Choosing the right suppliers for your small business requires strategic thinking. You should have a strong sense of what you as a business owner are looking to achieve and how you can do it before you make your selection, because choosing suppliers is about much more than just the goods you want to buy. For example, if you want to cut down the time it takes you to serve your customers, consider suppliers that offer you faster delivery in addition to those that compete on price alone.
Here are some of the most important factors in choosing the best suppliers for your business.
- How many do you really need? Narrowing potential suppliers to a carefully targeted group gives you at least two important benefits. One, it makes your operations easier to manage. And two, when you send more of your business to fewer suppliers, you become a more important client to them. As such, you may be able to make deals with them that will give you a competitive edge. For example, if you have a rush job for an important customer, a supplier which you give a substantial portion of your business to is more likely to go the extra mile for you than one you use only on occasion.
Nevertheless, it’s critical to have several sources from which to choose. Buying from only one supplier can be dangerous: Where do you turn if it lets you down or even goes out of business? And, while giving a certain supplier “exclusivity” may prompt that supplier to provide you with better service, it can also make it complacent.
- Reliability: This is just as important a factor as price, because if a supplier lets you down, you may well end up letting your customers down. So when you find reliable suppliers, you want to keep them. Focus too much on getting the rock-bottom price and you may well end up losing these suppliers. And even if you don’t lose them, if you’re constantly bargaining you may find these suppliers less willing to go out of their way for you when you need it.
- Quality and value: Your customers will associate poor quality with you, not your suppliers. So you need suppliers that provide consistent quality. And you must decide what you’re willing to pay for it. Strike a balance among cost, reliability, quality, and service.
- Good service and communication: You need suppliers that can deliver on time or that will be honest and give you ample warning if they can’t. The best suppliers will also keep in touch with you regularly to find out what needs you have now and how they can serve you better in the future.
- Sound financial health: It’s very important to be sure your suppliers have strong enough cash flow to deliver what you want, when you want it. Running a simple credit check with one of the leading credit bureaus, like Dun & Bradstreet, can assure you that a supplier won’t go out of business just when you need it most.
- Team approach to business: A strong relationship between you and your suppliers benefits everyone. If your suppliers acknowledge that your business is important to them, they’ll likely make every effort to provide the best service possible. And you’ll be more likely to achieve this by letting them know how important they are to you and your business.