Maintaining supplier relationships is key to developing and scaling your small business. Quality relationships with your suppliers not only secure your supply chains and distribution, but can also be important sources of information. Whether you are positioned as business-to-business or business-to-consumer, ensuring your suppliers are happy will make all aspects of your business run more smoothly.
For new businesses, getting suppliers on board can be a simple matter of reducing their exposure to risk. Order size, ability to pay, and your business’s size, reputation, seriousness and past relationships are all variables that suppliers may take into consideration before jumping into an agreement. Of course, the longer you are in business, the stronger your reputation will be (hopefully), but new business owners may still have difficulty in convincing a supplier that they’re serious. You can help to ease their concerns by establishing a public-facing website, being knowledgeable about your industry, and knowing exactly what you’re looking for – no one wants their time wasted, and nothing says “amateur business owner” like being clueless about what your potential supplier offers.
It’s best to think about suppliers in four general categories:
- Manufacturers: If you can, it’s best to go straight to the source. Manufacturer prices will typically be lower than other types of suppliers, unless the geographic location of the supplier makes shipping cost prohibitive. Wholesale orders are the best way to keep costs low.
- Distributors: These suppliers often carry a variety of goods from several manufacturers, giving you the option to purchase small quantities from a number of manufacturers. Distributors (aka wholesalers or brokers) are usually geographically closer to your business which allows for quicker delivery and lower freight costs, helping to offset the higher per-item price.
- Independent contractors/craftspeople/artisans: Distribution of unique goods and services offered by independent craftspeople can often be found in your region, often through representatives or at trade shows.
- Importing: Purchasing directly from a domestic importer is the easiest way to source international goods and products. These importers operate similarly to a domestic distributor or wholesaler.
Once you’ve identified your ideally type of supplier, it’s important to consider a number of other factors that can contribute to a robust relationship with your supplier. Perhaps the most important is reliability. Making sure the correct amount of items are delivered as promised, on time, and undamaged is crucial to your business’s success. Ensuring your suppliers are stable is another key indicator of how your relationship will develop. Stable suppliers will have been in business a long time and have done so without changing businesses every few years. As mentioned, the suppliers geographic location will factor greatly into your assumed costs – merchandise ordered from a distant supplier can delay delivery times and increase your shipping costs. It’s also important to consider how innovative your supplier is. Choosing a supplier that offers the latest, most advanced products and services allows you to quickly pivot to more advanced products and services of your own.
Developing solid relationships with your suppliers can also lead to better business decisions. Suppliers often have advanced knowledge of industry trends and new products, which can give you a leg up on your competition. Longtime suppliers may turn into partners, helping to cut costs, improve product design, and potentially fund new marketing efforts, leading to growth and success for both parties.
Selecting your suppliers can make or break your business, so it’s important to do your due diligence when researching. Finding a quality supplier can help offset costs in the long run and guide your future business decisions. If you don’t make selecting quality suppliers a part of your growth plan, you’re likely to regret it.