Almost all businesses must work with third party suppliers in some form. This may include the supply of material goods such as retail stock or parts for your business’s manufactured products, or rendering of services such as skills outsourcing or tech support.
Whatever the capacity is for your external working relationship, there are some important things you need to be aware of when engaging with any outside supplier.
Achieve the best outcome for everyone when working with your suppliers by following these 6 helpful tips:
You won’t get all the things you want from a supplier. You need to compromise and this compromise typically takes the form of one of three ways: Time, Quality or Price.
Your expectations of your suppliers should be realistic. Select the item that is most essential to you, like the highest quality items, and be willing to make concessions on Time and Price.
If you are lucky to find a supplier who can offer the best price, time and quality – hold on to them.
Pay on schedule
Any business relationship should make this the first rule. Sadly, this basic courtesy is often ignored, so it must be emphasised. Pay your bills on time to establish a strong relationship with your suppliers. Always remember that they are also operating a business, just like you are, and are depending on you paying them to avoid cash flow problems.
There’s also a benefit for you when you pay on time. You will be seen as a good risk by your suppliers, and be likely favoured over inconsistent payers. You will create a stronger relationship, and if money becomes tight in the future, your suppliers will likely go easy on you, and may even grant you better payment terms.
Talk to your suppliers as soon as possible if you ever experience problems with payments. Never forget to pay your bills and don’t make a practice of making late payments, because this would damage your relationship over time.
Being transparent doesn’t mean you have to disclose all your business secrets. It just means that your suppliers should know where the stand in your business.
Ask them to come to your place of business, so they can witness how your product or service works. Make your production schedules available to them, so they can be aware of the peaks and troughs in your business. Make sure they are aware of how their goods or service is important to your business.
If different vendors are supplying you with the same goods or service, don’t make a secret of it. It is important for your suppliers to know the necessity for contingencies and backup plans. It would also benefit you to foster a bit of healthy competition among your suppliers.
Exercise honesty if a supplier doesn’t fit into your business. Don’t just drop a supplier; tell them why they’re not meeting your requirements. If circumstances will allow, give them the opportunity to improve or remedy the problem
Do you want to be in a relationship (personal or business) with someone you dislike? Your answer would most likely be “NO.” It is human nature to choose to connect with people to whom we have a vested interest in.
Conduct your business relationship in a similar manner. Ask your suppliers to attend your parties or functions, and make sure they know and feel that they’re an integral part of your business. If mistakes or miscommunications happen, try to be civil, and deal with problems together.
Don’t deal with a supplier haphazardly. Expect a disastrous outcome if you give too much unearned trust at the start of your business relationship.
Do your research before signing up a supplier. Look into their track record of supplying goods or services, and Check the calibre of their other clients. Ask them relevant questions regarding their capability in supplying you with the required goods or services.
And don’t forget to arrange a detailed contract. Bear in mind all the tips listed above, and draw up a contract that both you and your supplier can agree on. Have all the details in writing from the beginning, so you can protect yourself if any problem arises in the future.
Bottom line, a relationship is a two-way street. Your relationship will go smoothly if you treat your suppliers the way you want to be treated.
One of the challenges in running a business is dealing with suppliers. Seek help and guidance on this area from experts. PJS Accountants are the partners you need to expand your business and help it overcome any challenge or trial. We offer a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning, estate planning and bookkeeping. Contact PJS Accountants for enquiries.