From the October 1998 issue of Startups

Some of Jim Daigle's best friends are his suppliers. Daigle's company, Energy $aver$ of America in Houma, Louisiana, manufactures and distributes building insulation made from recycled aluminum film and polyethylene. "I've been doing this for 18 years," Daigle notes. "After a while, you get to know your suppliers. You want to be on good terms with them."

Like good friends, good suppliers are often hard to find and require effort to cultivate and keep. First, the new business owner needs to know where to look for suppliers and vendors and what to look for.

1. Get referrals. "Sometimes it's a crapshoot to pick the right suppliers," Daigle says. "I always ask for referrals and check them out. I also ask for samples before I sign a contract."

2. Don't be cheap. "Price is the last thing anyone should use to pick a supplier," Daigle says. "You'll get ripped off every time." While you shouldn't ignore price completely, a more important consideration is the supplier's ability to consistently and promptly deliver the goods or services you need. "Quality is the number-one thing I look for," Daigle says.

3. Ask questions. New business owners often struggle because there's so much they don't know, says Tim Cottrill, owner of Bookery Fantasy, a comic book and collectibles shop in Fairborn, Ohio. "You have to talk with others in your industry, but if they're in your market, they might not want to share information," Cottrill says. "Try going to another geographic area to pick someone's brain."

Mary Maxwell, owner of Heart Enterprises in Roseville, California, says questioning is the only way to learn. "I couldn't find all the supplies I wanted," says Maxwell, who makes custom Victorian lampshades and teaches others to make them, "so I kept asking questions. I'd send drawings of beads or other items to manufacturers and ask if they could make them. Sometimes it would take me a year to find someone."

The public library's reference section is a good place to find answers and leaf through the Thomas Register of American Manufacturers, a directory you can use to discover who makes thousands of different products. Libraries also have directories of trade groups and trade publications that can lead you to vendors.

4. Go to trade shows. Contact trade associations and read trade publications for information about trade shows where potential suppliers gather in abundance, says Jeffrey Lauer, owner of Kitchen and Bath Distributors Inc., a Forestville, Maryland, supplier of cabinets, countertops and other products for builders and remodelers. Lauer found one of his cabinet suppliers at the National Kitchen and Bath Show, held primarily in Chicago and Atlanta. "These shows are important to gain knowledge of the industry," says Lauer, "and that knowledge leads you to vendors."

5. Let customers help. The comic book industry has gone through tremendous consolidation in recent years, driving thousands of retailers out of business and reducing comic book distribution to one major company, Cottrill says. "My store also deals in old comic books, which I can buy directly from the public," he says. "I can fall back on [individual sellers] if I can't get something from the distributor."

6. Do it yourself. When Maxwell couldn't find all the products she wanted to make her lampshades, she got so frustrated, she made her own frames for a while with the help of a welder friend--until she found a wire rack company that was willing to weld the frames for her.

Maxwell became so good at finding suppliers of Victorian lampshade products, she was able to turn that knowledge into a profit center. She created a catalog of 160 frames, 28 bead styles, lamp bases, fabrics and other supplies she sells to people worldwide. The catalog has grown to include more than 300 products and accounts for more than half the revenues of Heart Enterprises.

Good Relations

Finding good suppliers is just half the battle. New business owners must learn to be good customers to develop a strong relationship with vendors.

7. Get acquainted. Lauer doesn't just buy products from a sales representative who visits his business. "I like to visit the [supplier's] plant, meet the people I'm going to talk to on the phone on a daily basis, and get a tour of their operation so I understand how their work flows," he says.

Daigle visits his suppliers, too, and they visit him. "A lot of trust and loyalty is gained. It becomes a friendship," he says. "Two basic things I do with suppliers: I tell them how much I like doing business with them and pat them on the back. I also give them feedback, just like I get from my customers."

8. Pay on time. Paying your bills promptly is the best way to ingratiate yourself with suppliers. This establishes trust that pays off in other ways, says Lauer: "I had good credit when I started [my business], and as I continued to pay on time, my credit lines with suppliers got bigger, and they dropped the [requirement for] personal guarantees."

9. Be selective. Lauer deals with just four cabinet manufacturers, each handling one product and pricing category. By keeping his number of suppliers low, he can order more product from each, which gets him volume-pricing discounts and special deals.

"If I order more product, I become a more important customer to them," Lauer explains. "They might give me free display merchandise, I might qualify for free or reduced-price literature on their products, and, of course, I get a better price."

10. Communicate. Communication is vital to your relationship with suppliers. "If a problem arises, we talk--my customers to me and me to my suppliers--and work it out quickly," he says. "If you don't keep communications open, things can go wrong and you won't even know it."

Communication is especially important when dealing with service suppliers, says Katherina Van Tuyl, owner of Behind Your Front Door Inc., a company that owns and manages homes for visiting executives in Columbus, Ohio. "I hire people all the time to do repair and remodeling work," she says. "If the work is poor, I have to tell them. So often, people don't [complain] about poor service because we're all so busy, we let the matter drop rather than pursue it."

11. Keep the good ones. When Van Tuyl finds a good supplier, she hangs on. "There's one man [I've hired to] refinish hardwood floors. He does a great job, he's responsible, and the job is done without my having to check up on him," she says. "He's continually busy because everyone goes back to him again and again." Good suppliers deserve that kind of loyalty.

Suppliers' Demands

To maintain good relationships with suppliers, keep these tips in mind:

  • Always pay on time.
  • Discuss vendors' needs and methods of doing business.
  • If a vendor or service provider isn't meeting your expectations, discuss it immediately.
  • Seek suppliers' suggestions.
  • When you're the customer, act the way your best customers do.
  • Strive to give suppliers enough time to do a great job.
  • When you find a good vendor, be loyal.
  • Understand vendors' need to make a profit.
  • Avoid unreasonable demands.

Jan Norman specializes in small- business coverage. She can be reached at jnsmallbiz@aol.com

Contact Sources

Behind Your Front Door Inc.,khgvt@aol.com

Bookery Fantasy,BookeryFan@aol.com, www.bookeryfantasy.com

Energy $aver$ of America, (800) 349-4756, (504) 868-4756, www.btubusters.com

Heart Enterprises, 101 Sharon Wy., Roseville, CA 95678, www.galaxymall.com/product/lampshade

Kitchen and Bath Distributors Inc., (301) 735-7040