To succeed in business you must be able to master supply and demand. And while much of your energy seems to be spent on the demand side –aka your customers and how to get more of them –without good suppliers, you won’t have much of a product to give them.
We spend a lot of time discussing how to make your customers happier, but happy vendors are almost as important. Here are 12 tips to getting the most out of your most significant vendor and supplier relationships.
Make Sure You Understand Your Contract
With the immeasurable stress involved in running a small business, you might be tempted to agree to a long-term deal with a vendor so you don’t have to think about it again. Don’t do that. In addition to understanding every term included in your contract, aim for a short-term deal with a renewal option so you can change vendors if necessary. Also, never agree to anything that does not allow you to negotiate with other vendors or possible new customers.
Check into Their Online Security
Target wasn’t hacked because its security was weak. Target was hacked because it had a relatively small vendor with weak security. Hackers exploited this vulnerability to cyber-attacks to infiltrate the retailing giant. If you don’t want that to happen to your company, check into your vendors’ security measures before doing any business with them. You’d be surprised how many still seem to neglect this.
Monitor Their Social Media
Just like you’d stalk a potential social acquaintance on social media, do the same with your vendors. It’ll give you an idea of their corporate culture and what sorts of stories they find interesting. It might also give you some insight into who else they sell to, so you can keep tabs on your competition.
Find Vendors to Fit Your Scale
There are vendors who deal very specifically in high-volume, big-ticket sales. If you’re a small business, this is not the vendor for you. And even if you do try to forge a relationship with a vendor like that, you’ll soon find yourself pushed to the bottom of their priority list. Try and find vendors who specialize in selling to smaller accounts, if by no other means than asking other small business owners.
Constantly Monitor Performance
Like with any relationship in life, you set the tone early. And if in the beginning of your vendor relationship you are accepting late deliveries, out of stock items, and poor service, it will never get better. So particularly at the onset of your relationship it’s crucial you monitor every phase of your transactions to ensure your vendor is performing up to your expectations.
Develop a Relationship
Think of vendors like your neighborhood bartender. If you go in once, he can make you a drink, charge you for it, and be done. But if you get to know him, you’ll occasionally get a free shot. Or a drink made especially for you. Or a drink ready for you when you walk in. The better you get to know your vendors, the more they can do things outside the scope of your contract, which will make your life easier and hopefully cheaper.
Let Them Know Your Goals
Vendors aren’t mind readers, and if they don’t know you’re ramping up to expand your business or aiming for a specific sales goal, there’s nothing they can do to help you. But keying them in on important policies and long/short term objectives will allow them to work with you to make it happen, instead of being an obstacle.
Include Them in Strategy Meetings
When planning things like specials, pricing strategies, and projected revenue, your costs will always play a major role. And instead of sitting around trying to speculate as to what a vendor will be charging you, include them in your strategy sessions. If a vendor knows you have a specific sales initiative, they can help you. Or they may have a cost-saving special that you can incorporate into your plans.
Get Competitive Bids
Complacency will kill any relationship, and if vendors think they have your business locked up forever service will begin to slip. Not to say you should hold competitors’ bids over an established vendor’s head like a constant threat of punishment, but always be open to new vendors who might do something better. If nothing else it’ll allow you to tell existing vendors what others are offering, and allow them to match it.
Understand Their Business
If you keep putting the pressure on a vendor to cut your prices, you know what’ll happen? They won’t be around to vend for you anymore. Much like you need vendors to understand what you do, you must understand your vendor’s business and what they need to do to stay afloat.
Pay On Time
This is probably not ground-breaking news to you, but kinda like that friend you loaned $20 who keeps swearing he’ll “get you back,” a customer who’s always late making payments isn’t going to be a friend for very long. Even if it’s not destroying your vendor financially, perpetual late payments will do a lot of damage to your overall relationship.
Always Be Communicating
Knowing your sales guy by a first name basis is great, but what happens if he switches companies? Or doesn’t know something important? Have at least two other contacts with every vendor, one of which should be in upper management. A good company will welcome this kind of open communication, and if upper management doesn’t want to talk to a customer, they’re probably not anyone you want to do business with anyway.
Following these tips will help you build strong vendor partnerships which can make or break your business success. It takes some time to develop and monitor these relationships, but when a vendor plays a critical role in the success of your company or if you are spending a significant amount of time and money on them, it can be an investment of your time that pays in dividends.