When we think of procurement, those with a history working in the corporate world probably picture complex and time consuming one-size-fits-all sourcing practices designed to protect the interests of large businesses. All too often, they fall short of delivering the best possible outcome for business, particularly regarding higher-volume, lower-value related services.
Of course, there is a need for well-governed sourcing practices to ensure the best possible outcomes for businesses with large infrastructure, material and supply related investments.
But do we really need to apply the same procurement disciplines for multi-million-dollar services to the procurement of project services like an Executive Coach, PR expert, Marketing Expert, Website developer, HR or Recruitment Consultant? We know that when the process gets too onerous, many small businesses drop out of the competition.
At the other end of the spectrum, many larger organisations apply little or no governance to sourcing higher-volume, lower-value spend, allowing individual departments to procure services directly without any guide rails, accountability or probity oversight and leaving question marks around the impartiality of certain types of sourcing.
The biggest opportunity to revolutionise procurement exists within our small business community
Many of the higher-volume, smaller-value spend by large corporates is with independent experts and specialist service providers within the small business community. More importantly, Australia’s small business community is currently outsourcing the core services they need to run their business. So, they’re consumers of significant volumes of services within their own community!
Small Businesses with less than 20 employees represent a whopping 97% of Australian businesses. They are the engine room of our economy, contributing A$418b to GDP or 32% of our economy in 2018-19. That’s pretty impressive on several measures.
In its 2019 Small Businesses Outsourcing Report, Clutch, leading global ratings and review platform, reported that the global outsourcing market in 2018 was worth a staggering US$86b.and that outsourcing was not just the domain of large businesses. In fact, 37% of small businesses surveyed outsourced at least one service, and a further 52% were planning to do it in 2019.
So that means of Australia’s 2.3m small businesses, 89% are likely to source at least one specialist service for their business each year. But what types of services are small businesses sourcing, you ask?
Clutch reported that 37% of small business in the USA surveyed outsourced their accounting and finance services and their IT-related requirements. Digital Marketing 34% along with Human Resources, Development and Customer Service featured strongly at 24% and 28% respectively. This is certainly the experience I am seeing within my business CircleSource.com.au, which helps businesses find and connect with expert Australian business service providers.
Small business helping small business
Given the importance of small business to Australia’s economy and the impact of Covid-19 on these businesses, easy access and sourcing for business services can positively impact our economy, particularly if we can keep the sourcing of these services within the Australian small business community.
Revolutionising procurement doesn’t need to be complex or challenging. It’s about focussing on our own Australian business community first and foremost. And it’s about being open to thinking differently about how we go about it. It can be as simple as registering your business on a credible platform and reviewing independent experts’ portfolios to see if they are a good fit for your business. Each time you need to procure a business service provider:
- Know that your business is making a difference to the Australian small business economy by using a local provider.
- Make it your goal to create an opportunity for another business to compete and pitch for work to help grow their business. Businesses want the opportunity to compete for work, showcase their expertise and be considered for your opportunity.
- Ensure your business gets the best value for money from an expert or specialist service provider that’s right for your business. Take the time to be clear on what you need done, and how much you can pay. Get people to demonstrate what they can do for your business.
- Think differently about how you source the service providers you need. Don’t do the same thing and expect a different result. It’s easy to find online platforms that can broaden your access to a range of business service providers and manage the process end to end.
- Join a new ecosystem where traditional ways of working, finding work, doing business is changing. Embrace it and help shape the way forward for Australian small business.