June 22, 2023
Vice President and Editor-in-Chief, CO—
During the U.S. Chamber of Commerce’s CO– Strategy Studio event, entrepreneurs spoke with CO— and discussed their experiences as they navigate partnerships between small and big businesses. There, they offered SMBs advice and strategies on how to establish relationships with big businesses.
Ensure Your Small Business’ Offerings Are Fully Established Before Seeking Partnerships
As someone with experience working for Amazon’s corporate side, Katy Luxem, the founder and CEO of Big Dill Pickleball Co., has gained a strong understanding of what it takes to be a successful seller on Amazon — and she’s learned how many have failed.
“There are a lot of hurdles with bureaucracy and compliance just in a day-to-day sense with working with… large companies,” Luxem said. “You don't want to waste time and resources if you start with… a half-baked idea or product.”
Before jumping into a partnership with big businesses, Luxem believes small businesses should ensure they have their basics in order, from incorporation and licensing to branding and taglines, and they should have a clear differentiation strategy to demonstrate to their customers what sets them apart.
“Have you done the research to ensure that there is a gap you can fill and a product market fit?” Luxem asked. “Don't start working with Amazon or Walmart or other large companies unless you're really solid on that.”
Implement Cybersecurity Frameworks to Meet Big Firm’s Requirements
As technology continues to advance, cybersecurity poses a bigger risk for businesses, which are liable in the event of a breach. Because of this, many big businesses’ cybersecurity requirements have changed to better protect both the company and consumers’ data — which, according to Defendify co-founder Rob Simopoulos, can pose a challenge for small businesses looking to form partnerships with bigger corporations.
“Many don't realize that these large companies expect that their small business vendors are going to have proper cybersecurity in place, and it's actually part of their vendor selection process,” Simopoulos said.
To implement effective cybersecurity strategies that big businesses expect of their partners, Simopoulos recommends three things:
- Conduct assessments and testing of IT systems from a cybersecurity perspective.
- Train employees on cybersecurity best practices.
- Have an alarm and monitoring system in place to detect intrusions in IT systems.
“Hire a cybersecurity company or … professional to help assess … cyber posture,” Simopoulos recommended. "[They will] look at [the] organization, understand what they have in place, what they don't have in place, [and] what actually needs to be protected.”
Expect Problems to Arise While Working with Big Businesses
In her time at Amazon, Luxem has learned from the countless mistakes business owners have made. She believes the most common mistake is not accounting for logistics and affiliated costs that are required for long-term growth and success.
“I saw a lot of companies launch a product like a supplement without realizing that Amazon will require you to remove items that expire at regular intervals,” Luxem said. “There's also… problems with leaking packages for liquids, electronics labeling, [and] regulatory things like that.”
From the cybersecurity perspective, Simopoulos warns that the biggest mistake being made is not prioritizing the IT side of the business or making cybersecurity a priority.
“There should be a standardized process in your organization to review cybersecurity and continue to improve your cybersecurity over time,” Simopoulos explained.
In a warning to SMBs, Luxem advises them to consider the longevity of their partnership, as well as their bottom line, before deciding if an affiliation with a big firm is worth the investment and resources.
“Can you be profitable while working with this partnership long-term?” Luxem asked. “On Amazon, fees are about 30% of each sale, and storage fees also go up every Q4… In any industry, you want to make sure you're fully accounting for all the costs of doing business with that larger partner.”