Businesses require many different services to run efficiently, and many companies choose to outsource these needs to business vendors. A business vendor sells a product or service to other businesses. Vendors can do everything from trimming hedges at your office building to managing your company’s IT services.
Businesses of all sizes use vendors to perform a variety of tasks. Some of these products or services might be outside what the business’s employees are capable of, while for other services, it may simply be more effective to pay a vendor than to have an employee do the job. Vendors often have access to lower product prices and better technology, while others are experts in their field and will use their expertise to get the job done for you.
Learning how to find the best business vendors for your company can save you time and money, but choosing quality vendors that meet your needs at a price you can afford is essential.
What types of business vendors are there?
Most vendors fall into three general categories:
- Product Vendors – These vendors supply your business with a physical product. They might restock the snacks and coffee in your break room, keep your office supplies well-stocked, or even provide products to sell on your store shelves.
- Service Vendors – These vendors perform a service for your business. They could do services such as landscaping and snow removal at your office, planning special events, cleaning, maintenance, or catering meals for your staff. Shipping providers, marketing companies, and accountants could also fall into this category.
- Technology Vendors – Technology vendors provide solutions such as small business software, cloud solutions, IT services, and others.
Your business may need other types of vendors as well. For example, you may use a manufacturing vendor or a vendor that provides raw goods to your company so you can create a product. Some businesses may need to hire a vendor for waste disposal, security, and other needs.
Where to look for business vendors
Once you decide what type of vendor(s) you need, it’s time to begin the hunt to find the best business vendor to meet that need.
You can start by checking business vendor directories online. Or, if you’re looking for a vendor local to you, simply do an online search for the type of vendor you need, along with your city name.
Another option is to get referrals from business owners in your network. Ask any business owner if they use the type of vendor(s) you’re seeking. Besides asking for their recommendation, you may also want to ask them about negative experiences with vendors, so you know which vendors to avoid. If you think you have a good enough relationship with the other business owner, you could also ask them how much they pay the vendor and what they receive in return to get an idea of what your budget might need to be.
You could also check for vendors at trade shows or other events. These events could be online or in person. A benefit to looking for vendors at trade shows is that these vendors are already familiar with your industry and probably already work with similar companies. This kind of experience can ultimately result in more value for your company.
Checklist for what to look for in a business vendor
Once you have your list of vendors, it’s time to narrow them down.
While cost is always a factor, going with the lowest bidder may cause you frustration in the long run if you receive low-quality products or unreliable service. Instead, focus on these three factors to help you decide if a vendor will fit your company well.
- Experience – How long has the business vendor been working in this field? Do they have experience working in your area or with similar companies?
- Reputation – Check their ratings online. Be sure to look at third-party websites for positive and negative reviews.
- Reliability – While reviews can give you a picture of the company’s reliability, you can also use your own experience with the company. How quickly do they respond to your communication? If you have an appointment, do they arrive on time with all the necessary documentation or other items?
Tips on how to communicate effectively with business vendors
While a vendor isn’t an employee or a customer, they’re still an important resource for your business. As in all business relationships, good communication with vendors is important.
Always be polite and professional when you’re speaking with a potential vendor. While you won’t hire every vendor you interact with, you may end up having a long-term relationship with the vendor you end up hiring. Keeping your communication professional ensures that the relationship stays positive over the long term. While you’re searching for the perfect vendor, remember that they’re interviewing you as the customer as well. They may choose not to pursue work with you if you’re rude, demanding, or otherwise unprofessional.
Always be upfront with your needs. Clearly state what you expect from your vendor, and let them know if you’d like them to change something they’re doing for you or if they aren’t performing their services as you agreed. Be sure you know who at the company is responsible for the success of your contract, so you can reach out to that person directly to discuss any issues.
And speaking of your agreement, be sure you’ve fully read the agreement or contract you have with your vendor. Then you’ll know what services they will provide and when they will provide them, so you can reach out if they aren’t performing their part of the agreement. The contract may include a cancellation fee or a minimum contract length requirement. Ensure you fully understand what happens if you cancel the contract.
Strategies for negotiating contracts and pricing with vendors
Every contract has two sides, and any agreement you enter with a vendor needs to benefit both sides. However, you can still negotiate your contract with your vendor to ensure your business gets what it needs at a reasonable price.
Here are a few tips that may be useful before and during the negotiation process.
Get multiple quotes
Before meeting personally to negotiate a contract, ensure you have multiple quotes from other companies offering the same or similar service. You can use these quotes as leverage during your negotiation.
Check industry pricing
Do your independent research to discover industry pricing for similar products or services. This research will give you an idea of how reasonable your quotes are and may even give you some ideas on areas you may negotiate the price.
Make your budget
Be aware of your budget before entering a negotiation. However, just because you know your budget doesn’t mean you need to tell the vendor. Knowing your budget gives you a starting place to push back if the vendor’s price is too high, and you’ll learn in advance if you have any wiggle room during the negotiation process.
Don’t be afraid of back and forth
Some people feel uncomfortable with negotiation, but remember that this is normal part of making a deal. You can prepare yourself knowing the process may take longer than planned. Some experts recommend bringing your own food or drink to the negotiation table, so you’re fully prepared.
Negotiate payment terms
Besides negotiating the total price of the service, you can leverage payment terms for a reduced rate. For example, the vendor may lower your price if you pay for six months or a year of service in advance. Similarly, paying via automatic direct deposit instead of by a credit card payment may save you money as well.
Be polite
As mentioned above, your business vendors are interviewing you just as much as you’re interviewing them. A good relationship should be respectful on both sides. Work to build rapport with your vendors from the beginning so your companies can have a positive long-term relationship.
Final thoughts about business vendors
Business vendors have specialized skills or resources that benefit your company, but finding the best business vendors for your needs is essential. Your company’s needs, your budget, and the vendor’s capabilities all impact how they fit in with your business. Interviewing and researching multiple vendors can save your business time and money and allow you to focus on continuing to grow your business.
Running an efficient business requires using products and services that other businesses provide. If you’re looking for a vendor for customer relationship management or human resources, check out our other articles for tips on choosing the best one.