A staggering 81% of businesses forecast sales growth for large companies over the next five years, according to an American Express survey. The survey of small and medium-sized suppliers found that 50% of respondents expect sales to increase by more than 50% or more for contracts with large companies with sales in excess of $ 1 billion.
The optimism stems from the fact that more and more companies each year hire small companies with large external purchases. These contracts offer enormous opportunities for small and medium-sized businesses. And they account for 30-50% of their total sales depending on the industry.
Almost three-quarters expect their business to grow in the next 12 months. A further 73% agree that their companies have increased their financial commitment to work with companies with sales exceeding $ 1 billion.
Donna Donato, Vice President of Strategic Sourcing and Business Enablement at American Express, explains this trend in the news release.
Donato states, "Contracting with companies provides tremendous growth opportunities for companies in all industries, and can help boost supply chain competitiveness, unlock innovation, provide access to new markets, and have a positive socio-economic impact on local markets . "
Companies claim that the networking and branding of their business is responsible for the failure of the grand contracts. 54 percent of respondents trusted both online and offline networks. Almost half or 47% said that personal relationships with procurement officials have fulfilled their role in their success. More than four in ten of the 501 SME companies use their corporate websites and other marketing materials.
Online social networking across specific groups is the most effective method for 51% of respondents. Some of the other tools are personal sales at 44%, trade fairs and events (42%) and networking in small groups (37%).
Another important tool in this process is certification. This is because it affects the reputation of a brand. According to the report, certifications for service quality products have a high priority of 48%. Past performance and corporate social responsibility also play a role of 15% and 10%, respectively.
The ripple effect of this trend shows that companies are also diversifying revenue streams and expanding their internal teams, creating a positive cycle. Nearly two-thirds (64%) of respondents reported an increase in their revenue, according to the survey. While four out of ten have either diversified their sources of revenue or have seen their business grow progressively as a result of the contracts.
Even wider communities see the benefits. A stronger labor market is responsible for hiring more people to feed the growing businesses from the contracts. More than half (54%) of companies report hiring new employees. Even more important is the fact that 74% of companies retain their attitudes due to the contracts of large companies.
As their businesses grow, the owners seek additional funding to expand their business. In this survey, 57% of companies claim to seek additional funding for growth. And, surprisingly, 66% say access to capital was easy and manageable.
Despite optimism from the booming business, challenges remain. Complex contracting processes are a major challenge for 43% of companies. Subsequently, terms of payment as well as data and security requirements are negotiated.
To this end, 56% of respondents say they are improving their company's privacy policy. Additional measures include the implementation of privacy and data protection training. Companies are also hiring new employees in their data and security teams to improve their opportunities.
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