It’s the dream, you start your own business, get a few small clients and then you are all set for the big leagues. That big contract that is going to take you to the next level, transform your business and your life. Soon you will be driving the car you always wanted and sipping champagne on the French Riviera without a worry in the world.
Before you get carried away, I want to pull you back a little. I was one of those people who always thought the pinnacle would be the contracts with the multinationals. A few years ago, I made the very conscious decision not to chase large multinational organisations for the opportunities of doing business with them.
Why would I do that? Well, a situation that my business was recently confronted with reminded me why. It goes a little something like this.
A large organisation recently approached us to organise a large event. The company is a multinational with T/O of £3.6bn.
First, we arranged a venue site visit, and they love what we had to offer. Site visits are the usual protocol for large events, and so far, everything is going smoothly.
Next, they try to negotiate the price down as much as they can. Not unexpected, and given the numbers, we offered a small discount.
We agree on the terms, and then they invite me for further talks at their shiny offices. We’d agreed on terms over the phone and email, nothing further was to be gained by meeting again in person, so I politely declined and said that I was happy to arrange another call if needed.
Because of their procurement systems, they renegotiated terms of payment. This was not ideal, but you have to accept it somewhat with larger organisations, unfortunately.
Moving on, they paid a small holding deposit, and it’s less than what we usually accept. Again, not ideal but at least it was some form of security.
Three days before the agreed final deposit date, they called to cancel the booking citing “management pulling the event.” And they ask for their original deposit back. Obviously, this was not what we agreed, and they were actually liable for more.
We then got a call from one of their directors who attempted to negotiate the terms of cancellation with us with “oh if you do us this favour there will be other opportunities in the future”.
Therefore, from a position of booking, signing on the dotted line and cancelling, they think they are doing us a favour of offering the “potential” of future work. How do you say “go **** yourself” in the politest possible way?
They send a formal notice of cancellation letter to our office and refuse to take any of my calls. They thought that would be the end of the matter. It was not, and I will tell you the rest below.
WHY BIG BUSINESSES ARE NOT ALWAYS THE BEST CHOICE
Getting a contract with a large organisation can transform your business and your life. There is absolutely no doubt about that. But it can also cost you in a lot of wasted time and energy. I have also come across many businesses who become a slave to the larger organisations that they supply.
I don’t want to come across anti-corporation, but my business strategy has not been to go after these larger organisations as clients and here are my reasons why:
They have layers of bureaucracy to go through to get decisions made
It’s complicated to distinguish who the real decision maker is
Their procurement processes mean that to get paid you will have to fill out a lot of forms and wait a long time after you have supplied goods/services which can affect your cash flow
If like in the instance above the organisation pulls the plug on you after agreeing, do you have the appetite and the money to pursue it further? In my case, it’s a matter of principle, and I pursued it
You can be left in a situation where you must agree to their terms of business rather than your own and do more work for less money. That’s not living the dream.
You could be a pawn to help someone gain promotion. I remember once someone who worked for a multinational bank which made billions asked me whether I would organise a teambuilding event for them for free, as it would help with their career prospects. “No thanks! The bank can more than afford to pay us what we are worth.”
False promises – the “if you just do me this favour then we are a massive company who could potentially offer you are a lot of work” – 95% of the time this is bulls**t.
I’m not saying that you should never work with big business. Small businesses do and do very well out of it. But make sure you approach it from the right angle.
HOW TO WORK WITH BIG BUSINESSES
So what do you need to do to attract and work big business? Do exactly what you would do if you wanted to attract any business.
1. Make sure your product or service is excellent if you work on offering the best possible product/service people will hear about it and because of that, they will want to do business with you.
2. Be yourself, focus on what you do well. Don’t try and put on a front and be something that you are not. Be honest about what you can deliver and be straight about what you don’t do. Explaining that you don’t offer X or Y service can often be just as impressive as what you can deliver.
3. Charge what you are worth. Negotiation is fine but remember if you offer an excellent product/service then you must get paid your worth, no matter whether you are dealing with your local corner shop or Apple. My mistake in the situation above was the allow them to dictate some of the terms with me.
However, I’m smiling. Over the past 5 years, the balance of power really has shifted, and now is the time that as a sole trader or owner of a small company that you can position yourself on a more level playing field with the PLC’s. The more and more that technology comes into play makes it only a matter of time before supply and payment terms are standard across business size and industries.
And back to my situation with the company that cancelled on us, for a conclusion.
As a matter of principle, I decided to pursue them for the full deposit plus a further cancellation charge.
They ignored the email that I sent them with an invoice attached, so I hired the help of Wadsworth Solicitors in Birmingham. You may think that this is an expensive option. However, the firm charged me a very reasonable £90 for the letter of intent.
A clear and thorough letter, citing the facts of the case, along with the threat of further legal action from a solicitor did the trick. A senior director from the multinational called my lawyers offering to pay the full deposit plus the additional cancellation charge. It seems they didn’t want the hassle of a court case or to publicly confront what they had done.
As promised they paid. I must say a big thank you to Wadsworth’s solicitors in this instance.
Doing business with big business is not always the Promised Land that you thought it might be. But if you are going to work with a multinational, get your terms of business in order and have the confidence to work on your terms, and importantly, be prepared to enforce them if necessary.