Dealing with Big Corporates

Dealing with Big Corporates

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Being a proudly South African company, Eqstra recognises how important SMEs are to the economy. They are the driving force behind most of South Africa’s economic growth and job creation, contributing approximately 55% of current private sector employment.

“We are in a fortunate position as the procurer of fleet related services and products in that we have a wide range of SMEs that we engage with in the form of tyre and fitment centres, panel beaters, as well as vehicle servicing suppliers, to name but a few,” says Morais.

What criteria do you use to assess an entrepreneur’s company?

When we engage with a supplier, we do so with the view that it’s going to be a long-term partnership where we can leverage off each other and capitalise on any possible synergies. We therefore look for suppliers that share in our values and our commitment to excellence. Then we evaluate them on the following criteria:

  • The technical assessment/audit ensures that the quality of their service/product and the infrastructure and facilities they have in place is sufficient to provide us with our required high service levels. In addition, because the majority of our suppliers represent Eqstra Fleet Management to our customers, we conduct a reference check on them as it’s crucial that they conduct themselves in a professional and ethical manner.
  • We are committed to transformation and all it represents, and therefore the prospective supplier must have a BEE score of a level 4 or better. Fortunately, SMEs usually qualify as QSEs and therefore automatically qualify.
  • As a member of The Carbon Protocol of South Africa we have undertaken a number of initiatives to reduce our impact on the environment and we expect the same from our suppliers, regardless of their size. So each prospective supplier needs to submit their sustainability initiatives that have been implemented and those they are in the process of implementing.
  • Last but not least is pricing. We ensure that the pricing structures are beneficial to both parties, where they retain enough margin to ensure profitability and we remain competitive. We are adding value to our internal and external customers while reducing costs without compromising on quality.

Once they have met the required criteria, we proceed with contract and service level agreement (SLA) negotiations. A monitor and control development process follows to ensure that the relationship is managed and maintained effectively.

Related: How To Pitch the Very Rich

What are some of the most common errors that SME owners make when pitching to a large corporation like yours?

They often tend to under-estimate the scope and complexity of the service required and consequently end up over-selling and under-delivering.

What traits impress you when sourcing suppliers?

Their passion for their own business and people, as well as their ability to effectively and accurately understand our needs and then adapt and innovate to meet them.

What traits raise red flags when dealing with SMEs?

Over-reliance on the owner or boss as it stifles the business and can adversely impact on service delivery. It’s also an indication that processes are not clearly defined which can lead to all kinds of administrative and financial complications.

Another trait which we take cognisance of is how long they have been in business. According to studies, on average in South Africa about 70% of all new SMEs fail for various reasons. So although it does not stop us from entering into an agreement with them, we proceed more cautiously, and then depending on how critical they are to our supply chain, we may do an additional long-term viability study in conjunction with our normal assessment process.

What advice would you offer SME owners who are looking to secure the business of big corporate companies?

Do your homework. Know their market and their competitors. Know the exact type of service or product that is required by them and all the implications for your business. Then tailor-make the solution for them highlighting how this will differentiate them from their competitors and the benefits that can only be derived from using you as the supplier to this solution.

What are the pros and cons of working with SMEs?

SMEs don’t usually have all the red tape that most big corporates do, which allows them to be more flexible and very reactive to our needs. They also have a more entrepreneurial culture which drives innovation in product and service delivery.

However, they do not always have access to the necessary resources (financial, IT, skills etc) that will allow them to reach their potential. We are very technologically driven and service orientated, and are sometimes hampered when SMEs are not able to meet our requirements because they do not have access to the correct resources.

Have you tried to pitch a big corporate before? How did it go?

Nadine Todd
Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.