When it comes to running your retail business, negotiations with suppliers are vital to your success. Supply costs constitute a major part of your expenses and so it makes sense that as a retailer, you make a concerted effort to manage these relationships. But this doesn’t necessarily come easy. It takes a lot of preparation, tenacity and planning. So here are our 10 top tips for supplier negotiations.
1. Communicate clearly and effectively
Never forget that suppliers are people. They run a business every day just as you do so ensure you approach them in a personable way. Make a point of touching base daily or weekly. This can make all the difference in building a rapport and establishing long-term relationships.
2. Be a loyal customer
Every business owner wants return business. During negotiations with your suppliers, make sure they know your long-term plan and how you intend on coming back to them as a preferred supplier. This kind of gesture can lead to favorable terms and can lay the foundation for great future relationships.
3. Negotiate yourself onto their page
During negotiations, read the cues. If the supplier 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.
4. Always pay on time
Cash flow is not always in your control. But in times that it is, make good on your bills and show your suppliers you care as much about their business as you do theirs. That said, if cash flow is an issue, consider a cash advance for quick access to working capital, which will allow you to pay debt and settle necessary supplier accounts.
5. 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.
6. Talk about your potential
When meeting with a supplier for the first time, there is a good chance they don’t know much about your business. So begin with a short overview and 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 becoming a part of.
7. Tactfully mention the competition
There is nothing wrong with strategically dropping a 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’s perfectly acceptable for them to know others have some skin in the game. A little competition never hurt anybody.
8. Don’t close a deal under pressure
When you’re under pressure, it’s hard to think straight. So if you are confused about any part of the negotiations, or you are not sure of the salesperson, rather wait. Shop around and don’t be afraid to ask lots of questions.
9. 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.
10. Play fair
Remember that it takes two 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 ensure a long term relationship you can rely on.
The bottom line
The art of negotiations is an age-old practice. It may seem easier to ditch the haggle and accept the price tag, but this is often unnecessary. A shrewd entrepreneur understands the enormous value favorable terms can bring to your business. So make it your mission to play the game the right way. Keep these 10 tips in mind and you will be well on your way to negotiating your business into a profitable future.
Negotiations are far easier when you have financial support in place, apply for a Merchant Capital cash advance today to set yourself up in a strong position to negotiate.