Resource Guide
Methods that Work for Creating Corporate Clients, page 18
Subcontracting is a strategy with a number of payoffs, according to Nancy Connolly, president and founder of Lasertone, Corp. in Littleton, MA. Connolly is certified as a women’s business enterprise through the Women’s Business Enterprise National Council. Her firm manufactures and sells laser cartridges, and some of her best customers are 1st-tier contractors who provide office products to corporate clients.
The benefits of subcontracting are clear in terms of growing the business and building relationships. Lasertone fulfills large orders for the prime contractor, and creates positive connections with both the contractor and the corporation. When the prime contractor expands into new corporate markets, they know they can count on Lasertone to help meet the potential demand. And, because twenty percent of an office supply budget is spent on cartridges, Connolly explained, some corporations look for a unique supplier. In this situation, being the “known” can make or break a deal.
This recently occurred with Fleet Financial of Boston, where Lasertone served as a subcontractor for the bank’s 1st-tier office product supplier. The bank chose to develop a separate contract for toner, and selected Lasertone as the prime supplier. Connolly credits this business with the relationship she built with Fleet as a subcontractor.
There are other payoffs to subcontracting that may not be as obvious, Connolly explains, but are equally as valuable. Subcontracting can help to enhance efficiency
and decrease overhead. Connolly points to distribution as an example. When she subcontracts with a prime who works with multiple corporate sites, Lasertone can deliver in bulk to the prime and save the cost and complexity of shipping.
“If I had to add the cost of shipping to every order, I would not be as competitive,” Connolly explains. “ Working as a subcontractor increases my orders and keeps my costs down. I pass on the savings to the prime, who passes them on to the client. When you make subcontracting seamless, everybody wins”
Connolly advises other women who are interested in subcontracting to identify challenge areas in their businesses that might be addressed by working with a 1st-tier supplier. She also suggests starting small. This was her approach with Ford Motor Company, and it resulted in one contract increasing from $200K to $800K within a year.
In this situation, the supplier diversity managers at Ford Motor Company referred Connolly to their prime contractor, who is also a minority. The prime provided twenty products to Ford. Connolly asked them to consider including just two of Lasertone ’s products, which they did. Once the prime understood the value that Lasertone brought to their contract with Ford, the subcontract grew.
Connolly also encourages businesswomen to learn about the prime’s needs, and to respect current contracts between primes and corporate clients. And, she says, creating a subcontracting relationship can be a slow process – sometimes up to a year – but the potential rewards are worth the wait.
Citation
Center for Women’s Business Research. “Methods that Work for Creating Corporate Clients, page 18.” Washington, DC.