Small businesses sometimes find it confronting and daunting trying to sell to large multinationals. It can be a challenge to be a supplier to a large business. As a small business owner, there is no reason  to feel intimidated when approaching a large multinational company. Christelle Damiens explains.

Large multinationals are often aware about what they are not doing well and are quite open to suggestions from small businesses. Not always being able to move quickly enough, large corporations recognise the value of fast-moving, agile small businesses that are experts in their field and can help them achieve their objectives. Often as a small business owner, the solution you are offering is very niche and your target market is a handful of large multinationals. In that case, there is often no need for a distributor to act on your behalf. It may even be counter-productive to have one.

On many occasions, I have been mandated to test the interest of large multinationals in a specific technology. In some cases, small businesses have been responsible for developing a breakthrough technology or a new scientific process. Once again, this new technology or process may only be useful for a handful of companies. Europe is often a great market as it is home to a large number of multinationals who are always looking to improve their productivity and protect their leadership status. If you have what they need, they will listen to what you have to offer.

Approaching multinational companies

What is the best way for SMEs to approach multinationals? In the past few years, a number of programs have been developed by large European multinationals specifically designed to target start-up companies. These programs are often part of the corporation’s R&D strategy or of their overall innovation program. What often happens is that European expatriates throughout the world are mandated to identify eligible start-ups for these programs. The partnership arrangement the multinational company is offering can be quite broad, encompassing:

  • Co-development of intellectual property.
  • Capital investment.
  • Involvement in your board of directors.
  • Integration of your product offering into their product range.

Before applying for one of these programs, carefully assess what their priorities are in terms of investment. Multinational companies have usually clearly identified a number of key areas where they are looking for solutions in order to solve specific issues (e.g. high energy costs) or to improve their service to their customers. If your solution falls within their list of priorities, you will save yourself time and have a greater chance of success.

If you do decide to get involved in these types of programs, you need to be very clear about what you want to get out of them and ensure that what you are asking for is feasible. Likewise, it is important to find out how it could help you to meet your objectives, both in the short term and over a longer timeframe. Often, these programs look like a great opportunity for a small business, but large multinational companies tend to take their time and then change direction abruptly due to budget cuts.

If you’re in the right place at the right time, leveraging these types of programs can be fantastic. If you’re thinking of selling your business down the track, it is also a great way to give your business exposure to potential buyers. Large multinationals are constantly on the lookout for small businesses to buy.

Develop your key account strategy

If the multinationals you are targeting do not offer these types of programs, then you’re going to have to resort to the traditional sales approach. Once you have validated an initial interest from a multinational, you now need to establish a strategy to enter that account. In many instances, you won’t be able to sell directly to that European multinational. You need to map out their decision-making process and the suppliers they are using for your specific product or solution.

For example, large European multinationals usually have up to three preferred distributors that they use to source things such as industrial tooling or safety equipment. How can you work with these suppliers/distributors? Your value proposition is important, as you will need to use it when approaching that supplier. Use the interest of this multinational as your trading value with the distributor to get in.

In the context of large supply chains, you will need to partner with companies already supplying to these large multinationals. Purchasing departments are aiming at keeping the number of their suppliers to a minimum, so it may be difficult for them to justify purchasing your product if you do only supply one component to them. In that case, ask them who their current suppliers are in your category and who is the best contact person. The best example of this situation is within the aeronautics or defence sectors, where small businesses have no other way to approach multinationals other than through partnering with Tier 2 suppliers.

Currently in Australia, large overseas contractors have been awarded large deals on the premises that they would allocate some part of the business to local SMEs. These opportunities are currently being promoted Australia-wide by the Australian government to SMEs. Start to position your business now for these long-term defence contracts for example.

Christelle Damiens is Managing Director of Exportia which provides expert consultancy services to SMEs who have developed a technology and have made the decision to export it to Europe.