As a business owner, your relationship with your suppliers is as important as the one you have with your customers or clients. To have a healthy and reciprocal relationship with your vendors and manufacturers, you should know how to negotiate with them in a way that gets you what you want but leaves them satisfied too.
To successfully negotiate with your manufacturers, research and establish your goals. Figure out how you can be valuable to your supplier and consider paying large deposits to sweeten the deal. However, be prepared to decrease your order or mention the competition if things don’t go your way.
If you want to know more, stick around! I will cover all the crucial elements of negotiating with a supplier and offer you some additional tips. Moreover, I will answer some other questions regarding supplier negotiation.
How Do You Negotiate Terms With a Supplier?
Negotiating with your supplier is always challenging, but even more so if you’re a new business owner who is just getting started. Keep in mind to do your research, know your value, and prepare to pay on the spot or consider new suppliers.
A key thing I want you to keep in mind is to have the attitude that you can negotiate anything.
Do Your Research
An essential part of your preparation for the negotiation is the research. You should check out all the potential suppliers on the market and see what they offer. Additionally, you should compare the wholesale and retail prices to determine your profit margin.
Based on the information you will get, you should set some objectives to guide you through the negotiation. Your research should also give insight into what your supplier is looking for and their priorities. For the talks to be successful, both parties should profit.
Remember Why Your Business Is Valuable
You are as valuable to your suppliers as they are to you, so don’t allow them to make you think they’re doing you a favor. Make a list of everything the business has achieved and plans for the future. Suppliers may be interested in breaking into new markets, and you may provide the key to entering them.
You should be prepared to showcase all the advantages you can offer during the negotiation, so you should know your worth. This is not just a tool to keep an upper hand during negotiations but also a good way of providing useful information to your supplier.
Make Sure You Can Pay Large Deposits on the Spot
If you’re willing to offer an incentive to help your manufacturing supplier agree to your terms, you should be prepared to pay large deposits upfront. Your ability to pay immediately will let your manufacturers know you’re trustworthy and invested in the relationship. Your willingness to pay a large percentage upfront will give you more power in the negotiation.
Be Prepared To Consider Non-Friendly Tactics, but Stay Flexible
A common negotiation tactic is threatening to walk, which can convince your supplier to agree or abandon the process. Before starting negotiations, you can explore other options to consider going to competitors if things don’t go your way. However, this tactic is overused and unnecessary most of the time.
You can also try lowering the volume of your order to make your suppliers consider lowering their prices. Make all the necessary calculations and consider alternatives before the negotiation to know what you could be walking away from. However, you should remember that the common goal is consensus and understanding, so try to be flexible if you can.
Can You Negotiate With The Manufacturer's Terms and Conditions?
A negotiation process can involve anything as long as both parties agree. If you feel that the terms and conditions of your contract are not suitable for your business, let your supplier know and ask to negotiate the contested terms.
If your supplier agrees to negotiate the chosen terms, you should study the contract, establish realistic goals and communicate them to the other party. Negotiating the terms and conditions of your agreement should result in an outcome that benefits both parties.
How Do You Negotiate Contract Terms?
To negotiate contract terms, you should first set the objectives, i.e., what you want from the negotiation. Afterward, you should develop a negotiating strategy and choose the people you want to help you. During the process, you should make sure not to lose sight of your goals.
(To learn more about negotiating margins & equity + reduce your unit costs w/ blanket orders listen to our episode with Remi of Freck)
Final Thoughts
Negotiating with your suppliers isn’t easy, but it can help you and your business immensely if it’s successful. Make sure to learn all you can about your options and establish what you want; the whole process will become much more manageable. During the negotiation, you should keep your goals in mind and remain flexible for the best solution.
