Finding reliable suppliers at a good price is crucial for every business. Without suppliers, production may have to halt, and if you are a retailer, you may end up with a lot of stock-outs, which will affect your relationship with your customers.
To find a supplier that is best for your business, you have to know what to include in your criteria when selecting. Below are five things you should always consider before you sign a contract with any supplier.
A lot of small businesses will have price as their number one priority because money is usually tight. But buying low-quality products at a great price is costly in the long run. The amount you save will not be worth it when you start losing customers because you do not provide good quality products. They will not be able to trust you to meet their needs, and this could lead to a negative customer perception about your brand.
Forty-seven percent of people say they would switch to a better quality brand even if they have to pay more. So if you choose to cut costs by compromising quality, expect to lose revenue.
When you have found a few suppliers that offer top quality products, you have to compare prices and choose one with the best value. Suppliers will usually have minimum order quantities, which are sometimes thousands per order. As a small business, you may not need that much product at a time, or you may not be able to afford that minimum order. So you would need to learn how to negotiate for a lower minimum to get a better price and avoid overstocking.
When negotiating prices, remember suppliers also run a business, so do not try to swindle them out of their profit; otherwise, they will not want to work with you anymore. Pay your bills on time, and keep a healthy communication strategy with the suppliers to have a better relationship.
It’s important to support other small businesses like yours, but when you are starting out, it’s better to go with a more established company that is stable and has a solid reputation. Ninety percent of startups fail within their first few years, so you wouldn’t want to find yourself stuck because your supplier has gone out of business.
Choose a company that has already proven its capability to handle business for the long haul. Research their track record over the years, looking at their delivery time, price hikes or even problems with the law. Make sure you won’t need to look for a new supplier in a few months before you agree to any contract.
It’s very important to consider the location of a supplier before you get in any agreement with them. When you work with a distant supplier, products may take a long time to arrive, especially since today’s sales process takes 22 percent longer than five years ago.
This means unnecessary delays, and that can add in extra freight costs you don’t need. Longer transportation time may also increase the risk of product damage, which will cost you a lot of money, even if the supplier covers some of the damage incurred.
It’s always best to go local if you can find quality products at a good price. If you must look for a distant supplier, study their shipping patterns. Find out how long it will take for the shipment to arrive, their accuracy in keeping up with that timeline, and the condition of goods upon arrival. Read online reviews, and if you can, talk to other small businesses that are already working with the supplier.
Finally, you should also look at the supplier company as a whole. Are they competent enough to handle your orders without any hurdles while still providing great quality products at good prices?
A competent supplier will offer the latest, most advanced products that will sell well in the market. For example, if you are a fashion retailer, you should find a supplier that can keep up with current fashion trends. This will help you meet your customers’ needs, which could translate to increased sales.
The supplier should also be easy to reach and have clear communication channels. They should have a well-trained and capable customer service team that is available to fully assist you with your concerns. Their customer support team should also have a positive attitude when dealing with customers and are working hard to provide the best service.
Lastly, the supplier should be open to negotiations, and they should offer attractive packages for customer loyalty, which could include discounts, bonuses and reasonable terms of purchase.
Sourcing for a good supplier can be a daunting process, especially for new entrepreneurs. There are many suppliers available out there offering what you need, sometimes at the same price. Take your time choosing the one that meets your needs best.
Place sample orders with a few that you think would suit your company’s needs, and see how the relationship goes. Do not sign any long-term contract with a new supplier until you have worked with them for some time and are satisfied with their service.