Do you know what procurement means? What about procurement opportunities? Many small business owners aren’t familiar with these terms, so we decided to write a blog to explain procurement and explore procurement opportunities for small businesses!
Procurement refers to the acquisition of the goods and services that your business needs to operate. Getting essential goods from reliable sources is important for all businesses, but for smaller businesses who typically rely on a limited number of retail goods or services to earn their profits, consistent quality and reliable delivery are even more critical to their success.
In this blog post we will explain the three main types of procurement: direct procurement, indirect procurement and services procurement. We will also explore the opportunities that exist for small businesses in the procurement world from both sides of the coin: procuring and supplying.
What are the different types of procurement?
Generally speaking, direct procurement is the acquisition of the goods or materials you need to produce the items you sell. This ranges from raw materials to semi-finished goods depending on the level of processing your small business does to prepare the item for sale. For retail businesses, direct procurement looks like buying the finished goods that they resell to the public.
Indirect procurement refers to the procurement of things you need to run your business that are unrelated to the goods or services you sell. Essential business supplies such as office supplies, technological equipment and software frequently fall under this category.
Services procurement is another type of procurement that is related to acquiring the outsourced or subcontracted business services you need to run your business. Marketing, design, accounting, legal, human resources and other administrative services are examples of B2B services a business may be seeking in order to operate effectively.
Find procurement opportunities on B2BeeMatch
B2BeeMatch is unique in its focus on connecting small businesses with the B2B goods and services they need to succeed. Join the growing international business networking platform today to explore procurement opportunities for small businesses around the world!
Tips for developing your procurement strategy as a small business
When it comes to small businesses, there are different elements to consider when developing your procurement strategy than those of large businesses. Why? Because small businesses typically are less diverse in their sales and therefore rely more heavily on the consistent quality and availability of the goods and services they are procuring.
1. Integrate CSR into your procurement strategy and strengthen your brand identity
Procurement strategies must always keep cost in mind, but for businesses with a strong commitment to corporate social responsibility, low cost may not be the determining factor in selecting a supplier.
Integrating CSR into your procurement strategy will look different based on the type of goods or services sold, and the particular values that each business owner holds. CSR can look like a commitment to prioritizing vendors from particular types of businesses such as women-owned small businesses or service-disabled veteran-owned small businesses. It can also look like a commitment to working with vendors with clear business transparency in order to be able to certify the quality of raw materials or the labor practices involved. Sustainability is another important factor of CSR that may help you determine where to allocate your business dollars.
It's up to you to determine your requirements around CSR and your procurement strategy. When developing your procurement strategy, it is important to consider your brand’s values and how to align your procurement strategies in such a way that consumers can recognize that alignment. After all, as we know, today’s consumers place significant value on positive societal influence when making a purchase.
2. Build relationships with potential suppliers
The procurement process provides opportunities for small businesses to network and build relationships with potential suppliers. While you may choose to only purchase from one supplier at a time, we recommend that you maintain positive business relationships with various suppliers as reliance on a single seller makes you more vulnerable should they ever go out of business or experience significant shortages. You could even explore contract opportunities with multiple suppliers at once. If you do, you may end up gaining access to different goods or services that might contribute to the growth of your business or help strengthen your supply chain.
3. Work with other small business and grow together
While larger suppliers have a lot to offer in terms of resources and reputations, don't forget about other small businesses! Although one small business may not be able to fulfill your contract alone, they may be able to team up with another small business to get the job done. Small businesses often work together to help each other meet their business goals and access contracting opportunities. Working together can help small businesses access resources and increase capacity. For instance, while one small business may have greater access to capital, more human resources, and more effective management strategies, they might not have the tech required to fulfill your contract alone—but this does not mean they can’t deliver! If they subcontract part of the work to another small business with the right cutting-edge technologies, the two businesses may be able to work together to get you exactly what you need! So, keep this in mind, and don’t hesitate to consider even the smallest of small businesses when you are shopping for suppliers!
Build a business network as a small business
If you are having trouble finding small businesses in your area to fulfill your contracts, we recommend you join an international business networking platform such as B2BeeMatch. Why? Because B2BeeMatch offers an easy and effective way to connect with small businesses around the world that offer the B2B goods and services you need to succeed!
Procurement opportunities for small businesses as suppliers
Small businesses play a significant role in the procurement strategies of large businesses, governments, and even other small businesses. Read the following tips for becoming a supplier and learn how to secure regular contracts to help your business grow and be more sustainable.
1. Seek out public sector contracts
There are more systems in place than ever to help small businesses access a fair share of federal government procurement contracts. In the past, contract bundling made it more difficult for small enterprises to be competitive in securing government contracts. In recent years, some governments have been allocating a greater percentage of their procurement to small businesses. Some even go as far as allocating a percentage to "small, disadvantaged businesses" in order to make the federal marketplace more accessible to businesses that have previously been disadvantaged in the contract competition process.
Why would governments create such policies within their procurement plans? Why would they want to achieve a more fair proportion of small businesses in federal government procurement? Well, this move is in part due to the understanding that small businesses promote job creation as well as innovation. You see, federal agencies know that working with small businesses has positive effects on economic growth. So, those federal agencies are working to increase small business participation in government procurement. Of course, government contracts are an invaluable opportunity to scale your business in a sustainable way, so get in touch with the appropriate department in your country to explore the possibilities of securing a government contract.
2. Get your foot in the door by subcontracting
If you are a new small business and an up-and-coming supplier, you may not be able to secure the larger government or private sector contracts. However, subcontracting opportunities may be a way to get your foot in the door and build a reputation as a dependable supplier. If a competing business requires assistance to meet the demands of their contract, they may reach out to their business community to find help through a subcontractor. You don't need to be the prime contractor (the company responsible for completing the project under contract) in order to make money, so working as a subcontractor can be a wonderful business opportunity as you establish yourself in your field. Helping the prime contractor to meet the demands of their business contract is a win-win: they deliver the work they were contracted for and you start to build a positive reputation for yourself and your business.
3. Use online platforms to find new B2B sales opportunities
Online networking platforms such as B2BeeMatch offer an accessible space for small businesses to promote themselves to other businesses. B2BeeMatch offers a type of networking that doesn’t depend on existing connections or geography—instead, it’s all about what your business offers and what you need. Plus, online networking platforms such as B2BeeMatch make B2B connections much quicker and easier than attending traditional networking events.
B2BeeMatch is the best online platform for small businesses to find procurement opportunities
We recommend you sign up for B2BeeMatch, the growing international business networking platform, to start generating leads and connecting with businesses that are looking to outsource right now!
Effective procurement is essential for the success of all small businesses
What are your business procurement goals? The purchasing decisions you make through your procurement strategy can make or break your business and becoming a supplier can help you scale your business to new heights. As they account for a significant portion of your business spending, the procurement choices you make affect all levels of your business. So, make sure to read and consider our recommendations when planning your procurement strategy—then, make the best choices for your business's future and sustainability. Whether you choose to align your procurement strategy with your CSR commitments as a private enterprise or you choose to go after as many federal contracts as possible, a solid procurement plan will help you with achieving new levels of business growth.
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