Keys To The Golden Door – 10 Steps to Success For Women and Minorities in Business
Researchers from the Atlanta business consultancy, The Hackett Group, surveyed 50 companies with median revenues of $7 billion and a median procurement spend of $3 billion (Wall Street Journal, August 2006). They found that firms that 'focus heavily on supplier diversity' generate a 133 percent greater return on procurement investments than the typical business. In these economic times, those numbers can not be ignored.
News of the many positive results of supplier diversity programs boosts support for these initiatives. It can also provide more opportunities for minority- and women- owned businesses (M/WBEs).
Starting with the supply chain, some organizations are establishing relationships in increasingly diverse markets and gaining a competitive advantage in the U.S. And globally.
How can M/WBEs leverage the growing number of opportunities available through corporate supplier diversity initiatives? How can they sustain business relationships leading to the long-term growth of their business?
Here are 10 steps that are guaranteed to produce positive results:
STEP I
Produce High Quality Products. It is not sufficient for your products to be good. Differentiation of your products and services based on the highest level of quality provides insulation from competitive rivalry, often based on price, and creates customer loyalty. Introduce the unique benefits of your products and services to your customers, highlighting the high quality solutions it offers to their problems.
According to Paul Belliveau, Abbie Griffin, and Stephen Somermeyer, editors of The PDMA ToolBook for New Product Development, there's another way to differentiate your product or service in the marketplace while improving quality: learn from your customers how to innovate.
Nabisco was proactive in this regard. Its engineering group designed modifications to bakery cooking and packaging equipment that increased efficiency and that were not yet available from the equipment manufacturers. Nabisco then contracted with the equipment vendors to incorporate the modifications into prototypes for its use. Eventually, the vendors included many of the Nabisco innovations in their standard designs, which Nabisco would then purchase since the commercial equipment was less expensive than the prototypes.
Whatever your company provides, whether a product or a service, must be both excellent and relevant if it carries your business name.
STEP II
Price Competitively. Women and minorities in business must challenge the perception that supplier diversity initiatives are in direct conflict with the corporate need to manage cost. Make sure that your products are priced competitively. Always charge a fair price for your product.
It is also necessary for M/WBE's to consistently perform cost-benefit analyses comparing product sales and business relationships. Remember to include the long-term value of the relationship in your analysis. If you are diligent in identifying and providing the benefits your customers require, you will differentiate yourself from your competitors and avoid competing solely on price. Note that some banks communicate financial security, trust, and esteem while other banks bombard us with price-driven advertising. This kind of advertising always leads to commoditization of their products and competition exclusively on price.
Wal-Mart and others have a winning low-price strategy, but they have a well-designed supply chain structure that focuses on consistently reducing cost. If your company does not have the infrastructure or interest in competing on price alone, you need to determine and deliver on the quality and value your clients desire most.
STEP III
Delight your Customers. Great customer service is not enough. To differentiate your business, the next frontier of competitive advantage is the customer experience. For women and minorities in business, it is necessary to differentiate on product/service quality, price competitiveness and, most importantly, responsiveness and service. It is with service that many of the smaller M/WBE's have the advantage.
Remember to consistently treat each customer interaction as a precious resource. Again, businesses that will thrive in years to come are those that have a clear competitive advantage in the marketplace. Creating an organization that is truly focused on providing superb customer service is the very best way to develop that competitive advantage.
Be responsive. Come earlier. Stay later. Anticipate and solve problems for your customers before they occur. Send a thank you card. Remember birthdays. Apply these techniques to your business consistently, and you will begin to develop an emotional bond with your customers that will not only keep them coming back for more, but will also have them recommending you to their family, friends, and colleagues. Make it personal. In fact, it is personal: it's your business!
STEP IV
Build Capacity. When a large client makes a request that a smaller company cannot fulfill because of limited capacity it can be devastating to an existing business relationship. It can be ruinous to a relationship that has yet to be established. There are two ways to rapidly build capacity for woman and minority-owned small businesses: 1) hire more people to execute production; 2) create strategic alliances with companies that supply complementary goods.
For specific project execution, a bias toward strategic alliances is recommended. Begin to look for companies with similar products or services and talk about the possibility of working together. It is not required that these are minority and/or women-owned companies. It is required that you have shared vision and, most importantly, shared values.
Strategic alliances can extend beyond promotions and single projects. They can include joint advertising, marketing exposure, special events, and employee programs that benefit both companies. As a result of a fully integrated approach, the overall value to the consumer increases significantly.
In today's changing business world, using the strength of strategic partnerships to increase capacity, gain exposure, and penetrate new distribution channels is an exceptionally smart approach. So, ask questions. Study the work of potential partners. Once you find a partner who produces work you admire and who shares your values and commitment to service, cherish those relationships for years to come!
STEP V
Define Your Niche. One of the most widely championed suggestions for small business owners of any ilk is, "focus on what you do well." As entrepreneurs, many minorities and women have a desire to be all things to all people. That's understandable. Sometimes projects that complement your niche pay the bills. However, these projects should be the exception, not the rule.
Creating a niche position in the market allows for good short-term prospects and the potential for long-term business beyond your initial position. It is an excellent tool to differentiate your business and protect your market space from competitive new entrants. A defined market position that targets a niche product or service presents a great opportunity to attract new customers or to offer your services in a new location.
Define what your company does better than any other in your industry, large or small. Find the market for your niche and become the very best.
W/MBEs that successfully embrace these business fundamentals have a pronounced impact on the economy. Consider the following:
- Women-owned firms are growing at a rate nearly twice the U.S. Average, contributing $1.1 trillion in revenues to the economy and creating jobs for 7.2 million Americans.
– U.S. Companies owned by women provide more than 12 million jobs while Fortune 500s employ less than 11.7 million jobs and are shredding between 200,000 – 300,000 jobs per year.
– The fastest growing segment of small business is African Americans, which experienced a 45% increase since 2002.
– The fastest growth rate of all minority-owned business (African-American) is increasing faster than the national average of 10% per year.
– The number of Latino-owned companies grew 31% between 1997 and 2002.
– In 2002 there were nearly 1.6 million Latino-owned businesses producing nearly $222 billion in revenue.
– The combined buying power of African American and Latino Americans today is more than $1.7 trillion. By 2010, each group independently is expected to reach a buying power of $1 trillion.
Sources: CNN Money, Center for Women's Business Research, Forrester Research, U.S. Census Bureau.
This data clearly illustrates the tremendous net positive result on the economy when women and minorities in business are successful. For this reason, the consistent increase in supplier diversity programs in large U.S. Firms is positive news. These companies are committed to maximize M/WBE participation by developing equally beneficial business relationships with minority and women entrepreneurs.
STEP VI
Manage your business relationships well. It has been said that great entrepreneurs are "married to their business." Of course, managing a company requires time, energy, and commitment. It is absolutely critical to maintain healthy (and profitable) relationships with all stakeholders. Here are the key relationships that successful entrepreneurs should nurture:
– Customers
– Employees
– Vendors
– Banker/Accountant/Lawyer
– Mentors.
Your customers are the critical stakeholders – they hold the most important key to business success; however, relationships with the employees and team members delivering your products and services are equally valuable. Vendors are also vital to the creation of great products and services. Of course, your banker, accountant, and lawyer help to determine sound financial and legal structure for the business. Lastly, it is crucial to have at least one business mentor and/or an advisory board to challenge business decisions and provide direction.
STEP VII
Create an impeccable feedback loop for stakeholders. Never underestimate the value of collecting, analyzing, and responding to the input received from customers and important stakeholders. Nothing can replace customers telling you how they like to be treated, what you are doing right, and what could be done better. But you won't learn anything if you don't ask. Remember, your customers don't expect perfection; they want a relentless pursuit of quality. Respond to their input by implementing relevant changes. If you really want to "wow" your customers, let them know that you heard them.
STEP VIII
Get certified. Another key competitive advantage is M/WBE certification. Nothing is more important than high quality products and service; however, if all things are equal, a certified M/WBE status could be your edge. Certification is available through a number of sources for both minority-owned and women-owned firms. These include the National Minority Supplier Development Council (NMSDC) and its 39 regional affiliate councils; the U.S. Small Business Administration 8(a) program and other federal and state government agencies; local (county and city) government agencies; the Women Business Owners Corporation; and the Women Business Enterprise National Council. It is well worth the investment to become certified by a nationally recognized body in order to increase credibility with large corporations and government entities.
STEP IX
Network. It works! The bottom line is that people do business with people they know and like. The brand "You" is important to your business success – your intelligence, honesty, relevance, and value to customer and community needs. Sharp entrepreneurs are keen political and civic participants, always willing to add value to community initiatives like economic development, workforce development, and education. Similar activities allow potential customers to get to know you as both a business owner and an asset to the community.
STEP X
Continuous improvement is your business strategy. It is absolutely necessary for firms to ensure quality in operations, in business practices, and as individuals. This is necessary to mitigate the challenge of competitors and to boost the sustainability of your business achievements. The continuous improvement philosophy allows firms to cultivate a process-oriented way of thinking and developing strategies, involving people at all levels of the organizational hierarchy (Imai 1986). In an environment of unremitting advancement, change becomes the norm and stagnation is recognized as the adversary of progress. Ultimately, personal and professional advancement emanates from the inside. It starts with the strengthening of the principles and values from an individual and institutional level.
We welcome your feedback. Remember, these lasting and valuable principles provide insight into better business practices to all entrepreneurs.
Continued success to you and your business!
Rachel Y. Daniel is the CEO of Synergy Marketing Strategy & Research, Inc.. She completes her doctorate at Case Western Reserve University's Weatherhead School of Management in May 2010. Her research interests include brand and organizational trust, and the impact of justice and fairness perceptions on trust.
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