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Choosing the right supplier for a small business: the complete guide

Choosing the right supplier for a small business: the complete guide

Temps de lecture : 4 minutes

Choosing the right supplier is a strategic decision, all the more so for a small business. It's a choice that affects your brand image, your profitability and your ability to satisfy your customers. How do you make the right choice? Here's our complete guide.

Why is the choice of supplier crucial for a small business?

Selecting the right suppliers is crucial to your organization's long-term success. Here's why:

The impact of suppliers on product and service quality

A reliable supplier of quality products is a godsend for any company. And why is that? Because, in turn, it will be able to optimize the quality of its offer and thus better satisfy its customers.

That's why quality is one of the keys to choosing a good supplier.

A small company's margins are potentially quite low, so the impact of suppliers is all the more important.

The relationship between supplier costs and profitability

Price is one of the key criteria when choosing a supplier. It's in a company's best interest to find the supplier offering the most competitive prices on the market. This is the only way to maximize profit margins and thus profitability.

However, this criterion must be combined with others for effective supplier sourcing. Minimizing price without sacrificing quality is the key to finding a good supplier.

Criteria for selecting the right supplier for a small business

Here are all the criteria you need to keep in mind when selecting a supplier:

Supplier reliability and reputation

A supplier's reputation can have repercussions on your own business. It's important to keep this in mind before signing any supply contract.

You must select a reliable supplier which honors its contractual commitments in terms of order quantities, product quality and delivery times.

To do this, you can ask other customers or do your own research on the Internet. Find out whether or not previous customers were satisfied with the company's services, and if not, on what points. Also consider measure its litigation rate.

Flexibility and adaptability

You must also ensure that the supplier you are about to choose is reactive.

It must be able to adapt to your changing needs (variations in activity, cash flow problems, etc.).

Your requirements may change over time, both in terms of quantity and quality. Your supplier must be able to keep pace, and innovate accordingly.

Cost and payment terms

We have seen that the cost criterion is one of the most important because it produces a direct impact on your profitability and competitiveness . The idea is not to minimize the price without taking other aspects into account. Rather, it's about aim for the best value for money.

You must therefore conduct an in-depth analysis of suppliers' offers . But don't stop at the purchase price. You must also take into account ancillary costs (customs, packaging, transport, etc.).

Don't forget to negotiate advantageous payment terms, particularly in terms of payment terms and deadlines.

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Where to find suppliers for a small business?

Here are some options for finding suppliers for a small business:

Online sourcing platforms

We're talking about websites like Alibaba, which bring together buyers and sellers of products and services . These are virtual marketplaces where you can easily compare different suppliers.

You can also easily evaluate each seller based on reviews and recommendations from other users.

Where can you find such platforms? You can type your keywords into Google or download dedicated mobile applications .

Trade shows and exhibitions

Trade shows can be the ideal place to meet suppliers. They are events bringing together exhibitors and visitors from the same business sector.

You can go there to compare offers from different exhibitors but also for find out about market trends. To make sure you don't miss out on any trade show opportunities, you can plan your visit in advance . To do this, you can consult the floor plan and identify the stands you will be visiting.

You can consult the trade press or the trade show calendar on the Internet to find out what's happening in your area.

Referrals and business networks

You can also rely on the recommendations of other professionals to find your supplier. The advantage? You benefit directly from the experience of your peers .

Common mistakes to avoid when choosing a supplier

Remember to avoid these mistakes when choosing your suppliers:

Focus on price alone

As we have seen, price is an important criterion when choosing a supplier. However, this should not overshadow the other criteria we have listed, notably reliability and quality. It's a question of balancing the two, and finding one that offers the best value for money.

It's important to maximize your profitability, but above all it's important to ensure the long-term future of your business. by offering quality products.

Neglecting long-term relationship management

Building strong, lasting relationships with your supplier is common sense. It ensures stability and durability to your business. What's more, you'll benefit financially, because once trust is established, you'll be able to benefit from favorable payment terms.

Ignore contracts and conditions of service

Selecting a reliable supplier is one thing. It's also important to frame your relationship with a clear contract that sets out all the terms and conditions of supply. This legal document clearly defines payment terms, supply deadlines, etc.

All terms of the contract must be thoroughly analyzed and negotiated to avoid any unpleasant surprises . So don't ignore this step.

2 examples of suppliers for small businesses

Here are some options you can explore in your search for suppliers:

Alibaba: for low-cost wholesale products

Known as the world's factory, China and its made-in-China products have invaded the global market. Their main advantage? Low prices .

Alibaba is the largest marketplace for suppliers of Chinese products .

The platform is ideal for small businesses as it allows them to benefit from competitive prices for wholesale purchases.

However, it is important to know choosing the right filters . In particular, you need to choose the "gold suppliers", those with the best recommendations. As on any other platform, scams also exist on Alibaba. You need to know how to spot them by doing further research on Google, for example.

To minimize costs, opt for direct manufacturers rather than commercial companies acting as intermediaries.

ThomasNet: to find industrial suppliers

ThomasNet is a directory of manufacturers of industrial products located in Canada and the United States. You'll find millions of products from thousands of suppliers at competitive prices. To find the right products for your sector, simply use advanced search and filter functions.

Use local suppliers

Small businesses also benefit from working with local suppliers. This is an advantageous option because it allows them to reduce delivery times and support the local economy.

How to manage supplier relations effectively

Here are our final tips to help you manage your relationships with your suppliers.

Establish clear, regular communication

We've seen how important it is to maintain a healthy, long-term relationship with your supplier. One way of doing this is to establish regular communication and transparency with this one.

Here are our tips to help you do just that:

  • Enable your suppliers to know and anticipate your upcoming orders

  • Respecting payment deadlines and, failing that, give him the reasons for the delay so as not to break your bond of trust.

  • Establish clear, constructive communication.

Negotiating balanced contracts

A balanced contract is one in which each party has a vested interest. This is the case for a supply contract, both parties must derive some benefit in the business partnership relationship.

Of course, it's in your interest to negotiate optimum terms. However, the contract must also benefit your partner. That's why you need to take the time to prepare for negotiations. by finding out about the supplier's costs and margins. This will enable you to not to make excessive demands during negotiations and risk offending him.

Evaluate supplier performance on a regular basis

Even if you want to maintain a long-term relationship with your supplier, you need to evaluate them regularly and on an ongoing basis. In fact, you need to evaluate your supplier on a regular basis to see whether he is continuing to comply scrupulously with the terms of the contract.

In particular, it is necessary to assess whether it is still able to :

  • Supply products that comply with company standards

  • Guaranteeing supply volume

  • Guaranteeing the best value for money

  • Honoring the corporate image

  • Meet other contract requirements.

In short, there's a whole range of criteria and aspects to take into account in order to achieve the right balance between choosing the right supplier for a small business . This is an essential process, given the supplier's strategic position in the quality chain. The choice of this business partner is all the more important as you then need to maintain a lasting relationship with them.

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Écrit par

Valentin Orru

Head of growth

13/11/2024