Working with Suppliers: Be Prepared – and Get Ready for Give and Take (Part One)

If your business model involves selling a product of any kind – from homemade soaps and custom gift boxes to baked goods or an entirely original invention – you know how important it is to have a great working relationship with a reliable supplier.

After all, your dealings with the vendors who keep you stocked with packaging (think clear plastic bottles, black matte wrapping paper and gold-flecked ribbon) and raw materials (fragrance for skin care, keys for security solutions, smoked almonds for your specialty box) are really important.

Sure, you need customers to buy what you’re selling. But in order to have a product they can purchase, first you need the right supplier. (Worth noting: you may need a whole lot more from a vendor than labels and stickers. For example, if you’ve built a prototype for a product, you might be looking for everything from design services and custom tooling to manufacturing and shipping, too.)

Here, we take a look at some of the realities and dynamics driving a long, happy relationship between small business owners and their all-important suppliers.

Homework is definitely required

Finding the right vendor takes work – sometimes, a lot of it. While suppliers certainly need your business to keep theirs afloat, here’s a reality check: If this were a dating game, you’d be the one wooing, not the one being wooed. In most cases, it’s up to you to convince a supplier that your business is worth investing in.

Like you, suppliers have their own inventory (and inventory headaches) to manage. Consider this scenario: you order 5,000 plastic bottles in anticipation of holiday-season demand for your scented body wash. Your vendor buys those bottles – but unexpectedly, you discover a problem on the production side. Now your supplier owns pallets filled with hundreds of unwanted bottles. You’re still on the hook for those bottles, even though you’ve got no product to fill them with – and, by extension, no sales to cover the cost of your investment.

This kind of situation explains why suppliers spend a lot of time carefully vetting potential customers to make sure they don’t get stuck with a load of unwanted bottles, boxes, snack bars, candles … you name it.

Given this reality, you’ll likely need to present, pitch, persuade and, quite possibly, plead your case with potential vendors. Leslie Barber, QB Community leader and co-founder of Bellybar, remembers when she was desperately seeking suppliers.  

“When you first start out, you’re selling your business to the supplier. You’ll need to sell your story by providing everything from Power Point presentations and bank statements to your research and development process. Your supplier will be making purchases on your behalf – for ingredients, packaging and more – so you have to prove you can pay them.

"Problem is, if you’re just starting out, you have no active accounts or purchase orders to prove your worth. When I was breaking into the food industry, the minimum order for most manufacturers was so high I felt like I’d been rejected before I even started. It was so hard!” (Dig in to Leslie’s full story here.)

Dirk Franklin can relate. When he was looking for an overseas manufacturer for his Drink Daddy, he knew he had to be prepared – and then some.

“The hardest thing was finding the right factory in China to make and ship my product. First, I had to sell them on my product idea. Manufacturers get paid based on the final shipping quantity, so the factory owners wanted to know, what will be the return on investment? Will I be ordering in scale – and in what volume? In China, suppliers want to know who you are, too. Over there, your name matters. Are you trustworthy? They have a reputation to protect, much more so than in the United States.”

You scratch their back, they’ll scratch yours

Once the wooing is over and you’ve found a willing supplier, the business owner/supplier relationship becomes more symbiotic. You need your vendor to get your goods sales-ready. They need you to buy their products and keep their business afloat. Sounds obvious, right? But perhaps more than any other business dynamic, this one thrives when both parties keep mutual respect top of mind.

In fact, the smaller your business, the more you stand to benefit when open communication and flexibility rule the day. QB Community member Jessbru99568 notes that small businesses, like her family-run bakery, are more likely than a bigger company to place low-volume orders and need options for payment terms.

“We like to determine our vendors based on their willingness to work with us and the terms they will offer us,” explains this frequent QB Community contributor. “If they are unwilling to work with a smaller company, we know they’d be unable to supply our needs. We would just be "small" customers for them.”

Kenny Briggs, owner of Chippewa Valley Lock & Key LLC, deeply appreciates being able to communicate openly with his top vendor. “We work with locksmith suppliers who deal with security products. We have one particular supplier we deal with on a daily basis. They are super to work with. If we have a large job and need a large stock of supplies, we call them and they give us extended time to pay.”

Kenny’s advice? “Be honest and up-front, and they will help out. Remember, they want you to succeed so they will succeed.”

Danielle Vincent, founder of Outlaw Soaps, agrees. “Everyone wants to help you, and no one is out to get you. My favorite supplier has given us longer payment terms, and I’ve agreed to higher prices. When we’re strapped for cash in the fall but know we’ll be okay at Christmas, he has extended me a month of credit. He’s not going to die by giving us a break, which means my business won’t die!”

Get personal

If you place all your orders for supplies online or over the phone, your relationship may stay strictly business. That’s fine. But we were surprised – and, frankly, delighted – to learn some of our members have established deep friendships with some of their vendors. In these instances, the warning to never mix business with pleasure definitely does not apply.

Joanna Misunas is a case in point. The owner of Sojourn Box relies on about 75 different suppliers to create her city-specific artisan gift boxes. Her dealings with vendors who provide boxes, packing materials and embellishments like twine and ribbon are mostly straightforward website orders. When it comes to purchasing her artisanal, handmade goodies for the gift boxes themselves, however, Joanna has forged unusually close relationships with her suppliers.

“I’ve developed a personal relationship with all the people I work with,” she explains. “I know everyone, I’ve gone to their workplace, and I’ve seen them create their goods. Locally, I have a great relationship with my printer and a graphic designer, too. I didn’t anticipate feeling this level of connection and community up and down the state. It’s like I have family in every Sojourn Box city.”

Outlaw Soap’s Danielle Vincent has become great pals with David Stober, her supplier at Guided. In fact, their customer/supplier friendship has strengthened because of, not in spite of, their ongoing negotiations about pricing, payment terms and more.

“We’ve become good friends through our mutually respectful negotiations,” says Danielle. “Every time I get a quote from David I say, ugh. I need to shave off every unnecessary penny, and so does he. The nature of business is to care more about your own needs than someone else’s – it’s nothing personal. The important thing is having respect for the person you’re dealing with.”

As a supplier offering custom print-, packaging- and marketing materials, David knows that small businesses face unique challenges when it comes to working with vendors. His approach? Take the time to figure out exactly what each customer needs.

“As ‘makers’ ourselves, we understand most startup and small business pains. At Guided, we try to really understand the brand/maker and engage the way they want to engage. That could be through supplying standardized products online or by taking a deep dive into a business’ requirements and tradeoffs, which leads us to a unique custom solution.”

Before you go

Got more questions about working about suppliers? We’ve got answers. Hop on over these posts for more on this important relationship.

• Working with Suppliers: We Share Answers to Three Burning Questions (Part Two)
• Working with Suppliers: Leslie Barber Shares the Inside Scoop (Part Three)

QB Community members, what are your tips for building a long, happy relationship with your trusted vendors? We hope you’ll share your insights below.