/20180806/news/667846/rush-sells-stake-in-detroit-manufacturing-systems-steps-down-as-ceo. It would be fair to say she landed in a very, very cushy way, after years of hard work. She was a massive and vocal supporter of women-owned firms.

For years Rush was in the perfect place to hire a great many smaller suppliers. In fact, Tier One suppliers like Andra Rush are required to do just that if they have contracts with folks like Chevrolet, Ford and others. This is how these huge corporations create opportunities for those of us much smaller companies. You would think that we would all leap at the opportunity. This is how we get in the door — at the level, and ONLY at the level- we are capable of playing.

Rush built her company to $1B in value. Not bad for a nurse who refused to work for $9.25 an hour.

To wit: if you run a $150k business in Dearborn, that may make you a big shot at the local Chamber of Commerce. That does not necessarily translate into being a big shot when you approach GM, whose 2019 revenues were $147 billion. Um, billion, with a b. You’re about as visible as a gnat fart in a hurricane to an operation that big, certainly if you try to beat down the front door. First Tier suppliers like Andra Rush and her ilk have got a foot in the door. And many of them are pleased to reach back and pull others of us up, assuming we we offer solutions and offerings they want, need, and make them (and GM) more profitable. Yet we don’t even see them, because we’re blindered by a big brand.

There are plenty of these women, as are plenty of Black business owners, LGBT, disabled, veteran, Hispanic and older folks like me who feel very strongly about spreading the wealth where there is a fit.

Yet I have seen eager- and clueless- women business owners flow around and by Rush- and other potent CEOs like her of all races and genders- in a crowd when their best opportunity stood quietly, like a forgotten castle full of treasure, right in the middle of the fray.

When you and I buy from our own- whether it’s women or Black or Hispanic or Asian, or veteran or LGBT or disabled, or from the broad categories of minority-owned business at large, we are benefiting the larger good. As with all companies, every so often there will be a miss- but then, that’s true of big brands as well, as corporations cut cost and quality to make shareholders happy. Small and micro businesses are still focused on delivering the best they possibly can. And that’s good news for all of us.

No matter how big you and I are, when we hire, buy from, support and recommend those small(er) and micro businesses that are part of the community, we ensure the future of the very goods and services that we most enjoy. For anyone old enough to remember driving across the USA pre-Walmart, who loved, as I did, perusing the quaint shops and stores on main street and loved the home-made grilled cheese sandwiches and fresh tomato soup (and I always will), the only way to get anything even remotely like that back is to buy small. Buy local. Buy in your community. Your city block. Your main street. Eschew the vanilla big brands and tease out the talented locals.

Grow them where they are planted.

After all, HP and Microsoft started in garages. Many, many business began in a basement.

America is a small business country- even if you have trouble with the SBA’s definition. Fully 99.7% of America’s employees work for firms with under 500 companies (https://sbecouncil.org/about-us/facts-and-data/). Depending on where your biz lives on that arc, it serves to buy and sell from similar folks around you. And in every way it serves to research — and reach out to — your competition. It’s a wise CEO/entrepreneur who recognizes that competitors could potentially be the best business partners of all.

Want to succeed? Suc-Seed your money where you live, in the businesses that are close by, and find ways to share good news with other folks. Success bubbles up from the ground level this way.

That supports great products, ingenuity, friendships and commerce. Whether your dream is big or it’s just to make payroll for this week, let’s find ways to spend local, lift folks up and spread the wealth. Everybody wins.