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Business accelerators: Negotiating a better deal from your suppliers

May 30, 2018

Are you barely breaking even? It’s time to set your sights higher.

To boost the bottom line, small businesses can use several tactics. They can raise their prices, increase their volume, or lower their costs. Let’s look at the last strategy as it holds so much promise.

In a crisis situation, employers might slash expenditures by letting staff go or moving to a cheaper location. But that can also wreck the business. To get ongoing cost savings and profit bumps, your suppliers can help.

This post explores how to negotiate a better deal with vendors, while simultaneously strengthening relationships.

Treat suppliers like partners.

For small businesses, relationships mean everything. Customers, employees, investors—strong relationships move the business forward.

The same is true for suppliers. Not only do they have their own costs, expenditures, and financial goals. They also build their businesses by focusing on customers, which is you. Keep these common goals in mind as you enter negotiations.

Show them the numbers.

When small businesses and their suppliers work as partners, not adversaries, they share information. Both parties open their books, communicate needs, and collaborate to find the best solutions.

  • Prove your value. Before meeting face to face, gather key data to guide the discussion. Figure out how much you spend each year with the supplier. Is it a significant sum? Are some items moving so quickly you need to increase orders? What about plans to expand in the future—will that affect volume?
  • Find the sweet spot. Next, show them your profit margins on specific items. Clover Insights gives you a quick overview of each item’s costs, sales, and profitability. Ask to see how much the supplier spends to make and deliver products. Is there a middle ground where you can both share the profits?
  • Compare prices. Don’t forget another piece of essential data: competitor prices. Get a price list from other suppliers, or ask fellow merchants what they’re spending on similar or identical supplies. How do the prices compare? Does your vendor offset higher prices with superior quality and service? Should they?

With hard data in hand, business owners and suppliers can negotiate with eyes wide open.

Find ways to benefit both parties.

Small business owners get used to making decisions and directing the action. But that doesn’t always play well when you’re dealing with suppliers, particularly if they have lots of customers. Some suppliers prefer to lose a few customers rather than drop prices. So how can you negotiate from a position of power?

  • Be reliable. To improve your position, remind them that you’re easy to work with. For example, if you pay bills promptly, you save vendors time and hassle. Or, you might offer to pay large deposits on orders up front. Both tactics can increase your bargaining power.
  • Search for efficiencies. Another possibility is to find ways to streamline the ordering and delivery process. What can you do to align with a vendor’s schedule? Better systems translate into lower costs, which they can pass along to you.
  • Go beyond cost. If it’s a big-ticket item and the supplier won’t budge on price, consider negotiating the size of the down payment or the length of the warranty. Be creative in finding ways to cut your costs and risks.
  • Lock in discounts. If competitors’ prices are lower, point out the discrepancy. Can they match the rates or ramp up services? Is there a volume discount they might offer, especially if you can show that sales are trending up? Can you consolidate orders and funnel more business to one supplier in return for better rates?

Sure, you pay the supplier, but they’re often the bigger player. Try to work together to find mutually beneficial solutions.

Think long term.

Small businesses depend on strong relationships. These bonds are built on trust— trust that you’ll deliver great products and services, at a price that customers are willing to pay.

Extend that trust to suppliers. By working closely with vendors and forging ongoing relationships based on honesty and transparency, small business owners create reliable partners.

The supply chain isn’t some impersonal entity. It’s an essential link to holding down costs, improving quality, and achieving greater profits.


Clover is sold by leading U.S. banks including Bank of America, BBVA, Citi, PNC, Sun Trust and Wells Fargo. You’ll also find Clover at our trusted partners including Ignite Payments, Restaurant Depot, and Sam’s Club. For more information, visit us at clover.com.