Over the past few decades, public policy makers and some conscientious industry leaders have explored various ways of expanding the participation of Minority, Women, and Disabled-Owned Business Enterprises (M/W/DSBEs) on contracts awarded for the provision of products and services in the public, private and non-profit sectors. Sustainable, productive business relationships are built on the trust and respect of business leaders within each organization. Confidence evolves from ongoing connections and open, honest communication which is hard to achieve on a bid by bid or transactional basis.
While more progressive industry leaders have been met with some success regarding diversity and inclusion, there still lurks a public perception that doors are only open to a select few disadvantaged businesses. The primary questions posed by small business owners standing at the gates of opportunity include:
- How do I effectively get on the radar of procurement and supply chain professionals?
- How do I navigate the process of doing business with large, decentralized organizations like the University of Pennsylvania, City of Philadelphia, and other major institutions?
- How do I build productive business relationships that provide access to real contracting opportunities?
- How do I successfully deliver products/services in a reliable manner that cultivates continuous business?
The Office of Economic Opportunity for the City of Philadelphia has pursued efforts to inform, engage and drive the success of M/W/DSBEs with the capacity to deliver on contracting opportunities with the City. When serving as Executive Director for the Office of Economic Opportunity (OEO), I observed the following characteristics as essential for small businesses to maximize business development.
Characteristics for maximizing contracting opportunities for service, equipment, and supply providers:
- Understand profitability of each transaction and prepare for cash flow demands
- Maintain efficient inventory management systems and channels of distribution to compliment the customer’s process flow
- Cultivate business relationships throughout the supply chain to insure competitive pricing, reliable delivery, and quality customer service
- Explore the consolidation of purchasing power with other small businesses to drive internal cost down
- Develop relationships with original equipment manufacturers, OEMs, to distribute and/or service proprietary products or equipment (e.g. license, permits, etc.)
- Acquire or lease reliable logistical equipment (e.g. trucks, communications systems, etc.) to service large departments or multiple sites
- Collaborate with other businesses via joint ventures and/or partnerships to build capacity
Characteristics for maximizing contracting opportunities for professional services:
- Understand profitability of each transaction and prepare for cash flow demands
- Maintain efficient communication channels to compliment the customer’s process flow
- Cultivate business relationships throughout the organization to insure responsiveness to the clients’ needs
- Develop relationships with original equipment manufacturers/system developers (i.e. license, permits, etc.) to service proprietary systems
- Collaborate with other businesses via joint ventures and/or partnerships to drive down cost and build capacity to service multiple clients
When asked what is missing from this list, Iola Harper, Deputy Commerce Director of the Philadelphia Office of Economic Opportunity, contributed, “Small business owners must keep their hands on the pulse of industry trends by attending conferences and joining organizations where customers and competitors highlight changes in the marketplace. The most successful entrepreneurs familiarize themselves with industry-driven best practices and make changes within their organizations accordingly. In addition, small businesses must recognize that each customer has nuances that require them to customize their approach to capture new business.”
I concur with Iola’s conclusion. The best professional networks provide their members with business insights, encouragement, and a conducive environment for collaboration and business development.
Jim Haile, Director, Partnerships and Outreach for Goldman Sachs 10,000 Small Businesses at the Community College of Philadelphia, indicates, “Small businesses must have a well-defined vision and culture based upon: execution excellence; continuous growth and improvement; marketplace knowledge; plowing money back into the business; appropriate technology; and a qualified and trained workforce.”
Jim also shared, “Some of the greatest mistakes small business owners make include:
- Underestimating demand for the product/service in the early phase of the business plan;
- Seeking additional sales when the in-house sales department is not well trained (revised);
- Not providing consistent, quality customer service;
- Not having enough capital to support business growth;
- Not paying taxes (local, state and/or federal); and
- Failure to properly managing employees (including relatives).”
Jim raises some valid concerns that contribute to entrepreneurs limiting their potential and falling short of their goals.
Falling short of goal is not unique to the seasoned and successful entrepreneur. The City issues an estimated 4,000 bids and request for proposals (RFPs) each year. On average, there are four responses per transaction. If most bids/RFPs are awarded to a single responder, 75% of the bidders are unsuccessful. The watch word for pursuing any business opportunity is resiliency.
Most bids/RFPs with M/W/DSBE participation requirements include prime/sub-contract relationships. Progressive organizations require their primes to build sustainable transactional relationships with M/W/DSBEs. One example being the University of Pennsylvania. UPenn’s website highlights their approach to economic inclusion which is centered around the following key elements:
- “Community Engagement – participating regularly in events and forums to ensure close connection with the community and the supply base
- Partnerships – collaborating with internal and external partners to mutually advance inclusion efforts
- Active Supplier Promotion – managing systems and programs to actively promote local and diversity suppliers
- Goal-setting, Measuring and Reporting – setting economic inclusion goals, measuring performance, and reporting performance to leadership and the community”.
Here are a few suggestions for institutions such as UPenn that are interested in upping their supplier diversity game.
Best Practices of Superior Supplier Diversity Programs:
- Cultivate a culture that values diversity on a vertical and horizontal basis, from the top down and across the organization. Leadership at the top and ownership of diversity goals throughout the institution is essential to the success of the program.
- Minimize terms and conditions within the procurement process that negatively impact the inclusion of small businesses (i.e. reduce contract size to attract small businesses as primes).
- Encourage joint ventures that enable small businesses to expand their capacity to pursue larger competitive transactions.
- Regularly host events, programs and workshops that inform and educate small businesses on the procurement process, contract engagement and relationship development/maintenance. Prime contractors should be a part of this outreach and business development.
- Hold primes accountable for M/W/DSBE participation and reward mentorship programs. Building relationships should be facilitated by a strategic, long-term approach to diversity not a tactical, transactional action plan (g. bid by bid basis).
- Hold M/W/DSBEs accountable for performance and commitments.
- Incorporate a tracking system that monitors and measures the impact of the program’s success year over year with a public component that highlights the contribution made to the community, (i.e. economic development, jobs, hope, etc.).
- Join and support organizations with a critical mass of astute business owners like the Women’s Business Enterprise Council and Minority Supplier Development Council who provide sourcing opportunities and business development relationships.
Speaking from his private sector experience, Jim also suggests the following actions to drive even greater success for the Supplier Diversity Program:
- Advocate for documented quarterly/semi-annual key supplier meetings with internal customers to review performance, opportunities and continuous improvement /innovation projects.
- Create “Mastermind” meetings for key suppliers using the company’s internal resources
Organizations that face the marketplace are the greatest advocates for diversity because they are most interested in having their organizations reflect the communities they serve. These organizations include the City of Philadelphia, Comcast, University of Pennsylvania, and Drexel University. The conviction held by these institutions is constrained by two major limitations:
- The supply of businesses capable of independently meeting the demands of the institution. The City of Philadelphia’s Annual Disparity study provides a source of data to highlight the overall availability of small businesses. Aligning specific availability of those businesses with the specific demands/needs of institutions is a critical part of the process for setting and achieving realistic diversity goals.
- The capacity of the businesses to respond to the demands of major organizations. Business acumen, capital, insurance, and the agility of the business are necessary for any thriving business, but particularly the smaller operations.
The tenacity required to sustain a holistic diversity and inclusion strategy requires resources, training, monitoring and metrics, and above all else, business relationships built on respect, fairness, and an opportunity for growth.
Angela Dowd-Burton is President and CEO of DowdBurton Associates, an economic development firm, and is a Senior Advisor at ESI. Angela is an award-winning business professional with over 25 years of diverse business experience and outreach within the community. In 2010, Angela was appointed by Mayor Michael Nutter to serve as Executive Director of the of Office of Economic Opportunity for the City of Philadelphia, where she was responsible for leveraging business services of the Commerce Department to strengthen the capacity of small businesses to successfully contract with the public, private and non-profit sectors.