As an entrepreneur, it’s easy to let yourself slip into the notion that you’re operating in a lonely silo, or even that to succeed in business, it’s you – and only you – against the world. Not only is this idea usually wrong, but it can be very destructive to you and your startup.
Supplier relationships are one area where you’re likely to find considerable interest in your company’s prospects, and more offers of outright help and cooperation than you might imagine. You can encourage this largesse, and make money with it, using some simple, proven tactics.
Work out special payment terms with suppliers
You may hesitate to ask, especially if you’re just starting a business, but you’d be surprised how willing many suppliers are to give financial breaks that will help fledgling startups along and give them some orders. If and when you make it big, of course, they’re also going to expect you to remember their help and keep feeding them your business.
Take Lanny Goodman, who was churning out the instruction manuals produced by his publishing business on his HP Color Laser Jet 5500, and knew he could cut those costs in half by moving the work to an offset printer. But his Albuquerque, N.M.-based startup didn’t have the $30,000 in front money to pay for the minimum-sized order that would yield the best price benefit.
“So we signed a contract with the printer for the $30,000 to be divided over six months, and they would print the whole order and then ship it to us in six monthly installments as we made our payments,” Goodman says. “They got the order, we got the cost reduction, and they carried the inventory and financing.”
Get suppliers to buy into your startup vision early on
Since they seem to be succeeding in business themselves, most suppliers are savvy enough to recognize a good startup prospect when they see one. If you have a great start and a solid business plan, share them with selected potential vendors and try to get them to treat you as bigger than you actually are.
Right from the start, GotVMail used that approach to get discounts of as much as 30 percent off list prices from suppliers of switchboards and other telecommunications equipment.
“We explained our business model and our ideas for expansion,” says David Hauser, chief technology officer for the Weston, Mass.-based startup business. “Some vendors said they really didn’t care, but others were interested. The ones who were are the ones we continue to use today, and now they’re very happy they worked with us.”
Expect and accept the currency of loyalty
Suppliers want to help you succeed, because that means more business for them. And well-established vendors have all sorts of ways to attract your interest and stake out their territory with you ahead of their competitors.
Many of these involve freebies. Take them – with hearty thanks. But don’t forget that the vendor is going to expect your loyalty in return.
When Scott Gross opened his joint, Sporty’s: A Casual Café, in Kerrville, Texas, in 2004, he had come from the corporate world and knew that big corporate customers are always hitting up their suppliers for freebies. He figured he’d take the same approach. Soon, his wine vendor was printing Sporty’s wine lists for free. The beer distributor was bringing the Miller Lite girls by for special promotions and lending Gross a 1/3-scale NASCAR racer to use in a local parade. Credit-card vendors responded to his request with free leather guest-check folders.
“They want to keep you, and it helps to be loyal,” Gross says. “If I used five or six suppliers for the same product, they probably wouldn’t have any more loyalty to me than I was showing to them.”
Encourage and listen to suppliers’ suggestions
Often, a supplier will have just the idea to make your product or service significantly better – if only you’re open to their input. Considering that you probably chose them as a vendor because they’re already established in the field – and you aren’t – it only makes sense to solicit constructive criticism from them about what your company is doing.
That’s what Al Larson did when he was trying to come up with a magnetic picture-frame system for people to stick on their refrigerators. Larson was having particular trouble coming up with a matte board that wouldn’t get dirty or damaged when the pictures were changed. But designers at the Chas. Chapman binder company of London, Ont., quickly came up with a fix: Screen-print a double-matte effect on the front of the page so the picture already looks matted.
“They’re already supplying us with the screen-printed material,” says Larson, co-owner of Fridge Frame, in Plymouth, Mich. “And as we move into Canada we’re looking at making them our distributor as well. So that will broaden the relationship.”
Our Bottom Line
Suppliers want your new business to succeed almost as much as you do. Use that business fact to develop true partnerships with them to both help you get your startup off the ground and give them a solid, long-term customer.