Running a business requires a good working relationship with suppliers, which can be tricky for those who are just starting their business from the ground up. The right supplier will not only determine the quality of your product but the time it takes to deliver that product to your customers. With these types of stakes, choosing the right supplier is one of the most vital steps in building a business. If your business is still in its early stages, here are five qualities to look for in a potential supplier.
1. Value
On paper, it makes sense to pursue low prices for maximum profit. In most cases, the low prices will come at the expense of quality of service. That’s why it’s better to look for a “good” or “fair” price on supplies rather than the lowest price available. Start by comparing different suppliers first, thoroughly evaluating their pricing and what they offer. Then, narrow that list down to three or four serious contenders and look for further opportunities to reduce business costs. Some examples include joining buyer groups or placing orders at strategic intervals for reduced shipping costs.
2. Open Communication
Once it gets up and running, a business operates a lot like a machine, and a failure in one component often ends up spoiling the entire system. If you have issues in your supply chain, you must be able to communicate with your supplier to resolve the issue. Before signing the final contract with your supplier of choice, take note of the responsiveness of their representatives and the quality of service they have provided thus far.
3. Consistency
Look for consistency in both product and customer service. You will need a supplier that responds quickly and efficiently to any orders placed by your business. The supplier should also have their own quality assurance system in place to ensure that quality issues don’t fall on your shoulders. Teaming up with a supplier that’s reliably consistent will allow you to focus more of your energy on the running of your actual business.
4. Scalability
Does your supplier have the capacity to meet your demands as your business grows? Are they a profitable business, or are they on the verge of financial collapse? As your business grows and production ramps up, you need a supplier that can meet a sudden increase in demand. For this step, it helps to look for suppliers that are established and have good reputations with other businesses that are similar to your own.
5. Payment Terms and Conditions
Finally, don’t forget to read the small print when it comes to how your business pays the supplier. Penalties for late payments or paying in installments can eat away at your profits over time. You should also look at their return policy to predict how helpful they will be when quality issues do arise.
Starting a business can be challenging. The best supplier is one that fulfills its promised obligations on time and on budget. By focusing on the above five qualities, you are sure to find the perfect supplier for your needs.
