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How to Negotiate with your Vendors

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Note from Kara: Ryan Peddycord, President of Resource Nation will be a frequent contributor to the Small Business Blog discussing ways you can plan, start and grow your business. Resource Nation is a company that matches businesses to vendors via a database of local & national, pre-screened vendors, in over 100 categories ranging from phone systems to web designers.

Recently there’s been some good discussion around what defines a vendor in the small business space. But, if you are looking for some good tips on working with your vendors here are several to keep in mind.

  • Prepare a brief overview – Every vendor you talk to should receive the same information, so write a brief description of your project and send it to each vendor.
  • Use a vendor matching service – If you have a lot of time, a web search will provide you millions of vendor options. But, to save on time and pre-screening, ask friends / co-workers for references or use a vendor matching service. Since the selected vendors know they are in a competitive bid environment, they are more likely to give you a competitive price right from the beginning.
  • Create a list of questions – While asking questions, you want to listen to the answers and also gauge if you like how the provider communicates with you. Be sure to provide an opportunity for the provider to ask you questions about your company and the project. This will help them understand the scope of your project and help you evaluate the quality of their questions.
  • Needs assessment – Depending on the complexity of your project, the needs assessment stage may take more than one conversation. Your goal during this process is to finalize a document that describes your project in detail. Also, you should ask to talk directly with the individuals who will be representing your company.
  • Ask for their proposals – Set a deadline for the proposal. A proposal should include confirmation of the project description, a price, a target project completion date, and a copy of the provider’s standard agreement so you can read all of their terms. After you make your decision, it is a professional courtesy to inform all of the companies of your decision. *For more complex projects, a provider may include something in a proposal that you did not expect (a special term or a promotion). You can always go back to the providers to give them feedback on their proposal and ask them to make adjustments if necessary.
  • Renegotiate contracts – As the term expires, renegotiation is a great way to save money for your company. Don’t feel obligated to automatically renew with the same company. Your business has likely grown and the market may have become more competitive. Before you renew, get new price quotes from alternative suppliers and make your current vendor compete to give you a great price.

Feel free to share any other tips you’ve uncovered when working with vendors.

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