ConneCting ireland’s unique

eCosystem of large and small business

Business ConneCt RepoRt 2018

www.sfa.ie#BizConnect

Presented by

RepoRt

Welcome to the Small Firms Association’s (SFA) Business Connect Report, which I hope will be a valuable resource for all companies, large and small, as they engage in B2B contracts.

The SFA is committed to championing the development of a strong and collaborative business culture, a culture that is characterised by large multinational and indigenous businesses in diff erent sectors partnering with our small businesses. With the Business Connect event and this follow-up report, we are beginning a long overdue dialogue between Ireland’s large and small businesses.

Ireland is a nation of small businesses. Small fi rms with less than 50 employees account for 98% of the total number of businesses and employ one in every two private sector workers. These companies make up one third of the total value of the Irish economy and are responsible for one third of business investment. Perhaps most important of all, they are present in every village, town and city in the country.

Another vital part of the business ecosystem, of course, is the community of larger businesses, both indigenous and multinational. Despite accounting for less than 2% of total enterprises, companies with more than 50 employees are responsible for employing the other half of the private sector workforce. There is no doubt that these businesses play a major role in our economy, making large contributions to the tax base, productivity, exports and investment.

Zooming in on the expenditure of multinationals, currently they source €4.5

billion of goods and €5.7 billion of services from indigenous Irish businesses. This amounts to 18.1% of their total spend on goods and 7.3% of their total spend on services. Our aim in the SFA is to shift more of this spend to indigenous suppliers, with dividends for small fi rms and the economy as a whole.

With Business Connect, we aimed to shine a light on some of the successful collaborations between diff erent parts of Ireland’s business community and to create a pipeline of opportunities for all businesses, large and small.

I would like to thank our colleagues in Ibec for their support on this initiative and in particular Ibec President Edel Creely, who has been a strong advocate of the Business Connect marketplace from the outset.

I would also like to thank the fi nalist companies in the SFA National Small Business Awards 2018 and the Awards sponsors, AIB, Bord Bia, DHL, Energia, Enterprise Ireland, IEDR, SEAI, Skillnets and Three, for their involvement in Business Connect.

Kind regards,

Sven Spollen-BehrensSFA Director

ForEWord

1

Ireland has a unique ecosystem of large and small businesses, multinational and indigenous. Indigenous Irish suppliers account for 10% of purchases made by multinationals based in Ireland. There is huge potential to increase this figure, with every percentage point increase injecting an additional €1 billion into the domestic economy.

What is Business Connect? Business Connect is a marketplace event, launched by the Small Firms Association in 2018 to bring SFA members together with medium and large companies across a wide range of industries.

Thanks to its unique position as part of Ibec, the SFA is ideally placed to gather the best of small business as well as leading indigenous and multinational companies.

The inaugural event took place on 1 February 2018 in the Aviva Stadium and was attended by over 350 businesses.

Opening the event, Sue O’Neill, SFA Chair, said: “In a small open economy like ours, small and large firms often compete – for contracts, for talent, for government and media attention. But they also thrive off each other. There are huge opportunities for small businesses once they understand how to navigate working with larger organisations and position themselves correctly to deliver value. Securing a large indigenous or multinational B2B customer has the potential to transform a small business.”

Closing the event, Edel Creely, Ibec President, said: “I am very struck by the statistic that 98% of businesses in Ireland have less than 50 employees, so the theme and learnings from today’s conference, the opportunity and the potential for small and medium sized businesses to grow via a supply chain to larger companies, is hugely relevant and important. In the case of Ireland, our ecosystem is global. And that is what is creating new opportunities for many people in the room here today and across Ireland. Every 10 jobs created by Foreign Direct Investment in Ireland leads to the creation of seven indigenous jobs.”

The half-day event comprised of three thematic sessions, each of which included keynote speeches, a panel discussion, Q&A with the audience and roundtable knowledge-sharing. These sessions were interspersed with networking breaks and opportunities to visit the exhibition area where the finalist companies and sponsors of the SFA National Small Business Awards were present.

Over the course of the event, delegates from small companies got a rare view inside the buying processes and decision making in some of Ireland’s leading companies, in

IntroductIon

Sue O’Neill, SFA Chair

2

Sue O’Neill, SFA Chair, Sean Gallagher, event speaker and Edel Creely, Ibec President

addition to insights from peers that have succeeded in securing major clients. For larger firms, the day provided access to a pool of talented local suppliers of a wide range of goods and services, an opportunity to explore collaborations that may allow them to innovate rapidly and a chance to demonstrate their positive impact on the indigenous business ecosystem.

Knowledge-sharing: roundtable discussions and reportWith such strong attendance from across the business ecosystem, the SFA wanted to facilitate introductions, discussions and two-way knowledge-sharing. With this in mind, each of the three thematic sessions concluded with a roundtable discussion. For each, one or two practical questions were posed by the MC, RTÉ’s Richard Curran,

for discussion at each of the delegate tables (mix of buyers and suppliers).

The groups had the opportunity to reflect on the points raised by the main speakers and how their own experiences compared with them. The main points arising from the discussion from each table were recorded by a rapporteur and fed back to the SFA at the end of the event.

The notes from these roundtable discussions have formed the basis of this report. While every comment could not be included, it gives a flavour of the interactions between delegates at Business Connect. Some points came up time and time again in the notes, others were once-off nuggets of information or advice. Together, they form a lasting resource both for those that attended the event and the wider business community.

3

one of the main advantages that we have found so far with the Small Firms Association is that they are

very proactive in introducing people to other businesses, other people who are going

through the same processes and dealing with the same issues that you are

Michael Bambrick, HEAtESE

4

Dr Peter Brennan, Bid Services

SESSIon 1 GEttING thE CONtrACtIn the first session, delegates got an understanding of the private procurement landscape in Ireland. Dr Peter Brennan, Chair of Bid Services, drew on many years advising companies on tendering to outline the scale of the opportunities available and provide guiding principles for bidding for work in the private sector. Tom Smith, Head of Procurement for Three Ireland, outlined his buying process and what Three looks for in a supplier. Anita Finnegan from Nova Leah focused on her experience of winning big contracts and her efforts to reduce the tender process from 12 months to four. Karl McGann of AIB Merchant Services shared insights as both a buyer and a supplier to small and large businesses.

Roundtable question 1.1: What are the biggest stumbling blocks for aspiring suppliers?

Roundtable question 1.2: What could buyers and supplier do to minimise these challenges?

In the discussion on stumbling blocks, there were a number of recurring issues that came to the fore. Some were common issues for buyers and suppliers, while others were unique to one group. Many were interrelated.

Suppliers identified a challenge at the very outset of finding out about a tender opportunity. Unlike public sector opportunities, there are no requirements for B2B

opportunities to be publicised. Incumbent suppliers, those with preferred supplier status and those who have personal relationships with buyers often have access to intelligence about upcoming and future projects/tenders, but companies that do not fall into any of these categories can be ‘out of the loop’. Even those businesses that do hear about tender opportunities emphasised that in some cases they are not given enough notice of upcoming opportunities to tender.

Establishing relationships was highlighted as one of the main obstacles for aspiring suppliers. There was consensus that identifying the decision maker, getting access to them (especially face-to-face) and

5

Anita Finnegan, Novah Leah, Karl McCann, AIB Merchant Services, tom Smith, three and Dr Peter Brennan, Bid Services

developing a personal relationship are of paramount importance, but can be difficult to achieve. This was echoed by buyers, who pointed out that their time to meet with potential suppliers is very limited. They highlighted that the timing of any contact is vital – if it coincides with an upcoming tender for the particular product or service, they are much more likely to find time to meet with the supplier. Other tips shared by companies included joining industry bodies and attending networking events as ways to meet buyers and have a face-to-face touch point.

Both sides indicated that it is difficult for a buyer to assess a tender from a company they have no prior knowledge of. This means that newcomers have a hard task of breaking into the supplier circle and must ensure to maximise the impact of their tender documentation.

This leads to another set of challenges, namely a frequent lack of knowledge among small companies of tendering procedures. Without specialised staff and due to limited experience, tendering skills can often be weak in these companies. There is an onus on the bidder to upskill to deal with the process, which could

be achieved by partnering with tender specialists or hiring a dedicated member of staff to deal with tendering. Buyers could also assist by providing clear information in request for tender documentation, outlining the selection criteria and providing a point of contact for clarifications and queries. Where possible, buyers could meet stakeholders at the beginning of the process to clarify the requirements. Bidders, whether successful or unsuccessful should request feedback from the buyer in order to build intelligence and skills for future tenders.

A cluster of points were raised around common pitfalls of completing tender documentation. Not reading the tender document closely was flagged. These documents can be long and complex, with requirements spread throughout them. A number of read throughs are generally needed to ensure every part is responded to.

The supplier submission must tread a fine line. On one hand, it was pointed out that buyers don’t have time to read surplus information, so tenderers should avoid being too broad. On the other hand, assessors can only score what is included in

6

the document, so care is needed to ensure that all questions are answered. There was consensus that proposals should be tailored to each pitch, answer the questions asked (if the scoring system is known, write to the scoring) and focus on the added value that the supplier can provide. A generic history of the company or description of its products/services will not be enough to differentiate it from competitors.

Another learning shared at the Business Connect event was not to ‘shoot in the dark’. Instead, know your audience and provide full information on your bid from the outset. Focus on what makes you unique (business and personnel) and, very importantly, quantify the benefits you can offer. Even the smallest companies should make sure that their organisational skills, writing quality and attention to detail don’t let them down.

There were some suggestions that a response template should be provided to suppliers to promote consistency and a level playing field. This was counterbalanced by the view that tenders are already overly restrictive and often do not lend themselves to allowing a newcomer to communicate a proposition. Ultimately, as one group noted: “If the way the buyer likes to buy is very different from the way you like to sell it is very difficult to get the business and to deliver it if you do win it.”

A large number of suppliers cited the resources (staff, time, cost) required to participate in B2B tendering as a challenge for their business, although others pointed out the need to invest in order to be successful.

There was a discussion about the minimum requirements outlined by the buyer, for example regarding turnover, track record, headcount and insurance. Some felt that these can be prohibitive for small companies. However, the buyers in the room were very clear that minimising risk is one of the most important factors for them, sometimes more important than price. The minimum requirements are designed to give the buyer confidence that the supplier can deliver, has the ability to scale and that as much of the risk as possible lies with

the supplier. Some of the small businesses believe that this is not the right approach and that buyers should treat the supplier as a partner.

The concerns expressed by the buyers highlight the need to demonstrate capacity and consistency in the tender. Case studies and customer testimonials can be powerful for this purpose. Suppliers may also wish to outline how they would deal with potential changes internally or coming from the supplier, for example personnel, budget or requirements.

In cases where companies felt they were at a disadvantage due to their small size, a number of approaches were suggested. Collaborating with other companies in consortia has allowed some firms to overcome this challenge. Another option, which was suggested from the stage was to target the sub-supply chain of the main contractors. This would be particularly effective in the current environment where many large companies are moving to rationalise their relationships and cut down on the number of direct suppliers. Both approaches would also help a small company to be involved in a contract even if they cannot deliver the whole offering themselves.

Regarding price setting, a large buyer indicated that they would not change supplier for less than a 3% saving, due to the administration and disruption involved. Even with this information, pricing the offering can be challenging for a newcomer as they are often not aware of the incumbent’s pricing. Tenderers should also be aware that, unlike in public procurement, there are likely to be multiple rounds of price negotiations in a B2B tender process. In this context, it is advisable not to pitch your best price from the beginning. There were also frequent reminders from tender experts for small suppliers to ensure that they will have sufficient margin from the business to make it worth their while. Suppliers must stand firm on this throughout what can be very tough negotiations and should never commence work unless a contract has been signed or a PO number provided.

7

8

Barry McLoughlin, the Communications Clinic

SESSIon 2 MAKING yOur PItChSession two started with a presentation from entrepreneur Seán Gallagher. He drew from his experience on both sides of the table pitching an idea or business, including his time on Dragons’ Den where he witnessed many great pitches as well as some disastrous ones. Barry McLoughlin from The Communications Clinic gave his top dos and don’ts for pitching. Seán Walsh of SFA member company Poplar Lines Trading Company spoke about winning a tender with UK retailer John Lewis to provide many of their household products as well as his exclusive deal with Disney for their merchandise.

Roundtable question 2.1: What are the essential elements of a successful pitch?

The importance of preparation came up time and time again as key to a successful pitch. In terms of the process, make sure you know who you will be pitching to, the process, duration and scoring system. Advance research is critical so that time is not wasted at the first meeting establishing the basics. Find out as much information about the market and the company as possible. Work to really understand the threats, needs and requirements from the buyer’s point of view and what suppliers they are considering (local/

international). As much as possible, research the people who you will meet with and try to understand what they really want. This advance preparation will allow you to tailor your pitch.

In terms of the content of the pitch, companies shared their lessons learned on the right approach, but also many pitfalls to avoid. The pitch should have a clear message focused on the buyer and their needs, not on the supplier (it is not about ‘The Power of Me’). Demonstrate how you can solve a problem and the value you can bring to the buyer’s business. Showcase the benefits you offer, not the features of your product/service. Techniques that

9

the key benefit of coming to an event like this would be the peer-to-peer learning and actually learning so

much from the people sitting at the table next to you. they’ve been there and done it, sometimes in other

countries that you haven’t been to. coming to an event like this is also about honing your skills

and learning to pitch to investors, pitch to manufacturers and other industry

sectors as well

Anne Butterly, EASydry

10

are judged to work well by both buyers and suppliers are using visuals in your presentation, backing up every claim with evidence and providing case studies and examples of projects you have delivered. Some contributors felt that an interesting or compelling story should be told through the pitch and there was broad agreement to avoid jargon.

For the person or people delivering the pitch, it is important to rehearse in advance, but experts advised not to stick rigidly to a script. Be honest, authentic and believe in what you are saying. These elements often come naturally to small businesses as those making the pitch have a close connection with the business as an owner, manager or director. If possible, adapt the pitch style depending on who you are pitching to – again, getting this information in advance will be key. Small businesses encouraged their peers to be confident, to see themselves as equals of the buyers on the other side of the table and talk to them at their level. Some businesses shared their experience that the first few words are the most difficult, especially in a formal pitch setting, but all acknowledged the importance of grabbing the audience’s attention in the first 15 seconds. Listening is also encouraged, with the advice not to pitch ‘at’ clients but to involve them by asking questions. Other best practice was not to waffle and to be conscious of appearance/grooming and balancing eye contact between all attendees.

During the Business Connect roundtable discussions, an important point was also raised to avoid over-promising. This comes up in particular during the question and answer session of a pitch meeting. The advice was to know your limitations and not to be defensive if probed about them. The universal consensus was “no spoofing” as it would only damage the relationship in the long run.

Roundtable question 2.2: What role do person-to-person contacts have before and after the pitch?

A specific question was posed to Business Connect delegates around the role of personal contacts and relationships in securing contracts. Broad consensus emerged that person-to-person contacts are vital, both at a pitch meeting, before and after. Some of the comments, which were echoed throughout the feedback, included:

■ “Person-to-person dimension is vital, without it there is no deal.”

■ “People buy from people.”■ “People first, before process.”

Before the pitch, developing a personal rapport with the buyer can build trust and enhance the supplier’s credibility. Some tips include leveraging introductions and referrals through your network to develop contacts, although there are many challenges for small firms in this regard, as discussed in session 1. If you do manage to connect with the buyer or an influencer in their organisation or network, try to develop a connection/rapport rather than drilling them for information from the outset. This relationship will help you to understand the buyer and be able to put yourself in their shoes when preparing your pitch.

Equally, at the pitch meeting, making a connection with the people in the room is a key goal. Making eye contact, minimising jargon, engaging with the buyers and demonstrating how you can solve a problem for them will all contribute to building a personal rapport.

Many business people highlighted that the follow up after the pitch is very important. Touch base to let them know you’re still there, confirm action points and expectations from both sides and use the opportunity to seek feedback and also to provide feedback if this seems appropriate.

11

the benefit of working with the SFA is the benefit of all the different people we can meet,

all the different members of industry who might be interested in working with us at a different

level that you might not think of, so it gives us a better platform to grow our business

Lara Moran, AdAmS & ButlEr

12

Dave Byrne, Dualtron

SESSIon 3 COLLABOrAtE tO INNOvAtEThe final panel of the Business Connect event was about how to ‘Collaborate to innovate’, highlighting the versatility of small companies and their ability to react to changes and turn around innovative ideas quickly. John McQuillan, Travel Tech Labs, spoke about his experience of creating solutions for large organisations in a fraction of the time it would take to do it themselves. His experience is that it can be hard to make a direct approach to a large company. Instead, he advised creating a situation where they come to you by publishing content and having strong advocates. Dave Byrne, from SFA member company Dualtron, and Ross Brennan, TCD Innovation, focused on how to retain your most innovative team members, ensuring they have the opportunity to grow with you and are recognised for the contribution they make.

In the panel discussion on collaborative innovation, a number of the themes from session one and two were reiterated in relation to supplying innovation to a large company. Aspiring suppliers must understand the buyer’s cycle and prove that they can deliver. Risk is a major concern for the buyer, who may have concerns about whether the supplier company will be around in 1/3/5 years’ time, how they would deal

with attrition of key experts and whether their priorities would shift if another big order came in. When approaching a larger company in relation to an innovative product or solution, it is particularly important to identify the people that matter to you such as decision-makers, influencers and gate keepers. It was recommended to keep your sponsor involved throughout the process if possible and let them make the case to their internal procurement team. Beware also of tyre-kickers, blockers and the internal Head of Innovation, who may not want to involve external players.

13

the Business connect event brought a more diverse group to the mix and allowed for greater networking

Ciara troy, oIISHI FoodS

14

richard Curran, MC

Roundtable question 3.1: What are the pros and cons of in-house innovation versus outsourcing/collaborating to innovate?

The roundtable discussion between small and large companies threw up a variety of perspectives on the relative merits of in-house innovation versus collaborating with outside partners and suppliers.

Pursuing innovation in-house was seen to have a number of strengths. Most frequently cited was the deep knowledge of the culture, product, brand, processes, people and broader market context that comes with in-house innovation. Another valued element was the ability to maintain control of the R&D/innovation process, keep it aligned to the company’s strategy and closely monitor cost, deadlines and quality. The other main comments related to the longer-term advantages of breeding a culture of innovation and creative thinking internally. This can become a key business strength and it creates a sense of value and loyalty to the company among employees. An important tip is not to ring-fence innovation to the R&D team, but rather foster it as a skill throughout the organisation.

These aspects were balanced with a number of concerns and downside risks of innovating in-house. Chief among these was the dilemma it poses between pursuing innovation, which can be time consuming, and delivering the core business of the organisation (future versus present). There is a risk of either losing focus on the day-to-day business, or not allocating sufficient time and other resources to research and development. Any delays or problems that arise during the process have to be borne directly. In addition, it can be hard to know where to begin with

change. Established organisations can be resistant to change and there can be a problem of “internal thinking” with a lack of new ideas or different views.

Buying in an innovative solution or collaborating with an external organisation on R&D, on the other hand, gives instant access to new, “outside the box” ideas and a fresh set of eyes on a product, service or process. External partners are expert at what they do, and they often have the ability to bring a new perspective or spot something that the company has overlooked as it is too close to the project. Comments indicated that outsourcing can deliver far quicker than internal innovation. This is especially true if it involves buying in a pre-existing bolt-on to the company’s product or service, which may have already

15

built trust in the market and bring with it a ready-made customer base. Outsourcing to a small company has the advantage of being able to test/trial the solution without committing substantial resources to it, described by one participant as giving the option to “fail fast, fail cheap”.

There are, of course, also risks to this approach. Some arrangements can involve sharing proprietary information outside the company. For this reason, researching

the supplier and verifying their reputation, including through referrals, is advised. The lack of control and an integrated chain of command was also mentioned in this context. Some felt that this can also damage the experience of the company’s own employees as they feel that their own innovation is stifled, or that the most interesting work has been outsourced.

Participants also shared a number of other lessons learned in relation to collaborating to innovate. Factors to consider include the size of the businesses involved, the resources available to both, reputation and due diligence, the possibility to integrate internal and external teams and cost. It was also advised that a company should explore the possibility of a two-way relationship with outside partners, where both would refer business to the other. The emerging sense was that collaboration can be tricky but, if done correctly, it can bring significant dividends and strengthen the business.

16

Business Connect will return in February 2019.

Register your interest at info@sfa.ie to be kept informed.

SFA+The full benefits of SFA membership plus essential insights from Ibec sectors

Business-focused advice and insights

Connecting members in a thriving community

Voicing small business priorities to Government

Management training tailored to small firms

Essential sectoral insights

SFA+ membership options:SFA+ Food and DrinkSFA+ PropertySFA+ TechnologySFA+ Medtech

Find out more and sign up online at www.sfa.ie/joinusnow or call 01 605 1664

www.linkedin.com/company/ small-firms-association

@SFA_Irl

www.facebook.com/smallfirmsassociation

SFA+ 269X171mm Ad NEW Print.indd 1 26/05/2017 14:57

So, why should you join the SFA?

Learn more about us at www.sfa.ieor telephone (01) 605 1664

Business-focused advice and insightsn56,755 enquiries from

members in 2015

n83% employment law / HR management

nWeekly e-zine

nWebinars and publications

Connecting members in a thriving communitynQuarterly printed magazine

for members

nOnline through www.sfa.ie – 2.9 million hits and on Twitter @SFA_Irl 4,500+ followers

n60 events nationally

Voicing small business priorities to GovernmentnNational Economic Dialogue

nMinisterial meetings

nPresentations to Oireachtas Committees

nBackbencher newsletter

nWritten submissions

Management training where it’s neededn ‘Train to Gain’ – training

programmes tailored to small firms at affordable prices

nTopics include: project management, performance management, customer service, employment law, foundations in management, credit management and tendering.

www.linkedin.com/company/ small-firms-association

@SFA_Irl

SFA 269X171mm Ad ART.indd 1 17/02/2016 13:21