When it comes to running your retail business, good supplier negotiations is everything. Supply costs constitute a major part of your business’ expenses. So it makes sense that as a retailer, you take heed and make a concerted effort to carefully manage the costs. Understandably though, this doesn’t necessarily come easy. It takes a lot of preparation, tenacity, and planning to effectively negotiate. We are here to help. So here are our 10 top tips for supplier negotiations.
How to negotiate with suppliers:
Suppliers are people too. They run businesses every day, just as you do. This means that you can approach them in a personable way. The same way you would like to be handled. Always be polite and courteous. Ideally, try to make a point of touching base daily or weekly. If you can become a pleasant part of their week, you will remain top of mind and in good standing. This can make all the difference in building a rapport and long-term relationship.
Be a loyal customer
Every business owner wants return business. It’s what makes it all worthwhile. During negotiations with your suppliers, make sure they know your long-term picture and how you intend on coming back to them as preferred suppliers. This kind of gesture can lead to favourable terms and great future relationships.
Get on the same page with negotiations
During negotiations, read the cues. If the vendor is making fewer demands it may be time to finalize the agreement. Once there, summarize the points discussed, back it up in writing and close the deal.
Don’t be that guy – pay on time!
Cash flow is not always in your control. But in times that it is, make good on your bills and show the suppliers you care as much about their business as you do yours. That said if cash flow is an issue, consider a Merchant Cash Advance (MCA) for quick access to capital. This will allow you to pay debt and settle necessary supplier accounts. If you are a retailer (and older than 6 months), an MCA can be easily paid off via your EFTPOS card transactions – great for seasonal business!
Honesty should be a policy
Shady dealings are hard to maintain and will most likely come back to bite you. Honesty goes a long way in supplier/customer negotiations. While being honest, be sure not to give up all your negotiation power. Remain upfront and as transparent as you can be without compromising yourself and your business.
Talk about your potential
When meeting with a vendor for the first time, there is a good chance they don’t know much about your business. Begin with a short overview. Provide a nice summary of who you are, what you do and where you are going. This will provide a bigger picture that they can begin to see themselves a part of.
Tactfully mention the competition
There is nothing wrong with strategically ‘dropping in’ competitor offering during your negotiations. These may be real or perceived. It often doesn’t matter. Don’t provide hard facts and prices, but it is perfectly acceptable for them to know others have some skin in the game. A little competition never hurt anybody.
Don’t close a deal under pressure
When you are under pressure, it’s hard to think. So if you are confused about any part of the negotiations, or you are not sure of the salesperson, rather wait. Shop around and ask lots of questions.
Practice. Negotiate. Repeat.
Not everyone is a born negotiator. In fact, it takes a lot of skill and often practice. Negotiations are laced with body language, nuances, and interpersonal cues. So practice your pitch and don’t be afraid to go out there time and again until it feels natural.
Remember that it takes 2 to Tango. You need to make money, but so does your supplier. A deal should be approached as a compromise, not a conquest. Ensure that you both have manageable and fair terms. This will clinch long-term relationships you can rely on.
The art of negotiations is an age-old practice. It may seem easier to ditch the haggle and accept the price tag. But rather don’t. A shrewd entrepreneur understands the enormous value favourable terms can bring. So make it your mission to play the game the right way. Then reap the rewards.
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