Look on the bright side. Back in the day, you would have had to travel to far-off lands for unique products to sell. Or invest in trade ships and worry about scurvy and pirates. Now you can get what you need more easily online. This article shares what you need to know about finding suppliers for small businesses.
Sourcing products is something you need to do with care. Whether you’re going to focus on an online storefront, dropshipping, or have a physical storefront, you’ll need to research market trends, vendors, pricing, and supply deals. Before contracting with a supplier, you’ll also want to know how long it takes to make the products, how you’ll ship orders, and what you’ll do about inventory.
You might source products from:
- Artisans, makers, and other DIYers
- Trade shows
You might choose to go more than one of these routes at once. In determining which product supplier is best for you, consider these tips for finding suppliers for small business:
- Vet potential partners
- Always order samples first
- Evaluate the relationship
- Consider payment terms
- Ask about logistics
- Negotiate discounts
- Ask about CSR
#1 Vet Potential Partners
Finding a supplier doesn’t stop at just finding someone who sells the product you’re interested in stocking in your store. Suppliers play a critical role in your business success. You’ll want to:
- Check their references
- Reach out to their other customers
- Read any available product reviews
- Review their standing with the Better Business Bureau
- Search online to see what comes up about that company
- Ask to see their licenses or tax information
#2 Always Order Samples First
You might be eager to get your business up and running, but don’t be too quick to sign a supplier contract. Before making your final decision, negotiate a deal with potential vendors to order some samples. You want to be sure that you are agreeing to buy products that meet your needs for price, quality, and market demand.
There are different types of samples. Factory samples are made to the manufacturer’s specifications, while custom samples suit your particular specifications. Otherwise, you might be offered batch or production samples (examples of the product already in use) or virtual samples (3D models).
#3 Evaluate the Relationship
Judging a vendor by their product price and quality alone may not serve you well in the long run. You will be reliant on this supplier to meet your product needs. Without them, you will struggle to meet customer expectations. This makes the relationship you’ll have with the supplier important.
In finding suppliers for your small business, look for people you feel you can work with well. You want to feel they are transparent about their processes and will work with you if there are stumbling blocks along the way. If they aren’t communicative when trying to win your business, what makes you think they’ll be better when they have your money?
#4 Consider Payment Terms
Speaking of money, don’t decide on a supplier without first discussing payment terms. Unlike the simple transaction you’ll have directly with your customers, suppliers will typically invoice you with different payment terms.
Payment terms tell you:
- When the supplier expects payment
- What penalties you might accrue if late
- If there are benefits to paying early
- If the rates change based on volume, timing
If the supplier doesn’t put the payment terms in writing, that’s not a good sign for you to do business with them.
You want to look for payment terms that your business can take on. For instance, if everyone you work with is looking for an end-of-month (EOM) payment, that could challenge your cash flow. Or, if a vendor requires frequent payments, that could prove problematic too.
#5 Ask About Logistics
Customers today expect the products that they want, when they want them. You can’t risk working with a vendor who will make you wait while you have a waiting list for an item. That’s going to undermine your business credibility.
Questions to ask include:
- Where do you ship from?
- How many warehouses do you have?
- What are the lead times?
- How do you manage order variability?
- What could affect your supply chain?
#6 Negotiate Discounts
The price you pay for your products will directly impact what you charge customers and your bottom line. Before entering into contract discussions with vendors, you’ll need to know:
- How much inventory do you want to purchase
- What price per item you are looking for
- What minimal order quantity you can afford
With the answers to these questions, you’ll be in a position to try and negotiate price or volume discounts that work for you.
#7 Ask About CSR
CSR stands for corporate social responsibility. Yours may be a small business, but it can be part of a bigger change. As the United Nations Development Programme (UNDP) states, production, and consumption can “help countries end poverty and significantly reduce inequalities and exclusion – in parallel with measures to combat climate change.”
The UNDP recommends incorporating sustainability criteria into your purchasing evaluations. This includes asking about potential exposure to illegal workers, country-specific human rights abuses, or employees working in unsafe conditions. You can also explore diversity and environmental issues; find out what monitoring mechanisms and assessments the supplier has in place to ensure you’re not taking on CSR risks.
Finding suppliers for Your Small Business
Finding suppliers for small business is not always straightforward. Yet, doing the hard work upfront when establishing your inventory can lead to long-term relationships with reliable, responsive, and responsible suppliers. Drive competitive advantage and business value by heeding these seven tips for finding small business suppliers.