If your trading company is to be successful, you need to ensure that you are on good terms with your suppliers at all times. If you are not on good terms with your suppliers at any point, there is a risk of them sabotaging your business operations. And your business would then have to suffer, as you look for other suppliers. In some niches, your business could actually be brought down by suppliers – especially in the niches where you deal with just a single supplier, or where you deal with a few suppliers operating as a cartel.
Some of the ways in which you can maintain good relations with your trading company’s suppliers include:
- By seeing to it that you always pay your suppliers on time
- By giving reasonable delivery terms to your suppliers
- By generally dealing with the suppliers in a respectful manner
It is also a good idea to ensure that you ‘touch base’ with your suppliers from time to time – even when you don’t actually have orders for them. The objective here is to ensure that you maintain the relationship, so as to ensure that the suppliers prioritize your order when you eventually have one. You need to avoid the situation where you only contact the suppliers when you need something from them. It surely doesn’t take too much time, nor cost too much money, to pick up your phone and call your suppliers from time to time: just to know how they and their businesses are doing. In terms of phone charges, if you are using, say, the Metro PCS system, you won’t really be charged much more at the pcspaybill portal on account of having made just a few friendly phone calls to your suppliers. While paying the resultant phone bills at www.metropcs.com/payment, you should view the extra amount you have to pay as one of your legit business expenses. Maintaining good relations with your suppliers may seem as if it is a non-issue, yet it is one of the key things you need to do, if you want to keep your trading company from failing.
If you want your trading company to do well, you will need to ensure that you consistently pay your suppliers on time. Sometimes (and rather unfortunately), it is easy to get the impression that the suppliers need you more than you need them. This feeling arises out of the fact that you are the one who pays them. And money has a way of making one feel powerful. Yet when you come to think of it carefully, you realize that you need your suppliers just as much as they need you. For if you have no supplies, your business is bound to close shop. Once you come to terms with these realities, the reasons as to why you need to pay your suppliers on time become obvious. And for you to be in a position to pay your suppliers on time, you need to:
- Create reasonable expectations at the outset: how soon can you (realistically) manage to pay your suppliers, after delivery? This is the question you need to ask yourself, before engaging the suppliers. Then, while engaging them, you need to tell them that that is how long they will be waiting for their payments. And that within that time frame, they will be (for sure) getting their money. If, for instance, you tell the suppliers that you will be paying them after a month, and you indeed pay them after a month, they will regard it as a ‘timely’ payment. But if you tell the suppliers that you will be paying them after a week, and you end up paying them after 10 days, they will regard it as a ‘delayed’ payment! So it is important to manage expectations right from the outset.
- Manage your cash-flow properly: the idea here is to ensure that you always have enough money (from your sales revenues and so on) to pay the suppliers on time, consistently.
- If necessary, borrow to pay the suppliers: you can take a bank overdraft, or a short-term loan to pay the suppliers. You can even use your own private funds — just to ensure that you pay your suppliers on time. Like if, for instance, you also work at a company like PepsiCo (on top of running the trading company) you can use part of your paycheck to pay the suppliers. So you just visit the Mypepsico website, to check the said paycheck. That is essentially a question of proceeding to the Mypepsico login page, signing in, and checking if your paycheck has been credited to your direct deposit account. You then use the money to pay the suppliers. And then you use the money you get from the sale of the merchandise you paid for to reimburse yourself.
If a trading company is to be successful, it needs to have reliable suppliers. You therefore need to put in a lot of effort, when identifying the suppliers to work with in your trading company. If you end up with unreliable suppliers, your business will suffer terribly. You will soon find yourself being unable to fill your customers’ orders in a timely manner. You will then start losing customers. The trading company will start making losses. Soon it may have to go out of business: all due to lack of reliable suppliers.
One of the most important things to pay close attention to, when trying to identify reliable suppliers for a trading company, is the track record. You are better off working with suppliers who have a track record of reliability. If a given supplier has been reliable in the past, there is a good possibility that he will be reliable in the future too. On the other hand, it is unreasonable to expect a supplier who has always been known to be unreliable to suddenly become reliable upon getting your contract.
Another important thing to pay close attention to, when trying to identify reliable suppliers for a trading company is capacity. So you need to work with suppliers who have capacity to meet your orders. Sometimes you may find a supplier who is indeed very reliable but who, unfortunately, lacks the capacity to do big business. So capacity is an important consideration here. The whole thing is akin to what we see with the double your line customer service — where the company aspires to build capacity to serve all its clients. That is on top of being reliable. So capacity is an important factor here.
Of course, if you come across a very reliable supplier who, unfortunately lacks capacity, you can opt to work with him in building capacity. It may be just a question of arranging for extra financing, and within weeks, the supplier ends up with enough capacity to meet your orders.
Ultimately, it is a good idea to assess the various suppliers objectively, rate them, and in the end be in a position to pick the most reliable ones. In other words, you need to undertake the supplier selection exercise in an objective (rather than subjective) way.