Vendor Diversity

One common problem for small businesses is managing their vendor relationships. Countless small businesses have failed because they couldn’t get the supplies or services they need at a fair price. Here are some ideas to best manage your supplier relationships so you don’t end up with problem vendors.

 

Find Multiple Vendors

When you start your business, it is a good idea to find multiple vendors. Even if you have been going awhile, it is good to know that if your primary vendor has trouble, you are not stuck in a horrible situation yourself.

You don’t have to use or even contact the other vendors if you are happy with your current relationships. However, it is good to know who else is out there and do a little research on pricing so you know you are getting a good deal.

 

Compare to Competitors

If you have any doubts about your current vendor relationship, make sure to shop around. Go deeper than just the websites and contact each vendor for specific pricing details. If you are going ahead with a project, a formal RFP (request for proposal) gives vendors the opportunity to compete for your business.

Remember, price is a lot but it isn’t everything. Their customer service and responsiveness are also incredibly important for your business.

 

Build a Long-Term Relationship

When you select a vendor, don’t just go for the low price with short-term goals in mind. Work for a mutually beneficial long-term relationship.

There are many benefits to a mutually beneficial long-term relationship. To name a few, you may be able to attain preferred pricing, your vendors are more likely to help you out in a pinch, and you will get much better customer service than those with only short-term goals.

 

Ensure Your Relationship is Win-Win

Just like your goals for a long-term relationship, a mutually equitable relationship will have a great payoff. That can be both in terms of pricing and service.

By working together, rather than against each other, you are also working to preemptively avoid any major disputes and problems. The worst thing that can happen is for you to get into a fight with a vendor and lose your source for business supplies and services.

 

Always Have a Backup Plan

Just in case the worst case comes true, and your vendor closes or you end your relationship, always have a plan B. You never know when something out of your control will come up and halt your business. You don’t want to be stuck, or worse shut down, because of something out of your control.

Do the extra work ahead of time and avoid a crisis. Always have redundancy options ready for your most critical vendors and have alternate vendors for less critical parts of your business.

 

How Do You Run Your Vendor Relationships?

Do you have any vendor horror stories? Do you have vendor redundancy to protector your business? Please share in the comments.

About Eric Rosenberg

Eric is a finance blogger at Narrow Bridge Finance and a serial entrepreneur. He runs a media company, flash mob company, and DJ business from his hometown in Denver, Colorado. You can read more about his finance background and connect with him around the web.

Comments

  1. Steven J Fromm says:

    You cannot have enough backup plans to cover the unknown contingencies and events that may occur. Things change over time and the ideas you mention have a wide application beyond vendors. Very nice post.

  2. Glad you enjoyed it Steven! Any wisdom to share on the topic?

Trackbacks

  1. […] @ Entrepreneurship Life writes Vendor Diversity – Here are some ideas to best manage your supplier relationships so you don’t end up with […]

  2. […] @ Entrepreneurship Life writes Vendor Diversity – Here are some ideas to best manage your supplier relationships so you don’t end up with problem […]

  3. […] @ Entrepreneurship Life writes Vendor Diversity – Here are some ideas to best manage your supplier relationships so you don’t end up with […]

  4. […] @ Entrepreneurship Life writes Vendor Diversity – Here are some ideas to best manage your supplier relationships so you don’t end up with […]

Speak Your Mind

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.