How to work with bigger organizations: Suggestions for consultants and smaller businesses

By Katharine Bierce, PMP, CSM

Photo by Kelsey Krach

If you’re a small business owner, consultant, or someone who wants to work with organizations much larger than your own, this article is for you. Having worked at companies of many different sizes, I’ve seen how things operate at different scales. This article was inspired by wanting to help business owners work more effectively with companies many times their size and to help level the playing field for a fairer and more just world.

How I define organization sizes:

• Small: 10 employees

  • Very easy to make decisions and find the right person to talk to (with authority to make decisions promptly).

  • Can move quickly, but tend to have fewer resources: like a sailboat rather than a cruise ship.

  • May not have a dedicated HR/operations/finance person; these functions may be fulfilled by a CEO, COO, or co-founder.

• Medium: 100 employees

  • Moderately easy to make decisions and find the right person to talk to.

  • Tend to move at a more medium speed. May have a dedicated HR/operations/finance person or may use an outsourced service for these functions.

• Large: 1,000 employees

  • Starts getting slower to make decisions, but start to have bigger budgets for things.

  • Tend to have dedicated HR/finance/operations staff.

  • Probably have figured out some sort of standard contract template for working with vendors.

• Extra-large: 10,000 employees

  • Have dedicated HR/finance/operations staff, and probably have Legal and Procurement teams.

  • Moderately slow to make decisions (weeks to months).

• Extra-extra large: 100,000 employees

  • Tend to be much slower to make decisions, but when they do, they have a LOT more resources. Think “cruise ship” rather than sailboat.

  • May plan budgets 3-12 months in advance.

  • Tend to have a lot of process and a legal team to dictate whatever they want to their vendors in their contracts, as there are fewer companies in the world at this size, unless the company they are working with is a similar size (see the 10x rule below).

  • May have reporting requirements (think government contracts) for doing work with them.

You’ll notice I didn’t put ranges on these – I am using powers of 10 because I feel like it’s a convenient bucketing system for approximating things, and the sizing is similar to T shirt sizes.

My general observation is that if you are an organization that wants to work with an organization 10x or more your size, the larger organization generally tends to be able to dictate the terms, unless both organizations are less than the Dunbar number. The Dunbar number is 150: it’s about how many relationships you can keep in your head. So, for a company of 10 people and 100 people, you may be able to find the right person to talk to and have a conversation with him/her directly, but if you’re a 10-person company talking to a 300 or 500 person company, it’s harder to find the right person and they may have more policies in place for standard terms of contracts. 

DISCLAIMER: This blog is from my own personal experience in supporting value chains, including services agreements. I am not a lawyer and am not giving legal advice. 

What is a contract?

A contract is a legal document that says some entity will make some good or provide some service, at some price, delivered by a certain time. Procurement of goods and services involves contracts because not everything is a widget you can buy off the shelf. While you can get services in relatively standardized ways like booking a ride on an app, not all services are “off the shelf.” So you have to specify what you offer and how much someone can pay for that. You also specify what you do in case you don’t agree about something, i.e. who’s liable if something goes wrong, or if the person who ordered your services (because consultants mostly sell services and not widgets), if they don’t pay on time, or if there’s a power outage or a natural disaster (“force majeure”) and you don’t have Internet to do your work, etc.

Photo by the author of a small dog pursuing a large dog, which is a metaphor for smaller companies looking to interact with larger companies. 

Questions to ask as a small business or diverse-owned vendor to reduce power differentials in contracts

The thing about small organizations working with large organizations is that the power differential between the two organization sizes tends to get embedded into the contract. After all, if you’re a one-person consultancy, you probably really want access to the big budgets that large, XL or XXL size organizations have. At the same time, you’re probably frustrated that they can move really slowly or have to go through multiple people or departments to make a decision when you have rent to pay and it feels like you’re doing free consulting work to just get the gig.

So, here are some questions you might want to ask when you’re figuring out what kind of work you might do with an organization 10x or 100x your size.

1. Will the contract be fixed fee or time and materials?

Fixed fee means you as the small business owner are taking on the risk that the larger organization actually knows what they want and won’t give you scope creep. If you don’t have a very clear (and ideally, fixed) scope, this can mean you get paid less per hour than if you chose T&M. Fixed fee is useful for a large organization buyer, though, because they know how much to plan on spending on something in advance, which is useful for quarterly or annual budgets. Fixed fee is fine for a small business if you’re offering something that’s fairly standardized: like a lawyer incorporating a nonprofit, for example (rather than providing strategic consulting, which tends to be very customized).

Time and materials (“T&M”) type contracts mean you get paid some fee per hour, plus materials (such as business travel, reimbursements for expenses like buying giant post-it notes for a brainstorming session, etc.). This is better for a small business if you aren’t really sure of the scope, if you’re concerned about scope creep, or if you need to work with the client to figure out what they actually want.

2.     What is your budget, and is that per vendor, per quarter/year, or how does it work?

Ask this question to know more about your client’s goals or guardrails.
Some buying organizations are fine with Time & Materials contracts, as long as the total amount they are paying is under some number during some time period.

Sometimes organizations have rules around who can approve what size contract in some time period.

Sometimes L, XL or XXL organizations want you to go through Procurement or use their standard legal template for everything; sometimes it’s only if it’s over a certain dollar amount.

Often, large organizations prefer Fixed Fee contracts so they can have predictable budgets that makes their CFO happy, even if the dollar amounts are big by small/medium organization standards.

Asking this question also helps to know if your larger-organization-client cares about keeping costs as low as possible (such as only paying for what they use), or using up their budget so that they can request the same or more amount the following year.

3. What are your payment terms?

Payment terms mean: how fast the buying organization makes payments after you send an invoice.

If you’re a W-2 employee somewhere, you probably get paid biweekly or twice a month. If you’re an independent contractor, you might get paid once a month. If you’re a vendor to a larger organization on a Time and Materials contract, you might get asked to invoice monthly, but they may take a bunch of time to pay you after you send your invoice, so you actually get paid 60 or 90 days after doing some work (30 days to send an invoice + “net 30” terms = 60 day delay, 30 days to send an invoice + “net 60” terms = 90 day delay).

Given that you probably buy groceries weekly and pay rent monthly, it can be hard to work with large organizations because they can create cash flow crunches for smaller organizations they work with. Which brings me to the next question to ask:

4. Do you have special terms for small or diverse-owned businesses?

Some organizations have goals of spending some percentage or dollar amount of their total budgets with small or diverse-owned businesses. Different organizations may define “diverse” differently. For the federal government, they like to know if vendors they work with are owned by women, Native Americans, minorities, veterans, veterans who were disabled in their military service, etc. (For more on diversity in U.S. federal procurement, see this GSA website.)

5. How do you make payments?

It can be helpful to know how you can expect to receive payment, such as check, wire transfer, or some other service, and if you’re expected to pay convenience fees for certain types of payments.

6. Do you have any other requirements for reporting besides sending invoices or timesheets?

As many nonprofits know, funders like to have data about how their donations perform. Large organizations, like governments, also tend to like to have data about their work, and also tend to have really long forms to fill out to have a chance at accessing the big budgets they have.

Last but not least, with the SEC proposing some changes to reporting requirements for publicly traded companies (the ones on the big stock exchanges) relating to sustainability and greenhouse gas emissions, you might keep an eye out for reporting requirements relating to your GHG emissions for your organization if you are trying to get a contract with a publicly listed company. Check out the GHG Protocol (WRI) website for their courses on GHG emissions reporting, for tons of details on what this reporting might involve. The GHG Protocol training on the Corporate Standard for Scope 1 and 2 emissions measurement are free. Note that if you work at a nonprofit, you can get a 60% discount on the Scope 3 training which is normally $325.

However, actually creating these kinds of reports can be a full-time job (or several) and it may be easier to hire a third party to do this kind of report for you. You might also make the case if you’re a one-person consultancy to a Large, XL or XXL size company that your contributions to their GHG emissions as a one-person consultancy are negligible, and they should focus on tracking emissions from vendors with whom they have “significant” spend. Prioritizing collecting GHG emissions data from suppliers with “significant” spend or “significant” emissions for a Scope 3 inventory is one way for large companies to prioritize data collection when they have thousands of vendors and even they may have limited resources to do their own reporting.

For my take on the GHG Protocol Scope 3 emissions inventory, see my other article here:

Sustainability, Innovation, and Greenhouse Gas Accounting

Just a reminder: Get a lawyer to review contracts!

One last note: if you’re signing a contract as a smaller organization for a larger organization, it’s a good idea to hire an attorney licensed in your state to read through it and give you more specific advice to your situation. Lawyers are licensed by each state and the rules for contracts (and disputes if things go wrong) can vary from state to state. A lawyer can also spot check if there are some things in the wording that look really one-sided and you can bring that up in a negotiation later.