In so many different businesses, vendors are the key to successfully expanding your business. After all, you can’t expand your restaurant into a chain without vendors in other cities and countries. A retailer can’t expand their operations without inventory. A construction firm can’t expand their operations without a trusted building supply vendor, etc.
Vendors need to meet a lot of different needs in order to help a business move onto the next level. Be that level a larger business in the same area, or to expand into other markets in your home country or even on an international level.
Here are some guidelines for choosing the vendors that will bring the most value to your expanding business:
1. Who do you know?
Vendor referrals from people you trust – or from people who’re trusted by those you trust – are the best kind of folks to do business with. This is how business is done. Most people hire contractors to work on their home based on referrals. Referrals drive the financial service industry. They drive most all industries.
Don’t just go online and do a Yelp search. You have to actually know someone personally who’s done business with the vendor.
If you don’t know anyone who owns a similar business that can put you in touch with quality vendors, it’s time to put your Networking Cap on and hustle up some more business contacts! It’s all about who you know after all.
2. Avoid narcissistic vendors
Some will show their grouchy defiance as soon as you meet them. Ax them from the list immediately unless your referrals indicate that there’s more below the surface than meets the eye.
The narcissists will usually tell you whatever you want to here during the grooming phase, then you’ll never hear from them again until you call them to complain. Then guess what? Their secretary says they’re “in a meeting” or just plain unavailable.
In all, weed out these time and money-wasters by asking specific questions and paying attention to the questions they ask you. If they appear uninterested in your business needs or just plain in a hurry during your meeting, how do you think they’ll be when a shipment gets messed up or lost?
3. How good are they with communication?
Don’t look for the salesperson telling you what they think you want to hear, but rather those who empathize with your needs and make that clear through dialogue. Don’t immediately nix them if they make it clear they can’t meet some of your needs.
Honesty matters a lot during this evaluation phase and you can still continue to shop around if needed. If they dance and prance around tough questions, giving vague or ambiguous answers, ditch them and continue your search.
Lastly on this matter: if they take more than 24 hours to get back to you, they’re not a good fit! Again, reputation has to play a part in the decision, but if they make you wait days for a response, as the old saying goes “Leopards don’t change their spots.”
4. Shop around
Your parents never wanted you to marry the first girl or boy you dated, did they? How would your grandfather feel if you bought a car from the first dealer you stopped at, without comparing prices with other dealers first? Comparison shopping is essential before getting into bed with a vendor whose prices will ultimately set your own price points, and potentially eat a considerable portion of your profits if you let them.
Only you know what best to look for when comparing one vendor to the next. You need to consider the quality image of your company when considering prices. If you’re Gordon Ramsay shopping for a local vendor for your next 4-star restaurant, the cheapest meat and veggie vendors probably won’t be able to make the grade. On the other hand, if you’re a dollar store owner, you might settle for the vendor who can give you the most product selection for the lowest price possible.
Comparison shopping might not even start until you’ve talked with 3 or more vendors. Once you’ve nailed down some average pricing, you can even use those quotes to negotiate a better price with vendors who meet all but your budget criteria.
5. Trust yourself
If you recognize this as the first of Arnold Schwarzenegger’s famous six rules of success, then give yourself a pat on the back. You always have to trust yourself first and those who’re referring others and working to get your business second. After you’ve nailed down those who you feel will be a good fit as a vendor for your business, the wheels for your expansion efforts will be set in motion.
Being forced to adapt is a part of any business. Being forced halfway in to change vendors because you failed to perform the proper due-diligence you should have at the start wastes time and money. It will also likely cost you customers and may irrevocably hurt your business, at least in the short term.
Trust your gut feeling about the vendor, in lieu of anything you’ve heard about them from others. If they seem rude or standoffish then that’s likely what they are, and a good representative of what they’re like to deal with, especially when things get strained.
6. Avoid long-term contracts
Vendors understand that one of the major keys to them staying in business is in their ability to keep long-running contracts. After all, if they don’t have anywhere for the goods to go, they’re dead in the water. Because of this, many will offer very attractive discount deals if you by in bulk or sign long term supply contracts with them.
These kinds of deals can seem like the smart move to make business-wise, but you still don’t know them yet. Avoid lengthy contracts or making massive orders until you’ve first tested the waters.
Share your ideas!
Do you have experience working with multiple vendors over the years? Feel free to share your advice in the comments to help those who’re new to the business world.