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What Happens to Small Suppliers When Big-Box Retailers Struggle?

Managing Supplier Risk with Big-Box Stores

One of my favorite customer success stories is Billy Westbrook, CEO and Founder of SCRUBBLADE. Billy is a small supplier who had a huge dream: he wanted to create a better windshield wiper and he wanted to sell it in big-box stores. He got some good advice and created opportunities for his company with Walmart® and AutoZone. But what happens to small businesses, like Billy’s, when large businesses, like Toys “R” Us, struggle? Often, smaller companies can’t pay bills or employees, the business owner’s goals or dreams are curtailed, and in the very worst case scenario, they are forced to close their company’s doors. How can your small supply business protect itself from the ebb and flow of corporate success? Here are two suggestions that can get you started and help bring peace of mind:

  1. Diversify your clients
    Many large companies won’t sign a contract with a small business if the large company will be the small company’s primary source of revenue. This isn’t unfair, it’s responsible business and gives the small company the opportunity to grow naturally and deliver to plenty of clients before it takes on a larger contract. That said, if you’re in Billy’s position and you’re shooting for the stars right out of the gate, you’ll want to have your ducks in a row from the moment you submit a bid or offer a proposal to show that your company can take the financial hit and recover if the larger company goes bankrupt or folds.

  2. Manage your risk
    Someone had to have seen the Toys “R” Us bankruptcy coming, right? Well, yes, and they did. Using exemplary data and cutting edge business intelligence Dun & Bradstreet’s scores and ratings for Toys “R” Us reflected the company’s tenuous position. If your company was working with Toys “R” Us, knowing the company might not be able to make good on its invoices beforehand would have been very, very helpful.

Being a smaller organization can provide a lot of benefits, but it can also be scary. By taking preventative measures to protect your company when one of your larger clients struggles – or goes with a competitor, or no longer has a need for your product or services – you can ensure that your business continues to grow and thrive.

Learn more about Dun & Bradstreet’s insight into the Toy “R” Us bankruptcy filing here.

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