Vendor relationships are essential to the success of any business and millions of dollars are lost because of poor vendor selection. Here are tips that you can use to select the perfect vendor for your small business.
Make certain that the vendor that you choose to partner with has the following key characteristics:
- Integrity—The depth of every relationship is limited to the depth of trust. Search for vendors that do what they say they’ll do. The ones that deliver on time as promised.
- Capacity—Capacity is one of the most important considerations in vendor selection. Know your vendor’s lead times for planning, production, and delivery and be careful to include these durations in your project schedule.
- Price—Negotiate and get the best price that you can, but be aware that your vendor must be able to make a profit as well. Otherwise, you’ll soon be looking for another one.
- Quality—Substandard products or services are unacceptable. Ensure that you receive what you’ve ordered with the level of quality that you paid for.
Drafting a Contract
Once you’ve selected a vendor you may need to draft a contract so that both parties are clear on the deliverables. When you enter into a contract with a vendor, you should plan for the best and worst-case scenarios. Hire a lawyer to draft it so that your interests are being looked after. Ensure that you include what happens in the event of default, death, disability, drug use, divorce, disinterest, and destruction. Read every word on the contract and make sure all parties have fully executed copies.
Signing as the Business
Be careful to only do business as your company so that you’re not personally held responsible for your company’s liability. Always sign business contracts as the office you hold instead of your personal name. For example, instead of signing a contract as Debra Boyd, I would sign it as Debra Boyd, Member of DLB Consulting, LLC. This way any contract that I sign with a vendor clearly demonstrates that I am signing on behalf of the company.
Vendors can make or break your business, so it’s essential that you select the right ones and work closely to nurture the relationship. Be intentional in your business and avoid costly mistakes.
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