by Jerry Mooney
If you’re setting out plans to quit your day job and pursue your dreams of starting a business, then you’ll quickly be discovering that there’s a lot to think about! From the tone you’re going to adopt in your branding to your recruitment drives to how you plan to expand and grow, being a first-time business owner is no picnic! You may think that buying from suppliers is pretty simple compared to the rest of it, but there are various pitfalls which could drain your overall productivity. Here are a few of the most common you need to avoid…
Getting Sucked in When Deals Are Too Good to be True
We live in a world of spam, and by now you’re probably pretty good at recognizing scams that are directed at consumers. However, seen as this is your first time running a business, you may not be all that experienced in dodging the other scams that are out there. If you get a quote from any supplier on any product that’s under 30% of the RRP, then get out of there fast! These are usually outright scams, or have some nasty catch like the quality of the products being sub-standard.
Failing to be a Ruthless Negotiator
Image from Flickr
If you walked into a B2C store and tried to haggle down the price of a display item, then you wouldn’t make it far! However, when you’re buying from B2B suppliers, it’s a totally different story. Negotiations for discounts are pretty much expected when you’re buying from B2B companies, whether they’re workwear suppliers or bespoke machinery designers. When you’re interviewing a prospective supplier for your business, there are all kinds of ways you can soften them up and get a better deal. A lot of suppliers offer referral deals, for example, where you can get considerable discounts simply by mentioning the company to fellow entrepreneurs. Offering the supplier an opportunity to break into new markets can also be a hugely effective way to get a better deal. Running your own promotional period can often be enough to bring suppliers around. You’re going to have all kinds of opportunities for discounts, so make sure you’re approaching your negotiations with a ruthless, can-do attitude.
Not Being Firm About MOQs
If you’re planning to run a business that sells a wide range of products, then you may feel pretty taken aback when you see a lot of supplier’s MOQs (minimum order quantities). To protect yourself from being screwed over by your suppliers, you need to set firm limits when it comes to the MOQs you’ll be happy to accept. Most suppliers will allow you to make a smaller order when you first start buying from them, but after that you’re going to have to put your “ruthless” hat on again! I recommend shooting for prices 5% lower than you’d need to turn a healthy profit, and then offering 5% higher in exchange for smaller MOQs. Negotiations on flexible ordering schedules can also be a big help.
Jerry Mooney is co-founder and managing editor of Zenruption and the author of History Yoghurt and the Moon. He studied at the University of Munich and Lewis and Clark College where he received his BA in International Affairs and West European Studies. He has recently taught Language and Communications at a small, private college and owned various businesses, including an investment company. Jerry is committed to zenrupting the forces that block social, political and economic justice. He can also be found on Twitter.