Vendor relations are important, and this is probably even more true in a year with supply chain disruptions and budget adjustments. As many businesses are looking for ways to save money, many vendors are hoping to hold on to clients. It might be a good time to talk about wiggle room. “Suppliers and service providers are often open to negotiating their ‘standard’ prices if you ask, and doing so can help your business get the best deal possible on goods and services,” write US Chamber of Commerce Contributor Nicole Fallon in CO.
It helps to have a set of specific questions prepared before your conversation, according to CO. This will help both parties to communicate clearly and understand each other’s needs. For example:
- What is the length of our current agreement?
- What is the minimum purchase quantity requirement?
- What is your order processing time?
- How many shipping methods do you have?
- Are you a national distributor?
- Who are some of your other clients and what are the terms of their current contracts?
Tips for a successful negotiation
The Chamber recommends these strategies for a successful negotiation.
Do your research beforehand
Research your vendor, their industry and how the current economy has been affecting their business. This way, you’ll have a better understanding of what their position is and how they might be able to alter your contracts.
“Ground yourself with market knowledge of what competing vendors charge and what businesses similar to yours pay for comparable services,” says Andy Diamond, president of Angry Crab Shack. “When you have this knowledge, the conversation shifts to a more productive discussion, rather than you asking questions, and you’ll likely have a better chance of locking in the terms you’re looking for.”
Be flexible with what a ‘win-win’ looks like
Most negotiations won’t result in both sides getting everything they want, exactly how they want it, so be prepared to compromise.
“‘Win-win’ deals are kind of a misnomer,” says Ayesha Holloman, founder of Outdoorish. “Both entities can make concessions in a win-win bargain so that each party gets some level of profit. Win-win negotiations take a long-term approach in a relationship-based environment, with an equilibrium of achievement and success for both ends over a period of time.”
Aim for honesty and transparency
You do yourself, your business and your vendor partners a disservice when you aren’t open and transparent during negotiations. Eric Kardon, director of operations at Angry Crab Shack, emphasized that both sides need to be fully honest in these discussions.
“Transparency works best in leveling with a vendor and letting them know where you stand and your needs,” Kardon says. “If you want to have a longstanding business relationship, then compromising is a must. Extending the contract longer than you initially wanted in order to get your terms is a common compromise. Just remember, in any negotiation if one side feels they did not get a good deal, then it’s less likely more deals will happen in the future.”
Be prepared to walk away and keep searching
You may not be able to get what you want out of negotiations, and that’s OK. You may have to walk away and find a different vendor to partner with.
“Not every opportunity is for you,” says David Vranicar, managing partner and founder of FBS Fortified & Ballistic Security. “Not securing a deal isn’t a failure, it might just not be the right time for it, or even unconsciously one party might realize it’s not a fit even though neither of you can quantify why. Keep yourself on their radar and watch for opportunities, or re-approach them when you’re able to better meet terms.”