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How to Find and Work With Suppliers

Whether you’re looking for raw materials for manufacturing or finished products to resell, this guide will help you find and forge great relationships with suppliers.

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Suppliers are essential to almost every business. Without raw materials to make what you sell or manufacturers to provide what you resell, you will have a tough time growing. There are also many supplies and services your business consumes as part of general overhead, from paper clips to Internet access.

Suppliers and vendors-the terms are used interchangeably here-can do much more than merely supply you with the materials and services you need to do business. They can also be important sources of information, helping you evaluate the potential of new products, track competitors’ actions and identify promising opportunities. Vendors can turn into partners, helping you cut costs, improve product designs and even fund new marketing efforts. If you don’t make selecting good suppliers and vendors a part of your growth plan, you’re likely to regret it.

Evaluating Your Supplier

Suppliers can be divided into four general categories. They are:

  1. Manufacturers. Most retailers buy through company salespeople or independent representatives who handle the wares of several different companies. Prices from these sources are usually lowest unless the retailer’s location makes shipping freight costly.
  • Distributors. Also known as wholesalers, brokers or jobbers, distributors buy in quantity from several manufacturers and warehouse the goods for sale to retailers. Although their prices are higher than a manufacturer’s, they can supply retailers with small orders from a variety of manufacturers. (Some manufacturers refuse to fill small orders.) A lower freight bill and quick delivery time from a nearby distributor often compensates for the higher per-item cost.
  • Independent craftspeople. Exclusive distribution of unique creations is frequently offered by independent craftspeople who sell through reps or at trade shows.
  • Import sources. Many retailers buy foreign goods from a domestic importer, who operates much like a domestic wholesaler. Or, depending on your familiarity with overseas sources, you may want to travel abroad to buy goods.

What Makes a Good Supplier?

A lot of growing companies focus on one trait of their suppliers: price. And price certainly is important when you are selecting suppliers to accompany you as you begin growing your business. But there’s more to a supplier than an invoice-and more to the cost of doing business with a supplier than the amount on a purchase order. Remember, too, that suppliers are in business to make money. If you go to the mat with them on every bill, ask them to shave prices on everything they sell to you, or fail to pay your bills promptly, don’t be surprised if they stop calling.

After price, reliability is probably the key factor to look for in suppliers. Good suppliers will ship the right number of items, as promised, on time so that they arrive in good shape. Sometimes you can get the best reliability from a large supplier. These companies have the resources to devote to backup systems and sources so that, if something goes wrong, they can still live up to their responsibilities to you. However, don’t neglect small suppliers.

If you’re a large customer of a small company, you’ll get more attention and possibly better service and reliability than if you are a small customer of a large supplier. You should also consider splitting your orders among two smaller firms. This can provide you with a backup as well as a high profile.

Stability is another key indicator. You’ll want to sign up with vendors who have been in business a long time and have done so without changing businesses every few years. A company that has long-tenured senior executives is another good sign, and a solid reputation with other customers is a promising indicator that a company is stable. When it comes to your own experience, look for telltale signs of vendor trouble, such as shipments that arrive earlier than you requested them-this can be a sign of a supplier that is short on orders and needs to accelerate cash receipts.

Don’t forget location. Merchandise ordered from a distant supplier can take a long time to get to you and generate added freight charges quickly. Find out how long a shipment will take to arrive at your loading dock. If you are likely to need something fast, a distant supplier could present a real problem. Also, determine supplier freight policies before you order. If you order a certain quantity, for instance, you may get free shipping. You may be able to combine two or more orders into one and save on freight. Even better, find a comparable supplier closer to home to preserve cost savings and ordering flexibility.

Finally, there’s a grab bag of traits that could generally be termed competency. You’ll want suppliers who can offer the latest, most advanced products and services. They’ll need to have well-trained employees to sell and service their goods. They should be able to offer you a variety of attractive financial terms on purchases. And they should have a realistic attitude toward you, their customer, so that they’re willing and eager to work with you to grow both your businesses.

Changing Your Supplier Relationships?

You may not need to find new suppliers to get a new deal. You can usually get discounts, obtain improved service and receive other features you need by making a request of your current suppliers-although it may not be as simple as merely asking. Here are some of the options and negotiating strategies for turning mediocre suppliers into top-shelf ones.

  1. Getting discounts. If you walk into a department store and purchase a pair of shoes, you’ll pay the same price any other shopper would. But business-to-business commerce is more complicated. Businesses that sell to other businesses commonly have a whole range of quoted charges, offering discounts of 50 percent or more depending on the quantity purchased, the terms, the length of the relationship, and other considerations. You may be able to comfortably conform to some of these requirements, qualifying you for a lower price. To find out, ask about discounts and what is necessary to earn them. You may be able to get anything from an interest-free loan in the form of trade credit to a substantial discount for paying early.

  2. Improving service. It is the rare businessperson who knows exactly what is happening in all parts of his company at all times or what is going on with all his customers. You probably don’t, and you shouldn’t assume your suppliers do, either. If you have a service-related problem with a supplier, bring it to someone’s attention. If you don’t get satisfaction, move up the chain of command until you get what you want or are as high in management as you can get. Odds are, someone will be concerned and possess enough authority to remedy the situation. Only if you ask for better service and don’t get it should you sever the relationship.
  3. A better relationship. Not every customer wants to buddy up to suppliers, so the fact that your suppliers aren’t offering to work closely with you to improve quality, reduce defects and cut costs doesn’t necessarily mean they don’t want to. They may be under the impression that you are the reluctant one. So if you want a tighter working relationship with suppliers, let them know. You may also drop a hint that those who don’t want to work with you may see some of their orders being diverted to those who are more agreeable. Either way, you’ll know whether it’s your supplier’s reluctance, or their perception of your reluctance, that’s getting in the way.

Making a Change?

Having fewer suppliers is usually better than having many vendors. Reducing the number of suppliers you deal with cuts the administrative costs of working with many. Closer relationships with fewer suppliers allow you to work together to control costs. Getting rid of troublesome vendors can quickly increase the efficiency of your purchasing and administrative staffs. So how do you decide when to change vendors? Here are keys areas to consider:

  1. Unreliability. When a vendor’s shipments start arriving consistently late, incomplete, damaged or otherwise incorrectly, it’s time to consider looking for a new one. Every company has problems from time to time, however, so check into the matter before dumping your vendor. Vendors can experience temporary difficulties as a result of implementing a new product line, shipping procedure or training program. If you stick with a vendor through a rugged interval, you may be glad you did. They might be more willing to see you through a future cash flow crunch.

 

  • Lack of cost competitiveness. Sometimes vendors fail to change with their industries. When your vendor’s rivals start coming in with bids for comparable goods that are lower than your existing supplier’s, you need to investigate. Point out the issue to your existing supplier and ask for an explanation. If you don’t like what you hear, it may be time to consider taking some of those offers from competing suppliers.
  • Insularity. Some suppliers will let you visit their plants, talk to their workers, quiz their managers, obtain and interview references, and even examine their financial statements. These are the kinds of suppliers you should seek out. The more you know about your suppliers, the better you can evaluate whether you should continue to do business with them. If they shut you out, perhaps you should cut them off.
  • Extra-sale costs. The number at the bottom of the invoice is only the beginning of the cost of dealing with suppliers. You have to lay out money beforehand to draw up specifications, issue request for proposals, evaluate them, check references, and otherwise qualify your suppliers. You have to place the order, negotiate the terms, inspect the goods when they arrive, and deal with any shortages, damage or other errors. Finally, you may have to train workers to use the newly arrived goods or purchase more equipment and material to make use of them. While some of these costs are inevitable, some are traceable to individual suppliers. If too many costs are being tacked onto the sale prices, check out some other suppliers.

 

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How to Guides

Alan Knott-Craig’s Answers On Selling Internationally And Researching Your Idea

There is no ‘one size fits all’ secret to start-up success. But there is a recipe that can be followed. It starts with being willing to go the extra mile: To know more about your business, customers and their needs than anyone else.

Alan Knott-Craig

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What is the secret to success? — Anonymous

Success is not about winning. It’s about not losing. In other words, being successful is not about increasing the odds of winning. It’s about reducing the odds of losing. There is one simple way to reduce the probability of failure. Go the extra mile.

In everything you do, do a little more than expected. Need to prepare a proposal? Format it, add page numbers, spellcheck, PDF. Need to instal a router? Arrive early. Finish early. Dress neatly. Smile. Need to refund a customer? Be polite. Don’t delay. Apologise. Follow up. Need to provide 5MBs? Provide 10MBs. Need to be at work at 6am? Be at work at 5.30am.

Go the extra mile. Over-deliver. Blow away everyone in every little thing you do. If you do that, from the littlest things to the biggest things, you will have the lowest odds of failure.

In other words, you will not lose. As an entrepreneur, not losing is winning. Go the extra mile. It’s less crowded.

Related: Alan Knott-Craig Answers Your Burning Start-up Questions On Ideas And Partnerships

I’m a virtual business on Johannesburg’s East Rand and I want to expand my target market to the US. I unfortunately don’t have any international network that I can tap into.

I’m investigating Fiverr, Reddit and Upwork as potential avenues of work and market research tools. I have also made contact with an international VA agency. What else do you recommend I do to break into the international market?  — Jade

Selling internationally is no different to selling locally. It’s all about growing your network, sweating your network, and putting yourself out there.

Everything you’re doing is right. Chase all potential channels to market. Tell family and friends. Ask clients for references or leads. Don’t forget the magic of Google AdWords. And a LinkedIn Premium subscription.

Make it easy for your potential customer to find you. If you’re going to use an agency, remember this: Make the agency rich. Don’t begrudge your ‘sales arm’ making money off your sweat. The more money the agency makes, the more business it will send your way.

I’m based in a small town where people are accustomed to what they know as opposed to adapting to something new. I’ve advertised in the newspaper, sent out fliers and have a Facebook page with over 500 likes. So far, the response to my tutoring service business has been slow. How can I improve? — Stephanie

You’ve made a big assumption: That there is demand for paid-for tutoring. Generally speaking, you should sell your product before you start your business. Sell it, then build it. It’s safer.

But maybe you’re on the right track. In addition to paid-for marketing, consider channel partner and referral programmes. Go to your local high school, meet the maths teacher, offer a commission for every student she sends to you for tutoring. The maths teacher becomes a channel partner, allowing you to put up posters at the school, and referring clients.

Even better than channel partners is a referral programme: For every new client referred by a client, give the client a 10% discount, or a month free.

At the end of the day there is no shortcut to getting more customers. Start with one. Make her happy. Let her tell a friend. Tutor the friend. Rinse, repeat. Over time your service reputation will grow and word of mouth will bring customers to your door.

Related: Alan Knott-Craig Answers Your Burning Start-Up Questions

I have an idea to build a mobile platform to connect all informal artisans in SA to potential customers. Uber for artisans. Will you invest? — Neo

Great idea. Some questions: How do you displace the other informal platforms in SA, such as Gumtree? How do you de-risk your business before raising capital? Can you secure funding without selling equity?

Before you give theoretical answers, remember this: The questions are not theoretical. No one should back you unless you have the above solved in reality, not just in theory.

In other words, raising capital is only realistic once the risk is so low you almost don’t need to raise capital.


Listen to this

Alan’s audible book Be a Hero: Make Life an Adventure is now available on amazon.com and Audible.com

Read by Alan himself, Be a Hero is a collection of stories on how to make your life an adventure by changing your mindset and tackling adversity.

Go to amazon.com or audible.com to download your copy. Be a Hero is also available in Kindle and paperback through Amazon.com.


Read ‘Be A Hero’ today

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How to Guides

6 Tips For Transitioning From Idea To Operational Business

Forget Googling startup business stories. Instead, put your trust in the tried-and-true methods other entrepreneurs have used successfully.

Thomas Smale

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It takes only a few Google searches to become overwhelmed by the abundance of information available about entrepreneurial start-ups: Many, many stories exist about how this or that start-up transitioned into a successful, established business. But, in many cases, you’ll be left trying to fill in the blanks or still searching for case studies relevant to your industry or business model.

In fact, there’s only one reliable way to take your business to the next level: And that involves putting your trust in tried-and-true methods that other entrepreneurs have used to make the leap.

Focus on productivity – not activity

It’s all too easy to get caught up in a flurry of urgent tasks that demand your attention. Unfortunately, that can take your focus away from what matters most. So, avoid the busyness trap and ask yourself what you need to focus on today, or over the next two weeks, the next month, 90 days – even the next year or five years. Plan ahead so you know exactly what your next steps are.

Related: Admin Hacks For Entrepreneurs

Leadership expert and coach Leah Wultschik has noted in a blog post that when leaders engage in all manner of busyness – emails, meeting requests and so on – employees feel pressured to follow suit. At that point, the never-ending focus to get things done can result in decreased creativity. You’ll be constantly in a reactionary state, leaving you unable to make strategic decisions.

Don’t let yourself get to that point.

Hire the best talent possible

You are whom you hang around with. Wouldn’t you rather be around world-class workers who bring valuable ideas to the table than to try to squeeze what you can out of second-rate employees?

Aislinn Malszecki, who oversees content strategy and community at MaRS, suggests the following steps to attract the best talent possible:

  • Avoid reactionary hiring: Founders often find themselves desperately in need of help and may hire without looking for fit and the right skill set.
  • Create a buzz for your company: Utilize your reputation and personal network to attract the right kind of people to your business.
  • Tap into your network: In addition to posting jobs on your website and LinkedIn, leverage your network as well as the networks of your employees to find like-minded candidates.

Building your team is not a matter to be taken lightly. Surrounding yourself with the right people can mean the difference between breaking through and remaining stagnant as a business. Work with people who inspire you.

Partner with an agency

business-agency-partnership

The opportunity cost of doing everything yourself can add up fast. So, work with an agency. The up-front cost of outsourced work will ultimately be less expensive than trying to do it all yourself.

Patrick Woods, director of customer success at Keen IO, notes certain challenges of working with an agency. To overcome these hurdles, he suggests:

  • Build a relationship with the agency: Set aside time to get to know the people you’ll be working with. Determine fit as well as expectations.
  • Communicate: Since startups tend to move fast, communicate regularly and clearly with the agency to ensure you’re on the same page.
  • Understand what the agency can do for you: Clarify its staffers’ core strengths and competencies. Determine what tasks you’d like them to take over, and which you’re looking to handle in-house.

Related: Are You An Ideas Explorer Or Are You A Rooster?

Beware of negativity

Negativity can poison the waters of your entire company. Before long, you may find your whole team expressing doubt or disbelief. Conversely, being confident will instill a sense of confidence in your employees. They’ll also follow you more willingly.

Best-selling author and keynote speaker Jon Gordon has pointed out that negativity can affect the morale, performance, and productivity of your team. Negativity can also lead to decreased energy and increased stress.

When it comes to creating a positive work environment, the responsibility lies with the leader. You need to set the tone for your team, to draw the best out of them.

Avoid burnout

When you’re first getting started, and you’re excited about your business, you’re willing to do whatever it takes to get it up and running. Unfortunately, those 16-hour days will take their toll on you, and if you keep up that pace, you will burn out. Learn to rely on your team while growing your business.

James Schramko of SuperFastBusiness is an advocate for getting more rest and sleep. This flies in the face of what many aggressive entrepreneurs are saying today, but Schramko points out that proper rest can help you boost your performance. The costs of losing sleep can be significant, and include: Depression, a weaker immune system, memory issues, obesity and more.

The costs of burnout can be especially high if you render yourself incapable of working for a prolonged period of time. Consider the costs before letting yourself get to that point.

Prioritise

You can’t do it all. No one has more than 24 hours in his or her day, and we’re all busy. Beware of saying “yes” to everything, as you will eventually find it impossible to follow through on it all. If something doesn’t make you excited, don’t do it.

Derek Sivers,  founder of CD Baby, has said he lives by the “Hell, yeah!” or “no” philosophy. He explains that saying no to most things leaves room in your life for the few things that get you truly excited. If you find yourself wavering between a “yes” and a “no,” he suggests choosing “no.” Only say “yes” to opportunities that you can’t pass up.

Final thoughts

Transitioning from startup to established business can take time. So, don’t rush the process unnecessarily. When all the right pieces are in place, you’ll be able to shift smoothly from one stage to another. If you try to force the issue, you may end up with more problems than you bargained for.

If you have any doubts, go back to the basics. Take some time to determine what your priorities are. Start pruning any tasks or activities that don’t contribute to your ultimate success. If you have too much on your plate, ask for help or delegate. And above all, avoid taking on too much.

This article was originally posted here on Entrepreneur.com.

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How to Guides

How To Successfully Open An International Office

Moving into new markets can be a strong growth plan, but the foundation of international growth requires the business to maintain the same company culture across different regions.

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As a South African expat, I always wanted to expand my digital marketing business from London to Cape Town. After eight years of hard work in the UK and European markets, TopLine Comms was ready and we opened our South African office in 2015. The usual logistics, like setting up local bank accounts, finding office space and hiring staff, were time-consuming tasks but by no means unfamiliar and they were soon sorted.

A far bigger challenge awaited us, which was figuring out how to integrate our new South African colleagues and maintain the company’s culture between two teams across two continents.

Business growth is exciting but you have to put your people first and make sure everyone feels united as a team — regardless of geography.

The following principles are universal for anyone thinking of opening up a second office, wherever it may be.

Why open an office overseas?

Expanding TopLine abroad into South Africa made both personal and professional sense, but I knew that for the move to be successful, it needed a solid business case.

An undeniable benefit of opening an office abroad is that it gives you access to a whole new pool of talent. This boosts your business with a broader range of skills, experience, ideas, languages, culture and networks. It also adds an attractive employment proposition, offering employees the opportunity to gain overseas work experience.

Related: Mitigating Currency Exchange Risk For International Businesses in South Africa

Opening a new office anywhere in the world is primarily driven by the need to scale and tap into lucrative new markets. Our office in Cape Town is more than just a resource hub that supports our London team and services our UK and European client base. It also gives us the opportunity to target the local market.

How do you open an office overseas?

Stay connected

business-connection

Connection is the word and without today’s technology, TopLine would have stayed put in London. A good, fast, reliable Internet connection is essential to doing business across borders — and to keeping our teams in Cape Town and London working together seamlessly. Skype is an amazing tool but a call can quickly become awkward between colleagues or with a client, if the connection is bad and neither person can hear the other properly.

Regular check-ins, meetings and calls are important for bringing people together across offices. They help forge stronger ties between colleagues and bring the whole team closer to the business. A poor connection can therefore be incredibly frustrating and ineffective, ultimately wasting everyone’s time with limited results.

The right technology is a non-negotiable in our modern working world — offices need to have great Internet to stay connected to one another, especially if they’re using cloud-based services.

The cloud makes it easier than ever before to set up an office overseas, and South African businesses are increasingly starting to embrace it. Cloud-based services are cost effective, efficient and they make it easy for employees to access all the information they need from anywhere in the world at any time. The best way to facilitate easy working between offices is without a doubt to keep your company data in the cloud. Collaboration is simple; everyone can work together from the same page and all documents are updated in real-time so there’s no confusion around which version of what is latest.


Tools

Some well-known cloud-based services include Google Drive for sharing and storing documents, Asana for task management, Trello for communication and Xero for accounting and financial management. These are just a few of many — whatever your business need, the cloud can help you do it better.


Communicate

A lot of communication is non-verbal and relies on facial expressions, hand gestures, posture and attitude. Long distance communication doesn’t have any of these elements which makes it very easy for misunderstandings to happen. A simple misunderstanding can be swiftly fixed when you’re in the same room. If you’re miles apart though, it can fester into something enormous and cause unnecessary issues.

Related: 3 Signs Your Business Is Ready To Expand Internationally

With two or more offices in different countries, there will inevitably be cultural differences — even if everyone speaks the same language. These differences are interesting and important to the personality of your company but they can cause some communication issues that you might not be initially aware of. The South African ‘just now’ for example, is a lot looser than its literal meaning and in the UK, business communication can be quite direct and to the point. If you’ve never met the person behind the emails, you might take their words the wrong way.


Top Tip

The best way to avoid this is with regular phone calls, emails and Skype sessions. We’ve found that sending an internal email out each Friday with positive updates from the week has been good for staff morale. Communication doesn’t always have to be work related so encourage your employees across the different offices to get in touch from time to time to just ‘shoot the breeze’ and get to know each other.


Consistency

business-consistency

A consistent on-boarding process is key to instilling your company culture across multiple offices. It’s so easy to forget that what is second nature to you is completely unknown to your new employees and colleagues in an overseas office. Starting a new job always involves taking in a lot of information in the first few months which is made doubly overwhelming when the new employee is latitude lines away from most of their colleagues. A comprehensive manual that outlines everything they need to know is critical. It needs to be a completely user-friendly welcome pack that covers all the essentials like where to find certain documents, usernames, passwords and file naming conventions.

At TopLine we give our new-starters an action-packed schedule for their first two weeks — or longer depending on their level of skill and experience. In that time, they get to ‘meet’ the whole team, are introduced to all the accounts we work on and specifically the business that pertains to their role. We make sure that the whole process is managed by a senior employee who checks in every few days to ensure that the new employee is coping and getting to grips with everything and everyone okay. It also gives them a chance to voice any concerns or ask questions.

As amazing as technology is, real relationships are made in person. If you’ve hired new people to staff your new office abroad, then you need to get on a plane as soon as possible to go out and meet them. It’s good to make a few trips a year but it doesn’t always have to be you. Give other senior colleagues a chance to meet the new team and experience their working day in their office environment.


Top Tip

I’ve personally spent many months at a stretch working from the Cape Town office and other UK team members have visited for a few weeks at a time. It immediately strengthens the connection between our two offices and puts a face to a name, avatar or screen image.


The benefits of successfully expanding your business into new territories can be significant. Of course, to do this well, you need to have the right people working together with as little frustration as possible. Make sure your employees are sharing, talking and interacting as much as possible — the greater the collaboration, the stronger and more successful your business will be.

A consistent on-boarding process is key to instilling your company culture across multiple offices. It’s so easy to forget that what is second nature to you is completely unknown to your new employees and colleagues in an overseas office.


Key Insights

Understand why you are scaling your business

A Cape Town office is a valuable resource hub that services a UK and European client base, with lower fixed overheads. It also provides the opportunity to target the local market.

Make use of smart tools in the cloud to collaborate across continents

Having offices across multiple geographic locations is possible because of cloud technology — not only because it facilitates communication, but because it allows for seamless collaboration. If all company documents are securely stored in the cloud, it doesn’t matter where team members are based.

On-boarding is essential to maintain company culture

A consistent on-boarding process is an essential element of creating and maintaining your company culture across multiple offices. Take the time to create a successful and consistent on-boarding system.

 

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