April 26th, 2022 Taxloopholes.com Advisor
Landing a new client or project can be an exciting time for any business owner, but if you are like many entrepreneurs taking on a new client (or several) at one time can put a strain on you financially. Especially if there is going to be a significant amount of time before you are able to start doing billable work or produce product for a contract.
So, today I wanted to share with you some tips that I share with my business coaching clients, on how to increase your bottom line profits with the help of your vendors and suppliers.
- Ask For a Discount. It seems obvious to ask for a discount, but for many business owners it’s a difficult conversation to have, and therefore one that gets postponed. Every quarter or two, step back and take a fresh look at your suppliers. Can you aggregate purchasing and get better pricing? Have your orders increased? If so, can they give you better pricing? Have you proven that you’re a sure and speedy payor? If so, ask for and get a discount. Many vendors would love to see an increase in orders and would love to work with you to make it beneficial for both parties.
- Learn to Negotiate. Almost everything is up for negotiation, so don’t be afraid to counter offer. Make it part of the company culture to ask for discounts regularly when working with vendors.
- Go Out To Bid- Often. When was the last time you made your vendors compete to re-win your business? If it’s been over a year, I strongly recommend you consider pricing things out. At the very least you’re likely to get a significant price break from your existing vendors when they feel the hot breath of their competitors on the back of their neck.
- Pre-empt Any Price Increases. Send a letter to all your vendors and suppliers notifying them that because times are so tough that for the next 12-24 months you won’t accept any price increases. And that if they do have a price increase, that will automatically trigger you to go out for competitive bids. Assuming you are a good customer who pays on time, the fear of loss will prevent them from increasing your prices.
- Pay Early (And Choose Your Payment Method Wisely). Everyone loves positive cash flow, so take advantage of this by asking your vendors for an early pay discount. You can also ask them if they take AMEX, checks or ACH transfers for an instant 3% discount. If you can save them merchant account fees, they will be more inclined to pass the savings to you.
Working with your vendors to increase your profit margins and serve your customers ultimately benefits everyone involved. So don’t be afraid to review your current vendors and contracts and find ways that you can work together to reach your goals. Worst case scenario, you find another vendor at a more reasonable price point to further your bottom line. Best case scenario, you save money and continue working with a vendor you already have a great relationship with.