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Small Firms Try 'Speed Dating' To Ink Big Deals

By: Kim-Mai Cutler, Staff Reporter of The Wall Street Journal

June 21, 2005, Wall Street Journal

PASADENA, Calif. -- Because they speak little English, Arturo and Graciela Guerrero have had poor luck making deals with government agencies and aerospace giants for their small company to make parts for aircraft, military vehicles and tanks.

But their 20-year-old daughter, Rosalie, who took over the sales operations of this 10-employee company in Ontario, Calif. right after high school, found a way to win face-to-face time with corporate executives and government officials: "speed dating" services for small businesses.

Such business matchmaking is a twist on the traditional trade show -- it mimics its romantic counterpart by giving small-business owners 15 minutes with contracting executives before a bell rings and they switch chairs to meet the next person. The U.S. Small Business Administration program is intended to help the country's 25 million small businesses connect with big companies and government agencies. The SBA says that about $30 million of contracts have been struck through the program since its launch last year.

The program been drawing heavy interest in particular from one corner of the small-business world: minority contractors, often immigrants, who find it difficult to win business because of language, cultural and bureaucratic barriers. At a recent business matchmaking event here, 57% of the 1,000 small businesses looking for work were minority owned. About 40% were owned by women.

At that event, contract seekers were herded in groups at their appointed hour into a large hall with 200 small tables lined up close together. In the short time allotted, some business owners gesticulated wildly as they promoted their services while others calmly pointed to brochures outlining their operations. The pace sometimes was frenetic -- with the sound of a bell, the business owners shifted to the next seat while the executives stayed in place -- but others were able to get breaks between presentations. Businesses and contractors of different industries participated, but were grouped separately. Both sides were prescreened to match services with requests.

The younger Ms. Guerrero made a pitch to Northrop-Grumman Corp. while her mother waited on the sidelines. She presented homemade brochures, discussed the capabilities of the family business, South Precision Machining, and reminded the executive that they had done work for Northrop-Grumman before.

Northrop-Grumman wasn't to be a match. The executive told her the company didn't want to outsource manufacturing only; it wanted component design as well, a task South Precision Machining wasn't equipped to handle. After a break, Ms. Guerrero continued with her next meeting. Participants, including Ms. Guerrero, averaged six or seven presentations over two days.

Shah Rizvi, an immigrant from Pakistan who runs his own engineering company, made progress at the event. He said he had previously tried to reach companies like Agilent Technologies Inc. and Hewlett-Packard Co. to no avail. He didn't sign any contracts that day, but he made contacts, even one at H-P, he says. "Sales is basically a game of numbers, the more people you talk to, the more people you have a chance of working with," he says.

Small business owners are often shut out of the information loops they need to be in -- they are unaware of bidding opportunities, or even what is required to solicit work, says Ralph Bangs, associate director of the University of Pittsburgh's Center on Race and Social Problems.

"If you don't have social networks, whether it be in contracting or for job opportunities within an organization, you often miss out because people have a tendency to look at what's familiar to them," says Katherine Phillips, a professor at Northwestern University's Kellogg School of Management.

The experience of the Guerrero family shows that the matchmaking program, while an opportunity, isn't a cure-all. The couple came from Mexico about 30 years ago, and Mr. Guerrero picked up the machining trade to support a family that grew to include five children. The Guerreros started South Precision Machining in 2000 -- Mrs. Guerrero is chief executive and her husband is the programming/operations manager.

The Guerrero's company has manufactured parts for Lockheed Martin Corp., Boeing Co. and Northrop Grumman in the past, but it never won direct contracts. Instead, it got work through middlemen who the Guerreros say often fall behind in paying them -- if at all -- because they know they can't afford a lawyer to take legal action or hire a collection service.

Now, the matchmaking program is putting Rosalie Guerrero across the table from representatives of Northrop Grumman and Raytheon Co. "The opportunities are out there, but it's just that we can't get to the right people," she said.

South Precision Machining didn't sign a contract that day, but it landed another sort of deal. A few days later, a former SBA official, who Rosalie Guerrero met at the event, offered to help with paperwork to certify the machine shop as a minority-owned business that is economically disadvantaged. Earlier consultants had quoted figures as high as $3,000 to do the work, but Ms. Guerrero's new contact did it free of charge.

Though it was only her second conference -- the first one was a traditional trade show a week earlier that cost her $400 -- Ms. Guerrero wants to go to the next matchmaking event in Milwaukee. "You feel that contacts can remember you and you don't find too many events that are free," she said. (Business matchmaking services run by the SBA are free.)

Despite bureaucratic barriers, some corporations are open to the idea of awarding contracts to minority and women-owned businesses. Both H-P and AMR Corp.'s American Airlines run supplier diversity programs that look to minority-run businesses for procurement needs. The federal government targets 23% of the total funds up for contracts go to small businesses.

"Through these events, we have found suppliers that have amazing prices and services which give us a competitive match that we would never find any other way," said Christina Hanger, a senior vice president at H-P. "While it's true that big companies do have advantages, many times they may not be as agile and they may not have as innovative solutions."

Government agencies and corporate executives cautioned that they rarely offer deals on the spot and that potential partners still must undergo the bidding process.

Even if small businesses don't get a lucky break right away, the contact can lead to a future business relationship. After attending an event last summer in Anaheim, Calif., Walter Johnson, a vice president at minority-owned engineering firm Pacific Crossing, signed two contracts worth about $1.5 million. He's also tacked on $5 million in contracts with three divisions of Northrop Grumman, a company he first made contact with through the matchmaking service. "The companies that attended really seemed to have a commitment to doing business with small businesses," Mr. Johnson says.

Corrections & Amplifications:

The U.S. Small Business Administration's program to help small businesses connect with big companies and government agencies was started in 2002. This article incorrectly stated that the program was launched last year.

©2001 Kellogg School of Management, Northwestern University