A good supplier can be an invaluable business partner.
So you've decided to start your own business. One issue you now need to consider is whether you'll be dealing with suppliers of any kind in order to effectively provide your product or service.
Choosing the ideal suppliers requires legwork, along with a bit of intuition and luck. Because suppliers can significantly impact your business's reputation, you don't want to rush into long-term business relationships on a whim. Take the time to compare the prices and offerings of various suppliers.
A good place to start is with a standard reference book such as the Thomas Register of American Manufacturers (available at your local library, or on the Internet at http://www.thomasregister.com), which includes listings for vendors of countless items from all over the world. You should also contact business owners running ventures similar to the one you are starting to learn what kind of suppliers they require and the names of those who currently serve their needs.
Because there's no foolproof selection method that applies to all situations, our Building Blocks entrepreneurs are back to share their stories of how they found the right suppliers.
Suzanne George, Suzanne George Shoes
"Finding the perfect suppliers is a constant challenge for me," says Suzanne George, 34, who launched her made-to-order shoe business in the summer of 1995. Since she makes all of her footwear items by hand--one pair at a time--George is continually searching for the finest items to comprise her creations.
"The components that are used to make shoes are called `findings,' and they include everything from the glues and nails to the fabrics and the leather. Typically, you can get everything you need from the same suppliers," George explains. "While finding acceptable items such as laces and eyelets is a breeze, it's a lot more difficult to obtain affordable, high-quality leathers and decorative components."
George says that because the American shoe industry has largely relocated outside the United States, it's difficult for individuals practicing the craft here to find suitable items they need. "The most important component for me is the leather that I use because, apart from the craftsmanship, it makes the difference between a shoe that looks good and one that really looks great," George says. "One problem, though, is that available leather offerings change constantly, even from the same suppliers. Because the right leather can either make or break a shoe, I have to constantly revisit even my regular suppliers to keep up with changes regarding pricing and quality.
"Another problem is that, when I find the perfect leather at a great price, often the suppliers aren't interested in selling me just one skin. They want to sell me 20 skins or more. That costs far more money than I want or need to spend, so I have to use all of my negotiating skills and hope for a positive outcome. The same thing happens when I try to buy decorative components, such as fancy buckles for men's shoes. When I find something I like, the supplier wants to sell me a minimum of 1,000 or even 10,000, when I only need two or three. I can't afford to spend that much money, and I couldn't use all of those buckles in my lifetime."
Despite all these challenges, there is one supplier that George has worked with from the initial days of her business with whom she still works exclusively today. Because many of her creations are made-to-measure shoes, she utilizes the services of a man in San Francisco who makes precise molds of her clients' feet. "His quality was among the best I could find, he works with me on price, and I like his work ethic," she says. "Unlike many other people who just want to get paid to do a job, he is committed to the entire process and always comes through with top-quality work."
D. J. Waldow, B-School Cleaners
"The only supplier we needed for our business was a reputable dry cleaner in the area who would reliably clean all of the clothes for us," says D. J. Waldow, 21, who runs a dry-cleaning service out of the University of Michigan Business School in Ann Arbor. Waldow is assisted in his efforts by business partner Matt Campbell, one of his fellow undergraduates.
Working out of a room in the school's student lounge, Waldow and Campbell enable people to drop off clothing and retrieve it a few days later. They don't do any of the actual dry cleaning themselves. Instead, they've subcontracted with a nearby dry cleaner who picks up, cleans and returns all of the items directly to them.
"First, we contacted about 20 dry cleaners in Ann Arbor to find out how much they charged to clean suits and shirts," says Waldow. "We learned that the average cost in our area for dry cleaning a suit was $8.05, and for dry cleaning a shirt was $1.50. Using that information, we decided that we didn't want to charge our customers more than $7.90 for cleaning suits or more than $1.50 for cleaning shirts."
Next, Waldow and Campbell generated a list of criteria their ultimate supplier would need to meet. It included the prices they wished to charge, the days and times of the week they desired service, and whether or not the dry cleaner would be willing to pick up and deliver everything at little or no charge. "We immediately ruled out all of the dry cleaners whose prices exceeded what we wanted to charge," Waldow explains. "Then we got on the phone again with the remaining ones to see if they were even interested in working with us. Some said they didn't want to work with such a small-scale operation. Others refused to pick up and deliver, or wanted to charge $1 or more per item to pick up and deliver, which was out of the question."
Having narrowed their list to three possible dry cleaners, Waldow and Campbell visited each of the establishments in person. It didn't take long to reach a decision. "The first thing we noticed about the dry cleaner we selected was the state-of-the-art system he had for tracking orders, which was impressive and efficient," says Waldow. "What was even more important to us, though, was that he was the only one of the three who actually seemed excited about the prospect of working with us. As a result, he offered us prices that were a dollar or two better than anywhere else we'd gone, plus free pickup and delivery. We both had a gut feeling that he was going to be a great person to work with, and it has certainly worked out that way."
Al Schneider, usedmall.com
"Our company publishes electronic classified ads over the Internet, so our most important supplier since the beginning has been our hosting service," says Al Schneider, 57, co-owner of Englewood, New Jersey-based usedmall.com. Since 1996, he and partner Harvey Berlent have been providing electronic classified listings to companies wishing to buy or sell used and surplus equipment.
Hosting services, or Internet Service Providers (ISPs), display Web pages over the Internet. To share (or post) information on this powerful network, you typically negotiate an agreement with an ISP to access the Internet through them, paying a monthly fee so that your Web page can be viewed by others.
"We've been associated with the technology industry for 30 years, so we had a good deal of knowledge about the Internet and hosting services when we decided to launch our business," Schneider explains. "As an early implementer, the options available to us were far more limited than they are today, so it was relatively easy to select a provider. People starting a similar business today have thousands of ISPs to choose from, so they need to carefully compare factors such as price, service orientation and dependability. The goal is to find a reliable provider who is using the most up-to-date options and tools."
The other supplier Schneider and Berlent had to find was a top-quality Web site designer. The two used search engines to locate Web sites that reflected the features of the site they wanted to create. By looking at other sites, they were able to identify a list of objectives for their own site.
"We wanted to create a database-driven Web site," explains Schneider. "We were looking for a designer who could build a search engine within our Web site so that ads could be searched for easily, by name or by keyword. This was a must for our advertisers. The designer we hired had put contact information at the bottom of the home page of one of the sites that had many of the features we wanted on our own Web site."
Usedmall.com only needed a designer for the original site. Their ISP now takes care of any changes that need to be made.
Schneider says he's been happy with his ISP because it's remained competitive in the marketplace.
"We continue to review our relationship on a quarterly basis," says Schneider. "Our vendor is constantly challenged to stay competitive. Because we keep up with technology, they have to."
Maintaining A Positive Relationship With Suppliers
Because suppliers can play such vital roles in your entrepreneurial success, maintaining positive relationships with them is a must. Here are three important ways to do so.
1. Express your appreciation. One of the easiest ways to ensure good working relationships with your suppliers is to express thanks for a job well done. Everyone enjoys sincere appreciation, and it pays off in the long run, during those times when you require rush service or special accommodations.
2. Put it in writing. Avoid the temptation to rely on verbal agreements, especially when you first start working with new suppliers. The most important piece of advice for any entrepreneur is to always put important agreements in writing. Not only will this help if the need for formal legal action arises, but it also forces you and your supplier to work out all of the important aspects of your agreement (such as prices, due dates, and specific services to be performed) in advance.
3. Fulfill your part of the bargain. You expect your supplier to deliver the goods on time, so be sure to do the same. Too many entrepreneurs today miss deadlines of their own, expecting their suppliers to work longer or harder to pick up the slack. This is both unfair and unrealistic. Follow through on your commitments in a timely fashion and your supplier will likely do the same later.
B-School Cleaners, firstname.lastname@example.org
Suzanne George Shoes, 526 Seventh Ave., #3, San Francisco, CA 94118.
usedmall.com LLC, 25 Rockwood Pl., #4, Englewood, NJ 07631, (800) 683-1608.