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When choosing vendors for your business, doing your due diligence can be one of the most important parts of the process. In my 18 years in the small- and medium-sized business market as both an owner and a consultant, I’ve noticed that a reoccurring point of pain has been attempting to find quality vendors that can deliver on what they promise. I’ve found that having the wrong partners for your business can often disrupt production and efficiency, costing you both time and money.
Two of the most important tasks when choosing vendors are making sure you understand exactly what they do and ensuring that they know exactly what your business does, how it operates and what you’re attempting to accomplish by establishing a partnership with them. You want to set clear expectations from the start to avoid a waste of resources.
Business owners often will consider potential vendors based on surface-level marketing and introductory sales calls, and from there, they may attempt to decide to partner with a company without sufficiently assessing it. Sometimes, this can result in frustration and disappointment regarding results.
It’s important to realize that potential vendors are selling you a product, so they have a vested interest in establishing a long-term relationship with your business. Their goal may be to set as high of a recurrent budget as possible and ultimately draw out the term of the relationship for as long as possible. That’s how many vendors can maximize their profits and leverage their resources internally so they can easily manage the projects you assign them with their own team. In my experience, most vendors will work as fast or as slow as you allow them to.
As an owner or manager of your business, it’s your responsibility to manage a vendor similarly to how you manage an employee. First, you may need to train the vendor in your industry and products. Then, you may need to assign them tasks with realistic deadlines. Lastly, you may need to consistently reassess what you expect from them. Set a schedule for follow-up meetings so they can update you on their progress and you can help steer them in the right direction when it comes to your desired results.
Another important aspect of choosing vendors is being aware of the type of service they can offer you and what that means when you’re measuring the result when they deliver the product. When choosing a vendor that will deliver or create a tangible product, such as a food distributor or a technology company, the process is often straightforward, as you have a final product that you can touch and/or see, so measuring the result to see whether it meets your expectations is easy. However, with a vendor that offers intangible products or services, such as a marketing or consulting company, you may need to be more cautious when it comes to measuring their results.
Your business should have a specific process in place for choosing vendors. Consider creating a checklist of actions that your team goes through during the selection process. Some key best practices you should have on your checklist are:
• Read through the vendor agreement thoroughly, and try to negotiate any items that seem to be counterproductive to your business model. Ask the following questions when you’re reviewing the agreement: What costs are involved, and do they fit my budget? Will I own any content that’s created? Are the expectations for the working relationship clear and defined? Are the expected results outlined in the agreement? What is the timeline for achieving those results? What are the terms for ending the relationship should it not work well?
• Ask for proven results through third-party referrals. Has the vendor worked with other companies in your industry before, and if so, who? Most reputable organizations, unless they’re just starting out, should have referrals and a proven track record of achieving and surpassing expectations.
• Interview and get to know multiple members on the vendor’s team. Often there may initially be one point of contact when you’re negotiating a potential partnership, but you may want to ask who else on their team will be involved in executing the game plan you’ve put together. Discuss their team members’ roles and responsibilities. If possible, take the time to visit their office.
When it comes to choosing vendors, preparation is important, as the “devil is in the details.” You’ll know you’ve found the right vendor when the decision not only makes good business sense, but you also feel good about it.
Ultimately, though, no matter how much you prepare, you may not really know how a vendor will perform until you give them a shot. If you find that a vendor is slow to respond or that they don’t provide results in a timely fashion, you should be quick to terminate the relationship because, in my experience, it usually only gets worse. If you find a vendor that delivers exactly what you’re looking for or even surpasses your expectations, make sure to nurture that relationship. Just as you may do with employees, take your time when considering candidates, and hire slowly, but as soon as you know a vendor isn’t a good fit, fire quickly.
December 26, 2018 at 07:43AM
Forbes – Entrepreneurs