THE 2019 SURVEY OF SMALL AND MIDSIZE
BUSINESS SUPPLIERS, DEVELOPED AND CONDUCTED BY AMERICAN EXPRESS,
FOUND THAT BUSINESSES WITH CORPORATE CONTRACTS EXPECT REVENUES TO
INCREASE BY 50% OVER THE NEXT FIVE YEARS
U.S. small and midsize businesses are often referenced as the
backbone of the country’s economy thanks to their drive and
ambition to grow and scale but finding new opportunities to expand
a business is often challenging. To explore the perspectives of
small and midsize businesses on ways to grow, American Express
conducted the first ever Survey of Small and Midsize Business
Suppliers in 2019. The survey results, which includes
responses from 501 small and midsize companies with revenues
between $250,000 to $1 billion annually, suggest a bright future
ahead for businesses who tap into this new avenue for growth.
According to the survey, eighty-one percent (81%) of respondents
predict an increase in their sales to corporations with over $1
billion in revenue over the next five years, among which fifty
percent (50%) of respondents anticipate a revenue increase of fifty
percent (50%) or more.
“Contracting with corporations offers tremendous growth
opportunities for businesses across every industry and can help
drive supply chain competitiveness, unlock innovation, provide
access to new markets, and deliver positive socioeconomic impact in
local markets,” said Donna Donato, Vice President of Strategic
Sourcing and Business Enablement for American Express. “As our
survey results found, business owners who already contract with
companies that generate over $1 billion in revenue are diversifying
their revenue streams and expanding their internal teams which
ultimately benefits our economy.”
THE OPPORTUNITY FOR SMALL & MIDSIZED COMPANIES
Large corporations make substantial external purchases each year
-- as much as thirty to fifty percent of total revenue depending on
the industry, creating vast opportunities for small and midsize
businesses. The benefits of selling to corporate clients are clear,
with survey results showing that many small and midsize businesses
experience significant business growth when partnering with such
corporate clients:
- Nearly two-thirds (64%) of respondents have increased their
revenues
- Four in ten (40%) of respondents have diversified their revenue
streams
- Four in ten (40%) of respondents have grown organically through
corporate contracts
Not only are small and midsize businesses experiencing the
positive effects of winning corporate contracts, but their broader
communities benefit from these relationships as well. For example,
despite the limited labor market for small and midsize businesses,
contracting with large corporations has proven to be a successful
growth strategy, allowing such businesses to expand hiring efforts.
More than half (54%) of respondents hired new employees as a result
of winning new business with large corporations, and nearly
three-fourths (74%) of respondents noted that conducting business
with large companies has helped to hire and retain talent.
FINDING, WINNING AND FUNDING CORPORATE CONTRACTS
According to the survey, networking and introducing their brand
to procurement officials in target industries were found to be
instrumental for small and midsize business owners to grow their
businesses. The survey identified certain key personal and digital
networking channels as a means to obtain knowledge about potential
new business targets:
- Over half (54%) of respondents rely on both online/offline
networking
- Nearly half (47%) of respondents rely on personal
relationships
- More than 4 in 10 (41%) respondents rely on company websites
and marketing materials
Notwithstanding the variety of information channels, online
networking was shown to be more effective than offline networking
in securing new business leads. Fifty-one percent (51%) of
respondents indicated that online social networking via specific
groups was most effective in securing new business leads with
corporate clients, followed by forty-seven percent (47%) of
respondents indicating social media platforms as being the second
most effective method of securing new business leads. Offline,
respondents indicated that they saw the most value in networking
one-on-one (44%), at trade shows and events (42%) and networking in
small groups (37%).
The survey also found that certain business certifications and
credentials can further differentiate small and midsize businesses
from the competition. Respondents indicated that the credentials
set forth below were the most useful certifications in helping to
winning corporate contracts:
- Quality of service or products (48%)
- Past performance (15%)
- Socio-economic credentials (10%)
Coming up with the capital to finance contracts with
corporations can be challenging, with many small and midsize
businesses seeking additional financing to do so. More than half
(57%) of respondents sought financing to fund their growth to
service corporate contracts, among which two-thirds (66%) of such
respondents found the process for securing financing to be
manageable. Working with large corporations can open new doors,
especially when it comes to financing. Nearly three-quarters (74%)
of respondents agreed that working on corporate contracts led to
more flexible financing options for their companies.
CHALLENGES OF CORPORATE PROCUREMENT
While winning a large corporate contract is exciting for small
and midsize businesses because of the potential to increase
revenue, there are also challenges that come along with fulfilling
these agreements. Survey data indicated that the biggest challenges
facing small and midsize businesses while working with corporate
clients include:
- Complex processes (43%)
- Negotiating payment terms (38%) with 22% of respondents
reporting payment terms of 60 days or more
- Complying with data and security requirements (37%).
In order to meet the expectations of large companies, over half
(56%) of respondents have upgraded their company’s data security
and privacy policies, and more than 52% have invested in additional
IT hardware or software. As a result of winning corporate
contracts, respondents have implemented data security and privacy
training (52%) and forty-two percent (42%) of respondents hired new
employees on their data and security teams to meet the needs of the
large corporations.
A BRIGHT FUTURE AHEAD
Nearly three-quarters (72%) of respondents expect their
company’s total revenue to increase over the next 12 months and
seventy-three percent (73%) of respondents agree that their
companies have increased its financial commitment to selling its
products or services to companies with over $1 billion in
revenue.
HOW TO GET STARTED WINNING CORPORATE CONTRACTS
For small and midsize businesses that are interested in
corporate contracts but don’t know where to start, American Express
has published the Insight Guide Series: Corporate Procurement. The
guide details how to find opportunities and move forward once
companies begin their journey to partnering with large
corporations.
American Express will also host a “Digital Meet the Mentors”
online session titled, “The Inside Scoop on Working with Large
Corporations,” on October 18, 2019 at 1:30 PM ET to provide small
and midsize businesses an inside look at what some of the world’s
largest enterprises look for in suppliers -- how they procure and
common pitfalls to avoid when bidding for their business. To find
additional Corporate Procurement resources from American Express,
visit amex.co/businessadvocacy.
METHODOLOGY
The results are based on a survey of U.S. businesses which ran
from August 16 to 21, 2019. In total, 501 completed the survey.
Members of an online panel were contacted via email and invited to
participate in the study. The survey targeted US companies with
revenue between to $250,000 to $1 billion annually who sell goods
or services to companies with over $1 billion in revenue; and who
are also solely responsible or share responsibility for decision
making in: Sales, Strategy & Planning, Business Planning or
Development or Marketing. The survey includes a broad geographic
representation and mix of industries based on natural fallout.
ABOUT AMERICAN EXPRESS
American Express is a globally integrated payments company,
providing customers with access to products, insights and
experiences that enrich lives and build business success. Learn
more at americanexpress.com and connect with us on
facebook.com/americanexpress, instagram.com/americanexpress,
linkedin.com/company/american-express, twitter.com/americanexpress,
and youtube.com/americanexpress.
Key links to products, services and corporate responsibility
information: charge and credit cards, business credit cards, travel
services, gift cards, prepaid cards, merchant services, Accertify,
InAuth, corporate card, business travel, and corporate
responsibility.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191009005493/en/
AMERICAN EXPRESS Patrick Jones 212-225-4706
Patrick.jones@aexp.com
M BOOTH Liz Oliva 212-388-7691 LizO@mbooth.com
American Express (NYSE:AXP)
Historical Stock Chart
From Mar 2024 to Apr 2024
American Express (NYSE:AXP)
Historical Stock Chart
From Apr 2023 to Apr 2024