Picking good suppliers and partners is critical to your company’s success, especially a smaller, growing business. Pick a vendor that is difficult to work with, doesn’t provide a service as promised, isn’t there when you need help and/or hits you with hidden fees, and your company could be in serious trouble.
So what steps can you take to help ensure you don’t wind up in a bad business relationship? Here are 12 strategies for selecting the right business partners and suppliers.
1. Make a list of your requirements and expectations. “One of the most important parts of creating and maintaining vendor/partner relationships is to have very clearly spelled out expectations at the onset,” says Diane Helbig of Seize This Day. “Establish an understanding of what each party will bring to the relationship, when and how. That gives you something to measure the relationship against and let’s your partner/vendor know not only what you want from them, but what you will be bringing to the relationship.”
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“Create a grid with your most important supplier requirements and assign a weight to each. Then evaluate each supplier you interview on each of those criteria,” says Sheri Tate, senior vice president, Product Strategy, ChargeItSpot, a provider of phone charging stations for retailers. “This takes the emotion out of the decision process and allows you to analyze each independent attribute such as price, attention to detail, prior relevant experience, etc., to see where they fall. Ultimately, the decision is based on more than just the grid, but it is one more tool in your toolkit to use during the selection process.”
And remember, “project success is contingent upon your provider having a clear understanding of requirements upfront,” says Vinnie Schoenfelder, CTO, CapTech, a management consulting firm. “Without it, you run the risk of encountering project delays.”
2. Seek out vendors who are familiar with your space – and have the necessary expertise/personnel. “A vendor that is already tailored to your type of business will offer immediate value,” says Kean Graham, CEO, MonetizeMore, an ad tech firm. “They will already know your pain points and how to solve them because they already [understand] your industry.”
“The most desirable vendor [for an SMB should] have proven expertise in the small and midsized markets, understands today’s pressing budget and security challenges and will work diligently with you to resolve these issues, while also factoring in your baseline budget and the need to [provide a positive] return on investment,” says Brenda Hundson, vice president, Inside Sales, Insight Enterprises, a provider of hardware, software, cloud and service solutions.
But “do not assume that just because a third-party provider offers a particular service that it has the expertise that maps to your specific needs,” says Schoenfelder. “No two projects are alike. A good partner should not only have qualified personnel with the skills needed to execute your project, it [should] have experience in your industry and an awareness of how that may affect the design and execution of the project.”
3. Determine if the vendor can scale – or downsize – with you. “Just as SMBs need to consider scalability when selecting software solutions, they also need to understand how vendors and partners can accommodate expected growth plans, including geographic territory support, hours of operation and additional services required,” says Doron Gordon, CEO, Samanage, a service desk & asset management solution provider.
“Similarly, understand the consequences if your business downsizes,” he adds. “Does this partner have a minimum contract each month, and will you be able to negotiate if your needs change?”
“When evaluating vendors, don’t think about just whether they can solve your needs today, but also think about how flexible they are to support future growth,” says Leo Castro, vice president, Product Marketing and Brand, BigCommerce. “That can mean having built-in features that scale, but should also include a platform that you can customize when you’re ready for it. Also, look at the customers they feature on their website. If they have customers like you, as well as customers that look like how you want to be in 5 years, that’s a good sign.”
4. Get and check references – and not just the glowing ones. “It's great to speak with [a vendor’s] favorite reference customer or see their best work in a case study, but try talking to some of their current or former customers [who may not offer such glowing reviews] or even their former staff, [too],” says John-Henry Scherck, growth marketing manager, DocSend. “You will learn a lot about what it's actually like to work with them as opposed to what their sales team wants you to think what working with them is like.”
5. Vet vendors’ security. “Outsourcing infrastructure, data storage and applications hosting to a cloud provider enables resource savings and likely strengthens security, but SMBs shouldn’t sit back and relax,” says Chris Caldwell, CEO, LockPath. “Your organization owns the data and is ultimately responsible for it, even if outsourcing to a cloud provider means the data is not under your direct control.” So make sure any vendor you contract with complies with industry and government standards (if applicable) before you entrust them to handle any customer or company data.
6. Try before you buy. “The best advice I can share when trying to find the right vendor or partner is to work with them first,” says Nick Braun, founder & CEO, PetInsuranceQuotes.com. “If you can do a low cost, low risk project together or give them a try for a month that is the best way to ensure you’ll find the right partners. If someone wants a 6-12 month contract up front, that’s a bad deal for you.”