Running a cash-positive small business means cutting costs wherever possible. While reducing overheads and forecasting for seasonal activity are great ways to manage your cash flow, evaluating your suppliers could be the perfect way to save extra money and streamline your vendors. Here’s an essential checklist for reviewing your suppliers and getting a better deal.
Are you working with the right suppliers?
Before you start thinking about auditing your vendors or negotiating for a better deal, put together a complete list of your suppliers and then review whether they are providing everything you need. Are your suppliers experienced in the retail market? Do they provide consistent, high-quality products or services? You might discover some suppliers aren’t a good fit for your business – even if they were when you first started working with them.
Beyond that, think about your relationships with each vendor. Are there ways to improve them? According to Inc.com, one of the most common mistakes for small business owners is that they have “a combative relationship with their suppliers and vendors”. So instead of slipping on the brass knuckles and trying to fight for a better deal, consider whether maintaining a good relationship is more important. After all, a happy supplier is more likely to be considerate if you ever run into cash flow troubles.
Is there any overlap across suppliers?
Once you have a list of all your suppliers and understand exactly what they provide your business, you’ll be able to see whether there is any overlap between them. Noticeable overlap means you’re spending more money than you need to, so it’s a good idea to speak with your suppliers if this happens.
A good way to figure out whether there’s any overlap is to create a spreadsheet with a few ratings metrics to measure each vendor against. This might include:
- Cost: The price of your suppliers has a huge impact on your profit margin, so while you always want to use the best people, you also need to consider how much they charge. Asking your suppliers to sell in bulk could be one way to cut costs on expensive orders.
- Delivery: This involves not only whether your suppliers deliver the good on time, but also whether they deliver the right Are there ever mistakes in deliveries? Would an integrated solution fix any issues throughout the supply chain?
- Flexibility: Can your suppliers accommodate your needs on a long-term basis? How flexible are they if unpredictable issues crop up? What would happen to your business if they suddenly had to close for a period of time?
- Quality of services: While the quality of the product itself is crucial – for you and your customers – equally important is the quality of the people. You have to deal with your suppliers on a regular basis, so it helps if everyone you deal with is friendly and flexible – from delivery drivers to the accounts department.
Can you get a better deal?
Small business is competitive no matter what industry, but running a retail business means staying on top of every part of how the store runs. So why not try to find better deals where you can?
Your employees can actually be super helpful at this stage. Most of them probably interact with your vendors throughout their work weeks, so they are hubs of information that can help you evaluate your suppliers on a deeper level. Ask your team – either in-person or online with a communication solution for your small business – about how many times they’ve had to scrap or return products because the supplier didn’t meet expectations. Have there been any customer complaints because of a bad product or service from your vendors? If you still want to retain the supplier, this is a golden opportunity to negotiate a better deal.
Your suppliers provide the bread and butter to your retail business, so it’s worth staying on top of them to ensure you always have the best people helping your business succeed.