Getting the best deal from your suppliers
All businesses buy goods and services. It can be a good idea to make a dedicated person responsible for managing this.
This person is then responsible for:
1. analysing the business needs (with other staff, if necessary)
2. locating the best supplier
3. establishing equipment specifications/requirements
4. getting quotations and negotiating prices, levels of service and discounts on repeat business
5. ordering the goods
6. signing on delivery
7. keeping all proof (such as delivery notes)
8. ensuring invoices are passed to the relevant person or department for payment.
Purchasing tips
- Buy on product attributes, not price alone.
- Keep records of all purchases
- Look for alternatives to paying such as product swapping or barter.
- Focus on the products on which you spend the most and try to reduce the cost.
- Research possible suppliers and get quotations from at least three of them.
- Don't be dependent upon one supplier, although be aware that loyalty can bring many rewards.
- Treat suppliers well and they will serve you well.
- Agree on payment terms.
- Consider outright purchase, second-hand goods, hire purchase or leasing options.
Utilities
Utility costs can be a major expense, but using energy and water efficiently will reduce your bills. Even small alterations such as adjusting thermostats can bring about good savings. Encourage your employees to be energy-conscious and to turn off equipment at the end of the day. Several professional firms can help you to shop around for utilities for your business to ensure you are getting the best deal. They also specialise in cost-reduction analysis. The Carbon Trust provides free, practical advice to business and public sector organisations to help you reduce energy use. See www.thecarbontrust.co.uk.
9 negotiating notes
Your suppliers are in business, too, so will be trying to get the best deal for their businesses, just as you are. So:
1. Prepare - plan in advance what you want: prices, terms, what you are prepared to pay.
2. Get quotations from several suppliers - get a realistic picture of how much something will cost. Use silence - wait for the supplier to name their price.
3. Don't tell a supplier the price you've been quoted by a competitor. They may give you a better deal than you would have asked for.
4. Never accept a first offer.
5. Don't feel under pressure, take your time to decide.
6. Stay firm and consistent.
7. Outline the benefits to both sides. Remember: sales people have targets - they want your business!
8. Ask for extras before walking away from a deal.
9. Ask for a final offer - but be prepared to look for other suppliers if necessary.
