Try these negotiation tactics when dealing with suppliers

Small business owners are resourceful individuals, building their business from next to nothing to hold a place of respect in their community. These clever entrepreneurs understand the local business scene better than anyone.

However, when securing equipment or materials from a powerful supplier, things can change. Some large suppliers serve entire regions, buying or pushing out competitors to control prices and command more of the market. Though many business owners may feel powerless in these negotiations, clever entrepreneurs can use a few tactics to gain leverage over these powerful business entities.

Four different tactics

  1. Increase value: Customers can increase their value by reducing the supplier’s risk. Purchasing larger bundles or ordering more items from a supplier’s catalog can create beneficial price breaks. Suppliers may also provide incentives for introductions into new markets or meetings with new customers.
  2. Alter purchasing: Careful research can inform some alternative purchasing options that may send a message to a supplier. Entrepreneurs can try unbundling package deals and locating unlikely competitors. Several small businesses can even group into a buying consortium to package orders together and reduce individual costs.
  3. Locate a new source: Bringing new suppliers into the marketplace will significantly disrupt business and send a powerful message. Many competitors may be eager for an opportunity to break into a controlled market. Ambitious entrepreneurs can also research vertical integration strategies, manufacturing the necessary supplies themselves. Some suppliers would rather offer a price break than deal with a whole new competitor.
  4. Firm action: Some large companies only respond to hardball. Canceling orders, threatening litigation or adjusting operations without the supplier may help shake things up. Many of these near-monopolies will only comply when threatened with government oversight. An appropriate subpoena into a company’s reason for a price hike can inspire cooperation.

A consultation with a lawyer may help

Business owners having difficulty dealing with a supplier may want to consult with an attorney familiar with business litigation. A lawyer can review contracts, advise on negotiations and work with government officials on legal action and regulation.

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FindLaw Network