5 tips to negotiating with suppliers

5 tips to negotiating with suppliers

In the business world negotiation is part of the game. Whether you’re a new startup or an established business it is important to negotiate the best price. As part of a continuation to our previous post “Controlling inventory costs leads to healthy profits” we discuss the importance of managing your inventory and supplies expenses.

When dealing with vendors or suppliers it is important to think in terms of “strategic partner” to achieve a mutual business relationship.

1.     Be marketable. You and your supplier are both in the business to sell. You should consider selling yourself as a business with a promising future to your supplier. Let them know that you are someone that will give them repeat business over the long run. For example, if you’re a new start-up you can send them a sales projection plan to try and negotiate the best deal possible. Or if you’re an established business then you probably have a track record of past purchases which you can use to your advantage in negotiating a fair price.

2.     Ask for promotions. Don’t be afraid to ask for promotions on your first contact with supplier. Most businesses have some type of promotion or incentives. Every supplier or vendor is in the business to sell as much as possible. They’re in the wholesale business, so it is to their best interest to give you buying power so that they can move their product out of storage. If the price being negotiated is still not fair to you then consider advertising allowances. Most manufactures have advertising programs/products that they can offer you for your store front. This will help save you money on design and printing services.

3.     Shop around. Just like anything else in life, whether you’re buying a car or a house normally people shop around. The same thing with suppliers. To promote competitive pricing, talk to at least 3 suppliers and let them know that you’re getting quotes. Talk to recognized brand suppliers and others with low profile suppliers and compare pricing, but most importantly consider quality. There is no point in getting a good price when the quality of the product is bad, unless you don’t plan on staying in a business for long.

4.     Don’t be problematic. It doesn’t matter how much buying power you have, but if you’re a problem customer, you may not get the best deal. Let me remind you of the term “strategic partner”. Treat your supplier like a partner. Negotiating is not always about being aggressive and unfair. Make sure to make payments on time, have communication and respect.

5.    Paper talks. ALWAYS make sure you have any agreement or offer from your deal in WRITING, and make sure it matches the verbal agreement. Never sign or agree to anything before reviewing all the final terms. Most of the time suppliers will take card payments through the phone but it’s better to have them e-mail/fax you a payment authorization form with the terms of the deal.

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

Controlling inventory costs leads to healthy profits.

Controlling inventory costs leads to healthy profits.

Post by Eeliffee Garcia

Are your business profits low? It is time to look into your accounting to evaluate performance.

There are two major business expenses that can dent your profits; inventory and payroll. Keeping adequate control of both expenses will keep your profits in good shape.

For a small business such as a retail shop or restaurant; their inventory includes all items that you purchase for resale. That includes all the shipping costs along with any other costs associated with the whole process of getting the items to your shelf or restaurant kitchen.

For example, in the restaurant business it is NOT easy to have adequate control over inventory without the use of technology. It is important for a restaurant to have some sort of inventory management/POS system that can count for every item of food before it is cooked, count plate portions and number of plates being made along with the selling price for each plate. This will generate reports that will allow the business owner and the accountant to make important business decisions. Without the use of technology or by not having a professional look at your numbers the restaurant could be losing money on wasted food and/or other inventory.

A good accountant or bookkeeper will help you analyze your transactions by creating financial statements and interpreting these statements to you which in turn will help you make vital decision for your company. There are formulas that are used to evaluate inventory and sales performance such as the Inventory Turnover Ratio or margin on sales. These analysis will help you better price your product/service, help you buy the best quantity of inventory, and help you reduce inventory costs. A business owner or manager must not forget that not only are inventory costs are important but that administrative and operation costs should also be considered when evaluating your business. You don’t want to have high inventory costs and high administrative/operating expenses. Speak with your accountant to discuss your inventory to see if there are any improvements to be made.

My advice for your small business is the following:

  1. Use technology to keep track of inventory.
  2. Count every item
  3. Don’t over or under stock
  4. Research different suppliers and negotiate price
  5. Train your employees well.
  6. TALK TO YOUR ACCOUNTANT

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.

5 Tips to hiring a bookkeeper or accountant.

5 Tips to hiring a bookkeeper or accountant.

Bookkeepers or accountants are vital to a growing business. The expertise of these professionals will help you make important business decisions but most importantly, will keep your business tax complaint.

In my experience, I’ve seen “professionals” do costly errors when it comes to payroll reports and eventually annual tax returns. It’s not fair for their clients.

I recommend the following steps when seeking out a bookkeeper or accountant:

1.     REFERENCES. Make a list of recommendations from local businesses. Don’t be afraid to ask around. Remember, “word of mouth” is a better reference technique than reading “The Best, the best choice, or rated the best” on their websites.

2.     QUALIFICATIONS. Taxes are a business priority. Verify that the bookkeeper or accountant can represent you before the IRS or state agency in tax matters involving audits, collections or appeals. If you opt for a bookkeeper make sure the bookkeeper keeps up with continued education and has an “Enrolled Agent” license; that’s a federal tax practitioner license which places them in the game with CPAs and attorneys. In Texas if you hire an “Accountant” the accountant must be CPA licensed by the Texas State Board of Accountancy. If your bookkeeper is not a licensed “EA” be sure to seek a CPA firm for quarterly reviews or annual reviews and tax return preparation.

3.     ENGLISH LANGUAGE. Don’t you just hate not knowing what someone else is talking about? Accounting is a technical field with a total language of its own. Seek out a professional who can speak to you in plain English. Understanding concepts and certain process and procedures are very important for a business owner.

4.     VALUES. Honesty, work ethic, user friendly are some of the important values for a professional to have. The bookkeeper or accountant must always communicate, even if its bad news. If there is something crucial to be discussed, it must be on a timely manner.

5.     ASK QUESTIONS. You won’t get punished or ridiculed for asking! Before contracting any professional make sure you write down a list of questions you think are important. Some people like to “leave it to the expert” and don’t mind knowing a little more about the process. And remember, there is always that “additional fee” for something you didn’t think would be charged. So, ask for a detailed fee schedule.

 

 

If you need assistance with your business finances or taxes feel free in contacting us at Business Solution Center | Eeliffee@bsctexas.net | 956-466-4503 in Brownsville Texas.