What to look for in Vendors
Surprisingly enough, over 60% of all business owners mostly rely on credit to facilitate their business operations and many use vendors to build business credit. That is why building up a good relationship with your vendors is important for obvious reasons. Vendors play a very big role in helping business owners to build business credit. They will always be the first resort in case you face a cash shortage and you need some time to pay your accounts. Therefore, when building your business, relationships with vendors should receive special consideration both for the purposes of building business credit and for business operations.
Who are vendors?
Vendors are just regular people running a business and they are in the same boat as you. However, finding good vendors to build business credit sometimes is a problem because some are very rude and intimidating. Good vendors should have a reputable reputation, should be upfront and honest when it comes to helping you build business credit. Their main purpose is to provide business owners with the resources they need to make their goals become into reality by giving them creative funding options that work for them.
Let’s look at the four most important things to consider when choosing vendors:
Quality is very important. This applies not only to whether the product is packed and labeled correctly, but also to vendors’ adherence. A good number of business owners know how to look for these metrics but they rarely measure how well a vendor actually meets them. It is always advisable to be aware of the actual cost of a vendor’s failure in any of these categories.
If your vendor cannot make a reasonable margin on your business, then something is going to be wrong. On the other hand, if the vendor does not cut somewhere, he or she might discover when it is too late and then put the entire business at risk. Hence the price of the products is very important.
As said earlier, finding a good vendor is quite a difficult task if you are just starting out a business. Some vendors will claim to have a good reputation so they can take advantage of your innocence in business. With the changes in technology, it is a lot easier to find a reputable vendor from the internet. You just have to read what other business owners have said about them and make a decision based on the reviews. Always remember that vendors with good reputation are preferably the best because they tend to have more experience with building business credit.
Upfront and straightforward
With booming demand to build business credit, it is almost impossible to find upfront and straightforward vendors offering the services. It feels a lot better when working with someone who is both straightforward and upfront. It helps you know what exactly you are supposed to do and what you don’t have to do. Such vendors are very convenient and flexible to work with when it comes to helping you build business credit.
Why build business credit with a vendor?
* Protects ones personal credit
Using ones personal credit to fund most of the business operations is often very difficult for business owners. But with business credit, business owners are able to protect their personal credit since the business has its own credit ratings. This prevents mixing business credit, assets and debts with personal records.
* More credit capacity
Businesses tend to have more credit capacity as compared to personal credit. If your business has poor credit, the vendors will hardly assist you with your money problems; but if the business has good credit then the vendors will always be willing to do business with you. Therefore, working with vendors to build your business credit gives you more credit capacity.
Most vendors will offer discounts for early or prompt payments. You can become eligible for paying within 30 days or for a cash payment discount. However, if there is no discount on offer then as a business owner you can always try asking for one. As long as you are a prompt and reliable payer, there is always a possibility of receiving a discount which serves as a recognition. This is very rare when using other means to build business credit hence it is advisable to always use vendors if you need to build fast your business credit.
Your role when working with vendors to build business credit
Since your relationship with your vendor is going to be based on mutual trust and honesty, it is very important not to exaggerate you current state affairs. If you have not been in business for so long then be frank since every successful business has to start from somewhere. If possible, a face to face meeting is the best as it signals a good gesture although it is not always possible.
Get a business license
A business license allows you to buy your supplies tax free. It also shows your vendors that you already have or you’re trying to start a real business. However, a business license is not actually a necessity especially if you are dealing with foreign vendors.
Share all your priorities
If you want your vendors to be in a better position to assist you then you have to tell them all your business goals and needs. You should also tell them both your long-term and short-term objectives. And as a result, they may end up volunteering ways that can assist you meet your goals and objectives.
Be honest about your vendors performance
As a business owner it is upon you to regularly provide both negative and positive feedbacks to your vendors. If your vendor is not fulfilling the terms of your agreement whether related to quality of services or deadlines, then be brave enough and tell him or her before it is too late. This will enable the vendor to feel more invested in your business success and in return he or she will improve the quality of future services. On the other hand, praising good performance helps build loyalty and great vendor relationships.
In conclusion, now that you have the idea of how to build business credit with vendors for your company, start today and experience the magic in working with vendors.