The art of negotiating with a supplier
There is a good reason why the word art appears in the title of this article. Negotiating with the supplier or anyone for that matter is most definitely an art. There are times when you should most definitely negotiate and times when you should not. There are ways to go about negotiating and there are ways you should avoid. There are techniques you can use to become a successful negotiator and likewise techniques you should not touch with a barge pole.
So having established all of those points from the beginning let's look at ways and means of negotiating with the supplier.
Know your supplier
It is most definitely true that knowledge is power and before you even think about negotiating you need to discover as much as possible about the person with whom you are about to negotiate. How long have they been in business? What is the size of their business? Are they successful in their line of business? Do they have many long-standing customers? Do they have a track record of looking after their long-standing customers? Your position to negotiate depends on a number of things not least of which is the longevity and current strength of the supplier compared with your situation. If you're brand-new to the business or are struggling whereas your supplier has been in business for generations and is doing very nicely thank you very much, then your negotiating position can be described as weak. Know the facts before you even start to think about negotiation.
Overcome your negotiation fears
There are some people in business who are very good at a number of things but not at negotiating. It might be that they simply don't like to negotiate. You need to stop right there and think about the situation. Everyone in business negotiates. Obviously some negotiate more than others and some are better at it than others but there's no such thing as business without negotiation. If you have a natural feral antipathy towards negotiation, then you need to do some reading on the art of negotiation and maybe spend a little time on meditation. Remove your doubts and misconceptions. It might be that you run a particularly successful business and your supplier is struggling. You may think that negotiating with someone who is doing it tough is not morally right. You may have what it takes to be a good corporate citizen but if you are going to become someone in business who takes the world on their shoulders you may very quickly become someone who is no longer in business.
Besides do you really know the strengths or accurate situation of your supplier? I have met people in business who give the impression that things are not going well and yet their resources turn out to be extraordinary healthy. Always negotiate in order to improve your company's bottom line.
The technique of negotiation
If ever you want to see negotiation up close and personal, just pay a visit to any local or farmers’ market. Especially a car boot sale or trash and treasure market which is an ideal place to watch the handling of all negotiation in its most basic form. To start with the vendors will have a price on their items for sale. Do they put the lowest price possible on their goods? Of course not. They are expecting negotiation. They are expecting you, the customer to haggle. So once you begin the negotiations with your supplier you can be almost certain that the initial price they quote is not the cheapest price at which they are willing to sell.
You know how much it costs to run your business. You know that you can turn a profit if you pay a certain maximum amount for the goods from your supplier. Know that maximum amount. Do not go above it. By all means try to get the price lower but do not go above your point. Look to top up your supplies before you need to. If you let your supplies run out or close to that date, you will be far more keen to do business. You may be forced to pay a higher price because you are desperate..
Keep it dignified
Remember you are in business for the long haul. You want to set up a relationship with a supplier which is ongoing. Have a guess what the supplier is thinking? That’s right, exactly the same thing. So adopt a businesslike and professional approach. Be prepared to give a little. This is basic negotiating.