5 Tips for Small Business Owners Shopping for Suppliers

bad credit business loans

Business owners who are planning new product releases or are trying to make sure they are getting a good deal from their current suppliers must loan enough time from their busy schedules in order to ensure that they are finding a good deal. In order to make it easier for them to get started shopping around,  we’ve put together a top five list of the most helpful tips for finding and negotiating with a supplier.

Think locally. When looking for a supplier, one who is on the other side of the country is going to have to charge you higher shipping costs, raising the price of the product you are purchasing. It’s better to find a local supplier, if possible. Start out by using your network of business contacts to see if someone you know has any suggestions to refer you. A referral can potentially be beneficial by coming with a discount or a perk for the person who referred you or even for both of you. If you aren’t able to start your search through a network of associates, then try looking through local business directories or through searching the internet for the keywords associated with your product in conjunction with the name of your area, your zip code or other location specific terminology. Don’t just go with the first few hits you get, instead, compile a list and then follow up with each lead to cross reference their pros and cons.

Consider who you are going to be doing business with. Once you have identified a group of suppliers who you are willing to work with on a price basis, it’s time to go deeper. In order to find out more about the quality of the relationships they have with their other clients, you can ask for references, read reviews, and talk to them directly about the level of customer service that they are able to offer. Be aware that sometimes a poor quality product, or poor customer service on the part of your supplier, can wind up costing your business more than it would to maintain a quality relationship elsewhere.

Is your choice an established one? Looking at how long the business you are going to partner with has been operating and the level of connections it has within your area will help you get a better idea of the stability of the business. It is a mistake to tie your fortunes to a supplier that goes belly up, leaves the area or switches industries in the middle of your partnership. An established track record is a desirable trait for a potential business partner.

Create transparency in your agreements. Before you sign any kind of contract with your new supplier, you need to be clear on exactly what terms you are agreeing to. Not only should you know the minimum order sizes for the products you are ordering, but you should also know what kinds of discounts you can get, whether or not you will be able to renegotiate down the road, and the time frame that you should be able to expect your orders completed within. You don’t have to accept the first offer presented to you either. You should arrive knowing what you are comfortable paying and what you would ideally pay. Start with your ideal price and then you will leave yourself room to negotiate from.

Get close to your suppliers.  Sound out which suppliers you have the potential to create a strong relationship with. Beyond the dry numbers, a solid relationship based on mutual communication and trust can go a very long way towards advancing your small business.

Photo Credit to Brian Everett on Flickr

TOP css.php