It's often been said that good relationships are key to a business’s success. All too often, owners focus their attention solely on relationships with their customers and their employees, neglecting to nurture their relationships with key vendors and suppliers.

Why Strong Vendor/Supplier Relationships Matter In Business Ownership

Dependable suppliers can be hard to find. When you find one, treat them like royalty. Building strong and mutually beneficial relationships with your suppliers can quickly result in significant advantages.

• Terms: you may be able to negotiate better payment terms, helping to improve your cash flow.
• Discounts: negotiation on price is much easier to do with a vendor that views the relationship with your business as a partnership. You may also be able to get a reduction of such fees as restocking for product returns.
• Timeliness: With a close relationship with your suppliers, you also have better opportunities to manage your inventory and work out just-in-time delivery, so that you can deliver to your customers on time.
• Innovation: advances in your supplier's materials can help you to innovate your own offerings. Keep in mind that they are at the forefront of their field and when they understand your company, its needs, and challenges, they can offer valuable assistance on improving what you do.

Clearly, vendors are very important, so let's examine some basics on how to improve your vendor/supplier relationships.

Become a Valuable Customer

Think about what attributes your best customers have and try to emulate those with your suppliers. The amount of revenue they bring to a company is not the only factor that makes a customer valuable. Those that pay their invoices on time and provide sufficient lead-time cause fewer headaches and are easier to work with. You might be surprised at how much goodwill you can get just by adhering to those two principles as much as possible.

It's important to remember, though, that being a valuable customer doesn't mean you can't also be demanding, as long as you're always fair. Be sure that your suppliers and vendors are aware of your quality and time criteria, and hold them accountable if they don’t respect your agreements.

Make Relationship More Personal

Schedule a lunch with your vendors or visit them at their offices. This will help you get to know them better and vice versa, so that you can understand the nature of each other's business and your unique needs.

Consider inviting them to some of your strategy meetings. When you do, they can contribute their own perspective and connect with your goals and link them more closely to their own.

Keep them informed about developments in your business, special promotions, and new offerings. You might be surprised to discover that a good supplier can also be a source of new customers.

Vendor/Supplier Relationships When Purchasing a Business

If you're considering the purchase of a business, you should find out if the current owner has espoused a good supplier relationship philosophy. If strong relationships already exist between the supplier and the company, it's a definite plus.

You'll need to make sure you do everything possible to protect those existing relationships when the transition of ownership occurs. Get a complete understanding of the nature of the relationship that the current owner has with each of their current vendors. It will also be helpful to have a meeting with vendors and the current owner to discuss how the transition will occur.