As a small or medium-sized business owner in the UK, finding the right suppliers is crucial to your success. It’s widely agreed that the UK is a tremendous place to set up a business, despite the obstacles imposed by Brexit, the pandemic and, more recently, turbulent economic factors.
However, one of the most imperative factors driving a startup’s success in the UK is the choice of suppliers that you decide to work with. Your supplier choices can influence your profit margins, product or service quality, turnaround times, customer journey, and most importantly, satisfaction. Suppliers can influence these elements for both positive and negative reasons.
Working with the right suppliers can see your product quality and customer satisfaction rates improve exponentially, thus paving the way for enhanced brand awareness and scalable growth. Conversely, some suppliers may not be the best fit for your business and impede your ability to meet customer promises and turnaround times, which can have a knock-on effect on productivity and cash flow.
When starting out, many entrepreneurs rely on suppliers that can offer the healthiest mixture of affordability and flexibility. However, as your business grows, it pays off to be more selective and find suppliers that best suit your company at that particular point. The key is taking a strategic approach to choosing the right suppliers based on the value they can give to your firm and, by extension, your customers, and this involves looking beyond the bottom line.
Follow these seven tips to find the most reliable, cost-effective suppliers as your SME scales up.
Before reaching out to any potential suppliers, take time to identify your business’s specific needs.
Consider the types of products or services that you require, expected order volumes, delivery requirements and turnaround times. Make sure that you also factor in the ideal pricing and payment terms, as you want to afford the services while ensuring sufficient returns from customers while not compromising on quality or experience.
Take running a cafe, as an example. You want to ensure that you have sufficient products to be able to fulfil the food and drink orders you expect to receive. Spend time thinking about what you’ll be offering customers, from coffees and teas to pastries and sandwiches, and work your way up from there. Partner with a reputable wholesale bakery or bread supplier, as well as firms that can deliver timely, sufficient amounts of quality ingredients.
Having a clear set of requirements will help you assess which suppliers are suitable and whether their offerings align with your goals. Share these needs upfront so suppliers can tell you if they’re able to meet them.
When searching for suppliers to begin with, it makes sense to cast a wider net than usual. The more options you are aware of, the better chance you have of finding a good match for your business.
Use resources like industry directories where you can find sector or industry-specific suppliers who are advertising. If they’re putting placements in here it means that they are likely considering partners to work with. You can also get a feel for quality suppliers while also getting your brand name out there by attending trade shows or association events, where you can meet people in the industry face to face and open up negotiations.
Another proven marketing method is to attend business networking events where you can meet local suppliers or partners, as well as spot great referral opportunities. Attending meetings like these will expand your reach and allow you to meet fellow, like-minded businesses who are looking for your services, as well as those to partner with.
Once you’ve identified a number of suppliers that seem to fit your criteria on paper, conduct thorough research before deciding.
Assess their key qualities like local or regional reputation, industry certification or accreditation (if relevant) and company history. How long have they been in business? What do others say about working with them? Check online reviews from a range of sources to get a good picture of how they operate.
Consult with shortlisted suppliers to see if they can handle your current and future order volumes. Consider their locality and reliability in fulfilling orders that need to stay within the confines of your service area. You may also wish to conduct a company financial health check via GOV.UK to ensure that the supplier has a stable financial standing and won’t face insolvency when you need them the most.
Before committing to a supplier, get written quotes for your typical order sizes. Be sure to confirm any minimum order quantities and lead times so you know when to place orders to ensure that your capacity is manageable. Factor in any shipping or customs costs if needed and who is responsible for paying those fees should they be necessary.
One of the biggest obstacles is invoice payment terms; ensure that you confirm when invoices are due to be paid and what flexibility you have. Foster solid, mutually beneficial relationships with suppliers that mean they are not at a cash flow disadvantage while ensuring you can fulfil enough orders before accounts payable fall due. You may find that volume discounts are worth considering.
Before committing to ongoing buyer-supplier contracts, request product samples to assess quality first-hand. This will give you confidence and reassurance in what you’ll be getting.
A supplier’s ability to provide ongoing support is just as crucial as product quality and pricing. Make certain you understand who will be your point of liaison when managing your buyer account, and how issues like defects, damaged goods or missed deadlines will be handled.
Feeling reassured with your suppliers is key – those firms that can offer a positive and transparent experience for you, as a client, will make those ongoing bottlenecks and challenges easier to manage. Receiving quick and proactive assistance when problems arise is much better than saving money at the outset and facing difficulties with few workarounds down the line.
Before formally agreeing to work with a supplier, carefully review the proposed contract(s) and stipulated terms such as minimum length and termination terms. You may benefit by having a legal professional look at it for peace of mind, whether it’s related to liability and indemnification, pricing, confidentiality or service-level agreements.
Establishing favourable contractual terms protects your interests and long-term stability.
When you find suppliers that are a great fit, focus on building strong relationships with them. The best relationships are those that are built on mutual respect, transparency and a willingness to be flexible and adaptable. Work together to solve problems and improve processes as this will cultivate stronger feelings of trust and appreciation.
Make sure that you hold meetings regularly; visit their facilities and extend the invitation to them to visit your premises. The best kinds of relationships are ones where you can confidently and continually refer business to one another, with those suppliers proving to be highly invested in your success, and vice versa.
Selecting the right suppliers for your SME is crucial, but it’s not a one-and-done task. As your business evolves, continue evaluating your suppliers to ensure they keep pace. Over time, you will need to consider whether your current suppliers can meet your needs, and make crucial, strategic decisions about whether a long contract can continue. They will likely need to do the same too, so it’s not a one-way street. However, you’ll be set up for sustainable growth and profitability with the right suppliers powering your small business at every stage of its upscaling journey.