Gone are the days of simply placing orders with vendors and suppliers. Today, wise business owners are building relationships with their vendors to create new synergies and opportunities that help grow their business. Here are some benefits you can reap:
• Share information about your business with your vendors so they can be responsive to your needs. Working closely with vendors can help you optimize inventories, so you don’t under- or overstock. If you are a service provider and do not have inventory issues, creating a close relationship can enable vendors to customize solutions for you. If they understand your business they can help you do things better. For instance, in some industries, vendors can create new designs or use new materials to better meet your needs, so that you can expand your customer base. Or a vendor can simply cherry-pick items for you (e.g., a restaurant supplier that knows the type of produce you prefer).
• Partner with suppliers to provide your customers with creative solutions to their problems. This collaboration creates a unique proposition for customers that should translate into greater demand and increased business for you.
• Save money via a good vendor relationship. Typically, when you contract with vendors for supplies and services, you agree to standard terms set in a written agreement. As you build a relationship with vendors, you can modify the agreement to gain more favorable terms. You can qualify for greater discounts for prompt payments. Also, a vendor can give you extended payment terms (a financing arrangement) to free up cash in your business, instead of tapping a bank line of credit or obtaining a bank loan.
Barbara Weltman is an attorney, author (with such titles as J.K. Lasser’s Small Business Taxes and The Complete Idiot's Guide to Starting a Home-Based Business), and trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® at www.barbaraweltman.com, and host of Build Your Business radio. Follow her on Twitter: @BarbaraWeltman.