Sometimes, you’re only as good as your relationships. That is especially true for business owners whose ties to vendors and suppliers often determine their stock and the quality of the products or services they can offer.
So, it’s no surprise that companies spend a lot of time, effort, and sometimes money, on keeping their vendors happy and making sure they feel appreciated. It’s what’s known as VRM (vendor relationship management) or SRM (supplier relationship management). Large companies like Toyota, for example, are famous for their supplier-centric strategies.
While small businesses probably can’t compete with the efforts of multinational giants, there’s still plenty you can do to improve the relationships with your own vendors and suppliers.
Why are relationships with vendors so important for small businesses?
Small and medium-sized businesses (SMBs) are typically more severely affected by any disruption or delay, and usually have less cash on hand to fall back on than larger companies. A good relationship with your vendor could be a godsend even in normal times but especially in times of crisis, such as, say, a global pandemic, an economic downturn, or supply chain issues.
Maintaining stellar relationships with vendors can mean you’ll have access to the best supplies or products before your competitors can get their hands on them. A good connection can also mean your vendor will prioritize your orders in terms of scheduling as well as when supplies are short.
When a vendor knows they can rely on your business in the long term, they may also be able to offer you discounts or better payment terms, which will help you maintain a healthy cash flow. If you do find yourself in an unavoidable crunch, a vendor with whom you’ve already established a solid relationship is more likely to accommodate you.
What can small businesses do to improve their vendor relationships?
Managing vendor relationships doesn’t have to mean big spending or hiring dedicated personnel. Sometimes, it’s just about making small changes to your behavior and making sure you are not only cordial but also friendly with your most valuable business partners.
Here are five ways to boost your relations with vendors and suppliers without revolutionizing the way you do business.
1. Get to know them
This may sound trite, but your vendors are people too. They have hobbies, passions, and interests beyond work. Getting to know your vendors more deeply is important to creating the kind of connection that will benefit both of you, on a personal and professional level.
As a first step, if they’re local or if you know they’re visiting your area, invite them on a tour of your business. This is a great opportunity for them to get to know the team they’ll be working with and to become personally invested in their success. If you can, try to reciprocate with a visit to their facilities, when the opportunity arises.
It can also be a good idea to find opportunities to socialize outside of work, for example, by having them over for dinner. Building a deeper personal connection, when possible, can lead to stronger and more committed business ties.
2. Treat them as partners
Share as much information as you can about your business plans and goals with your vendors. Being more involved creates a sense of commitment and builds mutual trust between you and your vendors. This inside knowledge can also make it easier for your vendors to offer you relevant products and services that align with your strategies.
If you’re worried about trade secrets or your confidential marketing strategy potentially leaking, ask your vendors if they’ll be willing to sign a non-disclosure agreement (NDA). This will protect your proprietary information while allowing you to take your vendor relationship to the next level.
By the way, this tip goes both ways. To establish your relationship as a partnership instead of a simple series of transactions, ask your vendors about their own plans and goals to see if there’s any way for you to help. Maybe you can recommend them for new business opportunities and contracts or create a joint scheme that will promote both your plans.
3. Honor their payment terms
As a business owner, you know all too well how much trouble can be caused by late payments from customers. So, try not to put your vendor through that by honoring the payment terms they set and making timely payments.
If you have trouble keeping track of all your due payments, consider using an online accounts payable (AP) tool like Melio. This will allow you to manage all your payments on a single platform and even schedule them in advance to go out in time, not a minute too soon or too late.
If you can afford to pay sooner than the due date, however, your vendors will undoubtedly appreciate you even more. They may even offer you early bird discounts, making this a win-win for both of you.
4. Sign contracts
We know. This whole time we’ve been telling you to be friendly with your vendors and you can’t think of anything less friendly than drawing up a contract. But, contracts can actually save your relationship, should trouble arise.
A signed contract puts everything on the table and eliminates confusion about each side’s obligations and rewards. It outlines possible solutions when things go wrong, eliminating any guesswork while you’re busy trying to put out fires. They can also prevent issues from arising, as each party is clear about what they’re getting and giving.
In other words, a contract creates more clarity which results in less frustration when friction occurs and better relationships.
5. Show appreciation and support
Like all relationships in life, your relationships with vendors should be caring and supportive. If your vendors know you truly care about them and their business, they will appreciate yours even more.
In addition to using their services, you can publicly support your vendors without spending a cent by:
- Sharing their social media posts
- Referring your friends and colleagues as potential customers
- Participating in your vendors’ online or in-person events whenever you can
- Posting a positive review online
You can show your appreciation in private by just saying thank you every once in a while. A phone call, a text message, or a holiday card can also go a long way to let your vendors know how valued they are.
Treasure your relationships
At some point, your business’s success may depend on the strength of your relationships with your vendors. Following the tips above can help fortify them by creating trust and embracing shared goals.
However you achieve them, to maintain good vendor relations, you will need an easy and reliable way to pay your business bills. Sign up for Melio to start sending payments online today.
*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.