When running your own business,
every dollar counts. And negotiating with vendors for products or services will
up your bottom line if you communicate your ideas for a discount effectively. So
how do you make sure you get the best deal possible?
Do the negotiating yourself.
Don't send an assistant to do the job of the owner. Convey sincerity while
negotiating by showing respect, and take the time to make an in-person
appointment whenever possible.
Talk to a decision-maker.
When negotiating the best deal with a salesperson, remember you're also
minimizing their commission. It's best to approach the top person in the company
and deal with someone who can offer the best pricing and quantities.
Negotiate whenever possible.
One good tactic is to set up a meeting for a slower time of year when the vendor
or supplier can benefit most from the business. The week between Christmas and
New Year's is slow for almost every business. Spring break time is also sluggish
for retail organizations and suppliers. And summer can be slow, but make sure
your contact is in the office and not on vacation. Good timing may well result
in an easier negotiation.
Know the right time to strike
a deal. Avoid Mondays as well as Wednesday and Friday afternoons. Don't
schedule a meeting immediately before a holiday when many people are leaving
town or late in the afternoon when people want to escape on time. Also consider
the business: Don't try to deal with a food vendor right before Christmas when
they're at their busiest or a printer during the holiday season when their
workload is at its peak.
Choose a comfortable place to
meet. If possible, deal on their turf. People are generally more comfortable
when in their own environment.
Research industry standards
and supplier pricing. Be prepared to have a fair price in mind for the
product or services you need. It isn't unreasonable to seek a 10 to 20 percent
reduction if you have a good reason for asking.
Take the first step. Place
an order to demonstrate good faith. When my vendors take my order before I ask
for a discount, they see a sincere eagerness to deal.
Approach your vendor
gracefully and politely. Aggressive and demanding behavior can negate any
possibility of moving forward. When approaching your vendor, use a pleasant
tone. For instance, I usually begin by saying, "If you have a minute, I'd like
to discuss an opportunity that will benefit us both."
Don't act entitled.
Avoid telling your vendor, "I need a deal." If you make an admission like this,
your vendor won't feel compelled to simply reduce his or her asking price.
Offer the vendor a deal
first. In my business, I negotiate daily but offer the vendor a benefit in
return: I have 510 franchisees hoping for a group discount. I do my job well,
and I can get up to 20 percent off wholesale orders for my franchises because I
offer the vendor volume buying. Some vendors don't have the time or funding to
actively market their product, so gently suggesting that you'll bring them more
business is something they'll be very receptive to.
Communicate clearly and let
the vendor know the benefit of giving you a deal. Explain why your business
will provide the vendor with frequent orders and additional business beyond your
company. If you're a member of a local chamber of commerce, a marketing guru or
simply a hardworking businesswoman, sell them on the idea that you'll promote
their business as well as your own. In the beginning, I was very clear about my
business and franchising concept. I told my vendors, "You may not know me now,
but in five years, I'll have grown my business significantly--as well as yours."
Everyone appreciates a visionary.
Offer options. If your
vendor refuses to lower their price, modify your offer. Ask for a lower minimum.
If paper products or supplies are required in large amounts to receive your
current deal, see if you can cut down on the stipulated minimums. Your storage
costs and cash stream will benefit.
Barter. If your vendor
simply can't be enticed into a better deal, attempt to barter. If you can offer
a good service or product in trade, there might be a benefit to both parties
without interrupting cash flow.
There are hundreds of ways to
grow your business, whether purchasing a car or a ream of paper, and using your
negotiating power gives you the power to reinvest in your business.