Running a business requires using vendors for an assortment of goods and services. You need vendors to provide you with raw materials, finished products for resale, services for general business operations and even services for the outsourcing of some business processes. Regardless of what type of vendor you require, or how many, knowing the process of finding and securing the right vendor for your needs will help in keeping your business operating smoothly and efficiently.
Things You'll Need
- Past bills for all vendors used showing total charges
- List of potential vendors
- List of items and services you need to outsource or purchase on a regular basis
Create or reassess your current list of vendors that you currently use. Do not overlook all aspects of business. Add to your list vendors used for goods, products and services. For example, if you run a restaurant and bar make sure your vendor list includes food distributors, farmers that supply you with fruits and vegetables, linen cleaning services, janitorial service companies, utility companies and beverage vendors. To make sure you have included everyone, review all purchases and payments made during the past year for goods and services and write down the names of where all payments were sent.
Beside each vendor name, write down the total amount spent with each vendor during the past 12 months. Note what the vendor currently provides for your business or organization and also note additional items that the same vendor could potentially provide to you.
Highlight the top 10 vendors on your list where you spent the most money during the past year. Find contact information for your vendor representative at each company or business and contact all to set up individual appointments to discuss your account. Know that it may be easier to enhance and expand relationships with current vendors as opposed to signing up new vendors. Schedule appointments with all and have available your total expenditures for the year. Request the vendor representative bring along information on other items and services they can sell to you.
Make a separate list of alternative vendors for each of the categories of purchases you use. For example, if you use Vendor A for buying fresh produce, write down three to five alternate vendors that service your location and sell the same items. Make contact with all potential vendors and request information be sent to you and an in-person meeting be scheduled. During the meeting, let the potential vendor know how much you spend on the goods they sell per year and ask if they can help you save money or run your business better. Ask about payment terms, cash payment discounts, delivery fees, minimum order amounts, hours of operation, maximum ordering limits, order turnaround times and contract restrictions. Keep detailed notes on all potential vendors. Compare potential vendors to notes regarding the vendors you currently use. Analyze all options to make a vendor selection that suits your business style and needs.
When contacting each vendor make sure to state upfront that you are in the process of looking for new vendors. Explain your business and tell the representative the potential goods and services you would be purchasing from them. State how much you will most likely buy from the vendor during the course of a year.
To stay with the vendor or vendors you currently use, request another meeting to discuss changing the terms of your contract. Review all parameters of working with the vendor and get both a verbal and written confirmation that you and the vendor will remain in a business arrangement. However, do not sign any contract on the spot without having the documents thoroughly reviewed first.
Meet with the new vendor and sign any and all paperwork that is required to begin the vendor relationship. Know that a new vendor may request and require financial information from you to ensure that you will be able to pay all bills. Follow the process as outlined by the vendor, however, you may question terms and conditions that had not been previously discussed. Agree to the terms and sign contracts once you are comfortable with all conditions.
To change vendors, pay off all outstanding accounts payable to the vendor. Send a written letter to the vendor stating that you will not be purchasing from them for the time being. Use concise business language and make it clear that you will using the services of an alternate vendor for the time being. Send the letter and keep a copy for your files.