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Using the 6Cs to bridge the gap between being a high potential SME and securing a purchase order
Through its Business Accelerator, the Durban Chemicals Cluster (DCC) has identified that the greatest challenge for SMEs is access to markets. Globally and locally, small companies struggle to get their product or service in front of decision-makers and even when they do, there are still many obstacles that can derail the deal.
According to Meghan King, a representative of the DCC, the Business Accelerator has identified that there’s a level of business that SMEs often fail to fulfil, with the result that potential contracts are lost. To help them identify and avoid these procurement pitfalls, the DCC has created the 6Cs, a framework to help SMEs unlock commercial opportunities.
“This framework helps SMEs identify factors that could be deal breakers. By overcoming these, small businesses can ensure they bridge the often difficult, uncertain and frustrating gap between being identified as high potential suppliers and the actual placement of purchase orders.”
To realise their potential, Meghan says SMEs need to put themselves in the seat of large enterprises and ask if they comply with these six points:
1. Commitment: Is the vendor determined to add value and demonstrate their potential to their customer?
Commitment means that you are prepared to go the extra mile to ensure that the goods or services are provided as per the agreed contract. You need to clearly demonstrate your level of commitment and your ability to be proactive in meeting your customer’s requirements.
2. Capability: Can the vendor provide the product or service as per customer requirements?
Explain to your customer that you have the processes, equipment and skills needed to produce the goods or services required.
3. Competitiveness: Can the vendor meet the required price, quality, reliability, flexibility, logistics, and new product development requirements?
Give your customer the comfort that you can fulfil the contract requirements at the same or better price than your competitors. Show how you differentiate your products and services as well as your ability to design new products.
4. Compliance: Does the vendor fulfil the necessary financial, legal, labour, health and safety, sustainability, product specification and other compliance requirements?
As a business owner, you will be subject to several different laws. By showing your customer how you manage compliance and mitigate risk, you can confidently prove your integrity and reliability, building trust and strengthening your competitive position.
5. Capacity: Can the vendor supply you with sufficient volumes required?
Again, this speaks to your ability to meet the contract requirements and you need to demonstrate the number of units you can produce with your current manufacturing facilities and employees. You should also explain how you are structured for growth.
6. Cash: Is the vendor able to manage appropriate cash reserves for raw materials, working capital, and/or investments for expansion?
Cash is often a scarce resource for SMEs, so you will need to be able to demonstrate that you have sufficient reserves to purchase raw materials. You also need to be able to show how you can leverage flexible financing and how this can unlock working capital or investments for expansion. Again, this will strengthen your competitive advantage.
Meghan says that by applying the 6Cs framework, business owners can optimise the opportunities presented by the 2022 Business Accelerator. It will provide SMEs with the opportunity to interact with the sponsors including eThekwini Municipality and leading enterprises in the local chemicals sector. Speaking on behalf of eThekwini Municipality, Takalani Rathiyaya, head of the Economic Development Programmes Department, says the Accelerator successfully connects small businesses and big customers.
“Since 2019, the Accelerator has unlocked 55 new commercial commitments, adding up to R61 million in new revenue and 870 jobs. It really is an unrivalled opportunity for SMEs to access market opportunities,” states Takalani.
The 2022 Durban Chemicals Cluster Business Accelerator is now open for applications. All black-owned, small-scale businesses in the chemicals industry are invited to enter before 30 September 2022 at https://www.jotform.com/
