In today's Freedom Friday blog and email newsletter, I want to talk about a topic that I've discussed before, in part, but I want to talk about a preventative issue. I've talked before about vendors and suppliers breaching their contract, and how to handle that issue, but how can you prevent that from happening to begin with, other than making sure you get your deal in writing? One way to avoid a breach of contract is through negotiation, even before you have a deal at the start. So, in today's Freedom Friday blog and email newsletter, I'm answering the question, “How can I get the best deals from vendors and suppliers?”
First of all, a good businessperson knows makes sure your business is paying fair prices that fit within your budget and help your business grow financially. Of course, your supplier or vendor is doing the same thing. Here are four (4) steps to a successful negotiation with your supplier or vendor:
Before You Start
The first step to a successful negotiation with your supplier or vendor is preparation. You need to request and evaluate supplier or vendor proposals, develop a strategy for your negotiation, and if necessary, get upper management to endorse and the same from each group impacted by the negotiation. You also need to determine your objectives. You need to identify an ideal solution, which is the maximum supportable solution; along with the least acceptable solution, which is the last resort option; and then best alternative to the ideal solution, as well. You also need to come up with the same leverage and strengths as your supplier or vendor. They will be prepared, and you need to be prepared, also.
The second step to a successful negotiation with your supplier or vendor is once again, preparation, but this is a different kind of preparation than in step one. This step requires you to learn about your prospective supplier or vendor. You need to research and learn about your prospective supplier or vendor. This means you need to look online at their website and familiarize yourself with the company's history, growth, and product line. You should read press releases, if any, to learn about current events affecting the supplier or vendor. If you can find out who their other customers are to get reviews, and possibly information about non-confidential aspects of the negotiation. Contact the prospective supplier or vendor and learn the name, title, email address, and phone number of the representative from the supplier or vendor you will be working with, use social media networks to learn more about the supplier or vendor (and this is another place to look for reviews), and create a written strategy in advance, which is your playbook. Of course, the prospective supplier or vendor should never see it.
The third step to a successful negotiation is to shop around. Never sign a multi-year deal with any supplier or vendor. Some time ago, I looked at some coworking options for my law firm. One of the options I looked at was an international company which offers coworking and office space at several locations here in Tulsa. In fact, they're opening a new location here in Tulsa next month. However, while did not require a multi-year agreement, they encouraged it, but they did promise to raise my rent with them every year, whenever I would need to renew. There were other issues, and of course, I did not sign up with them. You should also conduct a regular spending assessment and don't assume suppliers and vendors are fulfilling their contracts at the best price. Compare what you're being charged with what you get in return, and what other suppliers or vendors charge for similar goods or services. You can always negotiate your current supplier or vendor down (or at least keep them where they're at) or look for alternative suppliers or vendors who charge a better price.
Help the Supplier or Vendor Out
The fourth step to a successful negotiation is to help the supplier or vendor out. This may seem counterintuitive, but helping the supplier or vendor find alternatives for materials or processes can help save the supplier or vendor money. Look to make the deal a win-win rather than be demanding with the prospective supplier or vendor. Help the supplier or vendor find new clients (if you are currently using them, give them positive reviews on Google and social media), give referrals for them. If they know you are helping them out in those ways, they may offer you a discount or a better deal.
Thinking about starting a small business? Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth? Please contact me at [email protected] to schedule a FREE strategy session.
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