For almost any small business, supplier relationships need to be developed over time. Suppliers form one of the functional pillars of a business that sells any kind of finished goods or uses up consumable resources in order to provide services to their customers. At Merchant Advance Capital, we’re certainly aware of the close connection between businesses and their suppliers, and we’ve learned from experience that a good relationship between the two is a nigh-on sure sign of a healthy small business. So it stands to reason that you should try to keep in their good books, and vice versa!
Being on good terms with a supplier has general business advantages, chief among which is the control of costs, cash flow and operating margins of your business. Negotiation of the terms of your agreement with a given supplier is a delicate art – like with any personal relationship, it gets easier to read and understand the needs of the person you’re interacting with as your trust builds over time. For most businesses, reliability is the cornerstone of a good set of supplier relationships: your business needs prompt and accurate delivery of goods, and your supplier needs prompt payment within the terms of your agreement.
Transparency is a second component of relationship building between businesses and their suppliers. Inc.com notes in their online business encyclopedia:
“Honesty on both sides is another important quality in effective buyer-supplier relations… This is most common when the business is grappling with past-due payments, but entrepreneurs should avoid subterfuge and be upfront with suppliers about their situations. “Instead of… saying the check’s in the mail, tell suppliers what’s happening and what you propose to do about it.”
Working in a positive and close relationship with your suppliers equips the businesses on both sides of the equation to develop, make changes as their industry moves forward, and compete more favourably in order to succeed.