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Tips for finding the right suppliers for your business
Whatever type of business you run, you need suppliers. Whether it’s raw materials, the finished product, or the materials you need to provide your service, you will have to buy something from someone.
Building relationships with suppliers is important. They can add real value to your business. Their knowledge of developments and opportunities in the market, and new products can massively benefit your business. And, chances are that they are sometimes contacted by people looking for a related product or service. One that you might provide.
So, what do you need to consider when choosing your suppliers?
Many businesses make the mistake of choosing suppliers solely on price. Yes, price is important, but it should not be the only consideration. Honesty, reliability, and service are also key factors. If you can’t rely on your supplier to get the stock to you, when you need it, in the right amount, your business will suffer.
Large suppliers versus small ones
Both have pros and cons. Large suppliers can probably give you a better price, and their systems mean that they should be able to meet your needs even when there’s a problem. However, they have lots of clients and, while your business is small, you’re unlikely to be that important to them. Small suppliers are unlikely to be able to offer you the same prices, but you will be more important to them, and will probably get better service.
Suppliers new to the market
Some people won’t consider working with a supplier that’s new to the market because they haven’t proven themselves. Don’t forget that you’re in the same situation. If you come across a new business, speak to the owner. Do they seem knowledgeable and honest? Use the internet to see if you can find out about their history and whether they know the market. Using a new supplier might be a bit more of a gamble but, if all goes well for both of you, as an early customer you should expect some benefits as time goes on.
The further away a supplier, the longer it will take for supplies to reach you. If you’re in a market that can have a sudden high turnover of stock, you need to be to replenish quickly. If your supplier covers your area once a week, or requires several days’ notice of orders, your business could suffer.
Another factor is that the greater the distance between you and your supplier, the higher carriage charges are likely to be, especially if ordering a small amount. This needs to be factored in when working out the real costs of ordering.
People do business with people, and a good supplier will be aware of that. Their staff should be knowledgeable about their product and happy to speak to you even when you just want advice or information. They should also be willing to discuss different financial options, and not pressure you to order. A good supplier understands that long term relationships are far more profitable than short ones.
How do you start finding suppliers? If you know other people in the same industry, ask them for recommendations. Don’t be scared to – you will be surprised how many business owners are prepared to share information like that. Look online, find websites, check out trade magazines, use business forums, and make a list of companies to contact.
When you contact your potential suppliers, ask for quotes or proposals. Be honest about how often you think you will need to order, and the quantity. Don’t exaggerate. They should supply you with prices, any discounts, their delivery policies, minimum order levels, and the credit terms they will offer. Don’t be offended if, at first, it is cash at the time of the order or on delivery. This is normal for new businesses until they have built up a credit rating.
Have a safety net
Finally, seriously consider splitting your orders between two suppliers, even if it means the cost is slightly higher. As the old saying goes, don’t put your eggs in one basket. Splitting your orders between two organisations will provide a back-up should one not be able to help out when you need it.
Start Small – Dream Big is the blog for small business owners with big ambitions – wherever they are in their journey.