5 tips for dealing with suppliers when you’re starting up

When you are starting up in business, it makes perfect sense to keep a tight rein on your expenses and do as much as you can yourself.

However you will at some point need to start outsourcing tasks to suppliers.

Sadly, all too often we hear stories of projects started but not completed, or of cash paid upfront for products which have never been delivered.

In both cases, it’s the clients who are left in the lurch. While there are means of redress when these incidents happen, it is far better to be forewarned so that you can protect yourself beforehand.

Here’s five tips for dealing with suppliers when you’re starting a business.

1. Don’t just go for the cheapest

Understandably, as a start-up, you have a tight budget which you need to stretch.

Don’t, however, be tempted to go for the cheapest option – it is rarely worth it.

A badly designed website will only require more money later down the line, when your business starts to grow and you realise your website can’t grow with it.

If you are bootstrapping your way through start-up, why not be creative with how you obtain support for your business, and join a micro-business community such as Enterprise Rockers, a social enterprise launched to make life better for micro-businesses.

It is free to join and has a well-established Barterplace where you can barter and exchange services.

2. Research your supplier

In such a crowded marketplace, it can be difficult to find a supplier whom you can rely upon, so take your time and carry out some research – even if the supplier has been recommended to you.

For larger projects/suppliers, it is sensible to carry out a credit check first.

For a small fee, you can carry out one yourself fairly quickly. Company Check enables you to type the company name in the search box and you will get a snapshot for free.

Alternatively, you can pay for a full credit check, CCJs, and current directorship. It costs £4.99 for a company report and £8.99 for a full director report.

Before you buy the director report, however, click on the director’s name and you will be taken to Company Check’s sister company, Director Check which will give you a useful snapshot of the director for free.

If there is a long list of “DISSOLVED” in the Company Status, this should ring warning bells!

Experian also has an online business checker, which costs £13.99 for a non-Limited company or £17.99 for a Limited Company.

3. Don’t just go for your first good option

If you were making a large purchase for your home, you would probably compare two or three quotes.

Yet in business, our enthusiasm can often get the better of us – we want to steam ahead so that we can get on with our big idea. Take your time, gather in a few quotations/proposals and compare what each one has to offer you.

4. Ask for recommendations

Make good use of your professional network – or even Linkedin and Twitter – and ask for recommendations. Perhaps join relevant forums and ask for advice.

You will find that other business owners are only too pleased to share their advice to help you avoid potential pitfalls.

5. Protect yourself with a contract

Do make sure your contract is as specific as possible.

When will you pay your supplier – in stages throughout the course of the project, or on completion? What happens if the project overruns or does not turn out as planned?

Often contracts are standard and are drawn up to suit the supplier, so do read through it carefully to ensure that it is suitable for your particular project.

Having a formal, written contract avoids confusion and misunderstanding, and is ultimately there to protect both of you, should things turn sour and need to be addressed legally.

Bonus tip: Get support with software

Adopt the use of small business accounting software to help with cash flow and financial management.

This will help you to identify what you can afford to spend, and make sure that you don’t incur fees from late payments.

Paying on time can also help you to develop strong supplier relationships – which could mean you are able to secure a discount in the future.