Is your hustle muscle feeling strong right now? I hope so because if your business is going to make it moving forward, it’s going to have to be – at least for somebody on your business team.
This inflationary environment virtually demands it (as does a likely recession — are you planning for it?).
Besides juggling all of the economic and cultural changes the last few years have put on your plate, you must set aside time to think about how to adjust for new market forces around your NoHo Arts District business.
Whether that’s shifting your hiring models, expanding payment methods (ever thought of text message payments?), or striking a deal with your suppliers… well, more on that below.
Running a business with long-term success requires you to be nimble.
And speaking of long-term success-ion (ahem), have you made plans for the future of your business? Or perhaps you’re feeling unsure about the plan you’ve already made. Either way, succession plans are something we should definitely talk about:
Because even when you’re dealing with the here and now of running your business, you still need to be thinking about what lies ahead.
But that’s for the future. Let’s come back to THIS moment and talk about one of those nimble moves you can make right now: vendor negotiation…
Vendor Negotiation Tips for NoHo Arts District Business Owners
“Information is a negotiator’s greatest weapon.” – Victor Kiam
Small business owners are always looking for a deal – really, who isn’t? And, you’d be hard-pressed to find times when you need a break more than you do now in our present economic situation. Am I right?
So, where can you find one?
One of your first stops on that journey: your suppliers. It might seem like you need them more than they need you – but that’s not entirely true, and with skill and doing a little homework, you can negotiate to get a good deal with them.
That’s why today, we want to continue our inflation series by looking at how you can work with your supplier to get the most you can.
The Wrench in Vendor Negotiation
It does appear that in many industries today suppliers hold the cards. Pleading supply chain problems or inflation, they hike their prices up seemingly at will. This also often comes after years of consolidation and larger competitors continuously buying smaller ones – to the detriment and disadvantage of the consumer (just look at the recent nationwide shortage of baby formula).
Whatever the reason, your suppliers may have a lot of companies clamoring for their goods right now. That kicks you right in the price point and seems to weaken your time-tested tactics of negotiation.
And what if you don’t negotiate with suppliers but their other customers do? You can wind up with delayed shipments, poorer products or service, and higher prices as your supplier makes up for deals haggled by your competitors.
Being Informed Is Key
Negotiation is almost always a good idea. It sets the right tone with a new vendor and gets you something for your (supposedly) solid payment history with a long-term supplier.
We say again: Make sure your payment record is good. Or your talks are going to be tough.
First question: Are they giving the best deal? Arm yourself with informed questions, starting with what’s likely your top priority with a vendor: prices. You’ll hurt your deal by initially asking for a price at or below your supplier’s price, so know the figure. Learn all you can about their wholesale costs (which in general have gone up in the past year by almost 11%).
With new vendors especially, ask for references from other customers – they should be willing to offer a few names – and from them, you might well learn not only about prices but other important aspects of working with your suppliers, such as accuracy and timeliness of deliveries, responsiveness, flexibility, and quality of service.
Here are a few good questions you should ask the potential vendor’s other customers:
- Does the supplier have experience with a business like ours?
- Can the supplier scale to your needs?
- How’s their customer service? How does it go when you need to change an order?
- Has your key contact changed often? Do they communicate in a way you like? Do you get all your questions answered?
Vendor negotiation goes a lot better when you know what you want going in. Set a price in your head before the discussion on what you’re willing to pay – and stick with it. Write down a few other priorities as well. You probably won’t get them all – but aim for the ones you want most, and you’ll have a better chance of landing them.
Think Through Your Talking points
Block out time to talk to your supplier when you can keep distractions to a minimum. Match level to level: You’re the owner here, after all, so make sure they’ve got somebody appropriately senior talking to you. Talk to them with patience and respect.
Of course, don’t reveal upfront what you’re willing to compromise on. But what you should reveal is the homework you’ve done on your market’s competitive pricing. In response, expect them to respect your savvy and figure out that you’re a customer in business for the long term.
Always counteroffer, and not just with price. Sweeten the deal with what you can bring to the vendor to get them in front of their key demographics. Doesn’t hurt to consider what you can do for their bottom line.
If you get stonewalled on price? Be flexible regarding how you use this supplier: Offer partial advance payments or talk bundled bulk orders (ask for discounts as percentages and not dollar amounts). If you’ve got different departments using the same supplier and ordering separately, consolidate orders – it tends to save money. Can you partner with another nearby company that uses the same vendor?
It’s not a pleasant vendor negotiation step to think about, but don’t be afraid to threaten to shrink your order – or cancel it completely. This is usually your last card in a negotiation, so be prepared to move on if it doesn’t work.
Remember, the vendor views you the way you view good employees: It’s cheaper to keep what you have than to find new ones. And don’t get mad: Get a better deal.
When staring down the barrel of rising costs, jumping into vendor negotiation is a logical response. We know it’s not easy to manage all that’s coming at you, but we hope this helps you in the process.
And besides that, we can take a look at your NoHo Arts District business’s tax situation and help you make some money-saving moves now. We can even take a look at your financial KPIs and help you shift your budget or financial path to better position you as we manage a recession. We’re just an appointment away:
Besides all that, we’re here for you, cheering you on as you press forward in uncertain times.
In your corner,
Roland Fink & Co, CPA