Negotiate with suppliers and reduce your costs
Posted: Sun Jan 19, 2025 10:27 am
Every company needs to have a good relationship with its suppliers, as they are essential to the operation of any business.
However, when your supplier is a large company or even a smaller company that has a differential that you cannot do without, it is very likely that you will have a great dependence on this supplier.
You may also have little room to negotiate to reduce your financial outlays.
In these cases, the supplier's power prevents new zealand phone numbers you from negotiating more attractive conditions in the contracts you sign and this creates a parameter or history that may be difficult to change in the future, which may not be good for the future and independence of your business.
It is always important for the entrepreneur to thoroughly research their potential suppliers and know all the standard conditions they apply in a negotiation.
With this information in hand, it is up to the entrepreneur to offer counterproposals to close a more attractive contract.
In Brazil, it is common to not accept a supplier's first offer and always ask for discounts, which is not so common in other countries, where companies assume that the offer is final. Knowing that this is part of our country's business culture, don't forget to try to negotiate the following terms with your suppliers:
Discounts above the standard (5% to 10% is standard in many cases)
Extend the payment term (beyond the traditional 30/60/90)
Pay only after you have sold and received payment from your customer (this would be the ideal scenario)
Sign a risk contract in which both parties only receive payment if you sell (it's not easy, but to close it you would need to offer an extra bonus to the supplier)
Make an exchange, delivering your final product as payment for the orders (it works when the supplier is interested in your product)
Furthermore, if you cannot obtain attractive conditions in the short term and have no alternative, close the contract, but say that in a year (for example) you will have to review the agreed conditions to reduce costs.
Put this in a letter of intent (it doesn't have to be a formal contract). This allows you to revisit the matter at a later date and try to renegotiate what was agreed in the past to seek better terms for your business.
However, the best negotiation with suppliers should be a win-win one, as in this case you will have a partnership relationship and not just a supplier-buyer relationship.
Ultimately, there are several negotiation possibilities, but a long-term partnership with strategic suppliers is essential to guarantee the success of the business.
This column was written based on the book “Entrepreneurship (almost) without money”
However, when your supplier is a large company or even a smaller company that has a differential that you cannot do without, it is very likely that you will have a great dependence on this supplier.
You may also have little room to negotiate to reduce your financial outlays.
In these cases, the supplier's power prevents new zealand phone numbers you from negotiating more attractive conditions in the contracts you sign and this creates a parameter or history that may be difficult to change in the future, which may not be good for the future and independence of your business.
It is always important for the entrepreneur to thoroughly research their potential suppliers and know all the standard conditions they apply in a negotiation.
With this information in hand, it is up to the entrepreneur to offer counterproposals to close a more attractive contract.
In Brazil, it is common to not accept a supplier's first offer and always ask for discounts, which is not so common in other countries, where companies assume that the offer is final. Knowing that this is part of our country's business culture, don't forget to try to negotiate the following terms with your suppliers:
Discounts above the standard (5% to 10% is standard in many cases)
Extend the payment term (beyond the traditional 30/60/90)
Pay only after you have sold and received payment from your customer (this would be the ideal scenario)
Sign a risk contract in which both parties only receive payment if you sell (it's not easy, but to close it you would need to offer an extra bonus to the supplier)
Make an exchange, delivering your final product as payment for the orders (it works when the supplier is interested in your product)
Furthermore, if you cannot obtain attractive conditions in the short term and have no alternative, close the contract, but say that in a year (for example) you will have to review the agreed conditions to reduce costs.
Put this in a letter of intent (it doesn't have to be a formal contract). This allows you to revisit the matter at a later date and try to renegotiate what was agreed in the past to seek better terms for your business.
However, the best negotiation with suppliers should be a win-win one, as in this case you will have a partnership relationship and not just a supplier-buyer relationship.
Ultimately, there are several negotiation possibilities, but a long-term partnership with strategic suppliers is essential to guarantee the success of the business.
This column was written based on the book “Entrepreneurship (almost) without money”