The choice of suppliers is a fundamental stage in the process of setting up a business.
All companies depend to a lesser or greater extent on others. That means that to give your customers an excellent experience, you cannot minimize the importance of selecting your partners. If you are wondering how to find and find suppliers for your business, I am going to give you some recommendations that I consider important to help you choose.
Start At The Beginning: Define Your Value Proposition
You cannot start signing contracts with suppliers if you have not clearly defined what you want to offer to your customers . It seems obvious, but sometimes starting a business involves making so many decisions that it is very easy to start the house with the roof .
Once you are very clear about what your value proposition is going to be, it is much easier for you to reflect on the means you are going to use to achieve your goal. Within this reflection will be the providers that you will need.
It is evident that if your strategy is low cost, you will not work with the same type of company as if you offer a luxury product or service. But it goes far beyond quality or price considerations. Your ideal supplier has to fit perfectly with your value proposition.
Where Can You Search (And Find) Providers?
If you know what type of product or service you need, it becomes much easier to find the most suitable supplier. You have several ways to search for providers.
- By Internet. You have a multitude of directories , yellow pages services and of course search engines like Google or Bing.
- At fairs and shows . This type of event can represent a great opportunity to find different companies in the same sector. Find out about the professional fairs and do not hesitate to pay yourself a ticket to go find out. If there are many exhibitors, you will save a lot of time in the search.
- Professional associations . When wondering how to find suppliers, reflect on guilds. It is possible that other companies in your sector work with the type of company you are looking for, so contacting your professional association can help you. Sometimes it even has framework agreements with strategic suppliers and you could benefit from some advantages. You can also search for the professional association of the supplier sector that interests you, to access the list of its members and to meet many potential partners.
- We return to the Internet . If you are interested in looking for wholesale suppliers, you have several interesting pages where you can find the products that interest you.
Find Out And Compare
If you want to be able to get good conditions, you cannot accept the first offer you receive. When you are going to start a business it is vital that you worry about searching in depth and comparing.
If you’ve found an interesting company, go back to looking for suppliers and select a couple more. The free market works like this. Your clients do the same. They research and compare to find out what is best for them. In a way, carefully selecting your suppliers allows you to learn more about the behavior and motivations of your own customers.
You may have heard of the 3-budget rule. The idea is that every time you need to buy something (product or service) you contact at least 3 companies and ask them for a quote. It is not absolute. For expensive or strategic purchases, you still need to compare more options. For punctual and cheap supplies, you would waste your time if you asked for different offers. But in general it works very well and allows you to make sure that you choose an acceptable option.
After knowing how to find suppliers for your business, after having received a quote from several of them, you still have one stage left: choosing and negotiating.
Negotiate: Price Isn’t Everything
Before choosing the provider with whom you are going to work, you must leave a space for negotiation, and not limit yourself to economic criteria. Price is important, but it is not everything.
- Price . Obviously you are looking to set up a profitable business, so if you buy cheap, it will allow you to have better margins or adjust your prices. Therefore, the economic aspect is an essential factor in negotiating with suppliers.
- Quality . The price alone doesn’t say much. The relationship between the quality offered and the cost is what should decide you to opt for one offer or another. Buying something of passable quality expensive is a mistake, but buying something very bad cheap is also wrong.
- Guarantees . What happens if something goes wrong? What is the company committed to? Do you just sell and ignore it? Does it include warranty and after-sales service or will it charge you large supplements? It is a sometimes forgotten aspect of negotiating with suppliers by novice entrepreneurs, until an incident arises that makes them learn the hard way.
- Availability and flexibility . You still don’t know how customers are going to welcome your product. If it’s a success, you still need more availability from the provider. Or on the contrary, you may have to reduce the initially planned purchases. Then you risk being out of stock. Of the possibility of returning what you have not sold, nor do I speak to you. Analyze with the supplier how to what extent you will have flexibility regarding your orders and returns.
- Payment terms . In my opinion, company credit should not exist, but it does exist. That means that the provider can finance you, thanks to deferred payment terms. Make no mistake, at first you will have to gain access to credit. And if your supplier is a much larger company than you and you are not a strategic client, you may never obtain payment terms on credit . However, it is quite common, and if at the beginning you show that you pay in cash, it is possible that you will get credit over time.
- Financial health . The more strategic your supplier, the more interested you have in investigating their financial situation. If it goes bankrupt and you depend a lot on it, you could suffer serious consequences, such as running out of supply.
- Ethics . This depends on your view of the world. If you work with socially responsible companies, you will be contributing your grain of sand to building a better society.