Don’t Let Vendors Become Complacent

If you are diligent you will likely find that you can get better deals from your vendors than you are led to believe. In the posting Shop Around to Find Quality Insurance for Less I discussed the importance of keeping your insurance agent working for your best interest and also not becoming complacent yourself. It’s the same with vendors and you should not become complacent and don’t let vendors become complacent.

Is That the Best You Can Do?

“Is that the best you can do?” should be a common and recurring thought you have when communicating with vendors. Make sure they know you are monitoring their service and prices to know you are getting the best deal.

You Usually Have Leverage

Unless the product or service you are purchasing is unique to a supplier, you generally have leverage in that you can go to another supplier. You don’t even have to specifically say you are going to another vendor. Rather, you merely need to communicate in such a way that they know you are aware you have other options. Even for those vendors who provide a unique product or service, there are sometimes situations where a substitution can be made. For example, on a personal level I recently made a change for home phone service that reduced my monthly cost over 93%. Now, the truth is I really don’t care to have a home phone service as a mobile phone works just fine for me. However, for family reason I still have the home phone. However, I got tired of being held captive to the local phone company and their absurd prices. So, with a small upfront cost I made that 93% reduction in cost and got what I consider better quality service. The upfront cost will be recovered in just over two months. All this was possible because I adopted an attitude of don’t let vendors become complacent. Actually I am in the process of doing the same with some personal insurance.

Business is no Different

Business is really no different than personal in regards to this process. You usually have leverage to obtain a better deal if you will merely take the time to research your options and then pursue them. It may well be that your current vendor will make considerable concessions in order to keep your business. I don’t care if it is office supplies, products you sell, services, insurance, or just about anything. As far as I’m concerned, nearly everything used in business is open to negotiation. Vendors are just like you in that they want to be as profitable as possible. Use that knowledge to your advantage. If they want to keep your business they will demonstrate some flexibility and understand that you have a responsibility to monitor your expenses to maximize profit and cash flow.

So the next time you find yourself blindly accepting the status quo, keep in mind the power you have to get a better deal and don’t let vendors become complacent. Incidentally, if you are a small company with nobody to do this, then this is an area where Part-time CFO or Controller can be of help. Yes, you will pay for that, but remember that is often a one-time or occasional expense while the savings realized are on-going.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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