Negotiating With A Supplier? Be Sure To Have These 6 Tips In The Bag!

Entrepreneurs need to juggle many responsibilities, and staying profitable is one of them. And part of turning up a profit is negotiating with suppliers and partners for a better deal. To some business people, getting other people to agree to their terms comes naturally. For others, however, the very thought of negotiating makes them shiver.

If you belong to the latter category, worry not. The following 6 tips will make business negotiations bearable.

1. Keep The Lines Of Communication Open

Maintaining a good partnership with a distributor, manufacturer, or sourcing agent is not different from personal relationships. You need to keep the lines of communication open. Think about it, how can you expect to gain leverage in negotiations if you hardly speak to them?

Stay updated with the industry trends and issues. Being in the know lets business owners and entrepreneurs build rapport, which makes future haggling easier.

2. Speak Like Your Supplier

No matter what industry you’re in - automotive, retail, or electronics - you want to speak like your supplier. Of course, we’re not talking about speaking their native language. Learning Mandarin because you’re sourcing products from China is tough.

Rather, you’d want to speak the industry’s language. Know the basics. And if your supplier is open to it, get insider tips and learn their jargon. Do that and your partners will treat you with greater respect.

3. Give What Your Supplier Wants: More Money

Your supplier has a product, and they want to ship as much of it as possible to profit.

You may not be in a position to buy more. But you can position your organization as a reliable resource. One that has a good history of selling and setting up partnerships within your supplier’s target industry.

Note, however, that this strategy requires you to have built up a certain level of trust and credibility.

4. Look For That Win-Win Deal

Yes, money makes the business world go round. But a supplier may not budge on price regardless of the offer. If such is your case, you would want to look for other win-win deals.

Why not look at other parts of the contract such as rates for bulk purchases, the extent and duration of the warranty, or the down payment amount for every shipment? The bottom line: strike a deal where you and your supplier can gain something.

5. Make Them See The Competition

A customer switching to a competitor is the last thing a supplier wants to happen. With this in mind, you should get quotes from at least 3 competitors of the manufacturer or distributor you’re working with.

So go ahead. Let your current supplier know that you’re getting quotes from other providers and that you will go with the one that provides the best bang for your buck. The likely result is a better and more competitive pricing.

6. Show The Money

Want a surefire way to create leverage with a distributor or manufacturer? Here’s how: prepare to make a 50% to 70% deposit!

Sure, this strategy will take a lot of cash, and this may be out of the question for small businesses with a tight budget. However, if your coffers can take it, depositing 50% or more increases your overall negotiating power.

Remember: