Enhance Your Buying Power
Neil Bromage has run his own small business and is a freelance business writer working on a range of newspapers including The Times, Sunday Times, Telegraph and Financial Mail on Sunday. This book is based on a wide range of columns and Q&As written and answered by Neil for Business Link over a number of years. He is based near Preston, Lancs.
Every business has to buy supplies of one sort or another. All too often this is done hastily, without proper consideration and therefore fails to achieve the best result – a competitive purchase.
Competitive purchasing is important for every business. It’s how profit margins are developed and maintained. But smaller businesses often think that as minnows in large ponds they are not taken seriously. There is, however, no reason why they shouldn’t act like bigger fish when it comes to buying.
With most businesses now following the maxim that says 80% of business comes from just 20% of customers, it’s clear that if you are purchasing small amounts from a supplier they are less likely to spend time and effort on your account. But if you show that you’re a professional customer, paying promptly and have growth potential, you’re quite likely to be treated differently: you will be exactly the type of customer sales people dream about.
When negotiating a purchase think clearly about the prices and terms you need and the arguments you will use to achieve them. It’s important to be realistic and one way to demonstrate this is to show that you have already been quoted from another source. Sales people make their best offers when they have real competition.
It’s also important to consider all your purchasing requirements and not to negotiate on the basis of one order. Look at monthly, quarterly and annual purchases and then negotiate collectively.
Price may not be the only factor. You may be able to get extended payment terms, lower delivery charges, marketing support, even an advert or mailshot that could be useful to your business.