As a business owner, you have the responsibility to negotiate with your vendors. Getting the best deal with your vendor is beneficial for you and your supplier. It brings you closer to your vendor, and it actually makes your client-vendor bond stronger.
I see vendor negotiations as a mutually beneficial event. That’s important in mindset and principle for getting to a successful agreement.
If you approach vendor negotiations as a war, you will come out injured. I don’t believe this is good for anyone. You should be goal minded and aggressive, but not approach negotiations as a death battle over percentage points.
In negotiations, you may get everything you want, none of what you want, or somewhere in the middle. No matter the outcome, you can benefit!
The 3 Benefits of Negotiation Big with Your Vendor
#1. Investing Face Time with the Decision Maker.
Most of the time you invest with your supplier is with the vendor’s sales representative.
Often, your sales representative has limited to no power to approve contract negotiations outside of prescribed boundaries.
When you request a negotiation outside of the limits of your sales representative, then you will most likely get face time with a higher authority. This is a great time to strengthen and deepen your vendor relationship with the upper brass.
#2. You Discover What’s Possible.
Most people think creativity occurs when there are no limits. I disagree strongly. To me, creativity is enhanced when there is a distinct number of limits and a problem that needs solving.
Let’s say for example that you need to negotiate 2% off of your purchase price for a particular piece of equipment. You know that others are getting that price, but they buy at a much larger volume than you.
So, you can’t get the 2% discount based on volume today. You need to get creative!
When you get creative, you start thinking outside the box. You start looking for other ways to make it happen.
Check out this super simple financial tool to help you isolate your equipment costs and see where you have room to negotiate.
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Discover What’s Possible by Asking a Few Questions
- At what volume can you get a 1% discount?
- 2% discount, 3% discount and more?
- What other products are you wanting to grow that are struggling right now? If I help you grow this product line, can you help me with the discount?
- What other ways can we get to a reduction? Even if it’s not directly off equipment, can we get there through:
- Marketing Share
- Training Credit
- Utilizing your Finance Services
- Other Services or Discounts?
And perhaps the most important question of all:
“Do you find our business valuable, and would you like to grow with us?”
If the answer is yes, then you are moving forward in the right direction.
#3. Growth Becomes a Priority.
You are in a stronger position for contraction negotiations with greater volume. This is a fundamental law of business.
Stepping into a room and asking for negotiations with limited sales can be tough. Not impossible, but tough.
The positive side of stepping into the negotiation room is that it will give you the motivation to grow. Even if you get a “no” today, then you can use that to fuel the “yes” for tomorrow.
Do you find negotiation to be full of negative emotions? Maybe they scare you or embarrass you. Well, you can use those emotions to fuel your growth.
Allow those negative emotions to push you towards a positive future. A future of growth and power for when you step back to the table.
You have a responsibility as an owner to be a great negotiator. To me, negotiation skills are critical to any business.
I’m currently in several vendor negotiations. Some of those will go my way, and some will not. Yet, I will benefit from each negotiation because of my mindset.
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