GUIDE: GROW YOUR BUSINESS | STRATEGY ELEVEN:
Choose Your Vendors
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What is a vendor?
A vendor is a person or business that sells its products and services to other businesses to aid the business in their ongoing business activities. These could be things like, but not limited to, janitorial services or products, office supplies, inventory management, and ingredients. Another word for a vendor could be a supplier.
How do you pay vendors?
After a sale between you and the vendor is completed, the vendor may request immediate payment, or they may invoice you with credit terms for later payment. Sometimes the deliverables from the sale won’t be given to the purchasing business until the vendor is paid. All of this depends on the terms agreed upon by both parties.
How to select a vendor?
The vendor selection process is a little different for every business. This is because we all look for different qualities in professional relationships, have different budgets, and different expectations. A lot of companies today utilize e-Procurement Systems to push out requests for proposals and pay invoices. We’ve made a list of things to consider and remember when searching for your own vendors below:
Soliciting Bids
Request for Invoice (RFI), Request for Quote (RFQ), and Request for Proposal (RFP) are common terms you may hear when going through the bidding process.
Vendor Evaluations
During your search, if you can find evaluations by other businesses who currently use, or have used, your potential vendor(s), reading through their thoughts/opinions on your potential vendor(s) could save you a lot of time and headache.
Identify Others
So you’ve narrowed down your list? Great! It’s time to find some more vendors to consider. Finding great vendors is truly a numbers game. The more you consider, the more confident you will feel with your final decision.
Watch Demos
If the vendor doesn’t have pre-recorded demonstrations of their products or services, you should ask to see how it works in person or over a video chat. Watching demonstrations will help you better understand how your money will be spent and if it will work for you and your team.
Financial Stability
If a vendor doesn’t appear to be financially stable, you may experience stoppages and delays in the delivery of the products or services you purchased. Ensuring that the vendor has their financial house in order will allow you to feel more confident about your own deliverables to your customers, as well as keep consistency throughout your entire operation.
Negotiate Terms
After you’ve gone through the process of choosing which vendor you’d like to go with, you must agree on the terms of whatever contract comes into play. Things to negotiate include deliverables, pricing, early payment discounts, transportation costs, and milestones. Every business is different, so negotiate what is relevant to you.
Frequently Asked Questions
Do you have questions about how to go about choosing your business vendors? You should consider checking out our Resource Navigator. It houses the contact information of 400 of our most helpful partners from across the state, like the Small Business Development Center, who provides free to low-cost assistance to Iowa entrepreneurs and small business owners.
Q: I don’t have vendors for my business, is this O.K.?
A: It depends on the nature of your business. If your business is a service-based business or if you have a very small business that does not require external vendors or suppliers, then it may be okay not to have vendors. However, most businesses, regardless of size or industry, usually rely on vendors or suppliers to some extent.
Q: How do I become a business vendor?
A: To become a business vendor, you will need to identify potential clients, develop a business plan, create a portfolio, register your business, develop your marketing strategy, reach out to your potential clients, and negotiate contracts with said potential clients.
Q: Does my business need to be a certain size before I find vendors?
A: There is no specific size requirement for a business to start working with vendors. Whether you are a small business or a large corporation, you can benefit from working with vendors or suppliers to provide the goods and services you need to operate.
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NOTICE: The information included on this website is to be used only as a guide. It is not intended to cover all provisions of the law or every taxpayer's specific circumstances.
