When you take on the responsibility of your own business, especially a new startup, there can be a few things you never anticipated.
First among these is finding the right supplier for your materials. With material costs being your largest ongoing business expense, sourcing quality components at a decent price are absolutely key to whether your business is still going to be around in 12 months’ time.
There’s no magic wand you can wave or any ‘hack’ that makes these good suppliers turn up at your door. However, there are some simple, common-sense steps you can take to make the process easier, and get your business off the ground in exactly the right way. With that in mind, here are a few pointers towards finding a good supplier, and the things you need to do to make sure you can strike the best deals when you find them.
#1 Ensure your business is well funded
Making sure you have enough money in the bank is key when approaching a supplier. If they see a healthy bank balance and a decent credit score when they do their due diligence, they are more likely to extend payment terms and give you preferential pricing.
Having 30, 60, or even 90 days longer to pay for your parts can help with cash flow, and in turn, allow you to extend terms to your customers and attract more business. Preferential pricing means lower material costs that can make you more competitive or increase your bottom line.
#2 Fill your order book
None of this helps if you don’t have any customers yet, so you will need to employ salespeople and advertise heavily in the local area and industry-specific publications and websites. A full order book looks very good when making a deal with a supplier as they can see the amount of business that is coming their way.
This means you can always buy in bulk, which suppliers love, and also allows you to dictate a level of discount that will make your business more attractive to customers, to create even more orders.
#3 Look online for good suppliers or specialized search engines
Now you have those two boxes ticked, it’s all about looking for good quality materials using specialized search engines. You’ll be looking for ones that sell electronics for parts as well as any other products you might need. Building a relationship with a single point of contact for your materials will allow you to strike the best deals in a mutually beneficial arrangement.
There are obvious risks with buying everything from one supplier but using a specialized search engine that lists and sources everything you need across multiple suppliers can provide an acceptable balance.
Many entrepreneurs start a business based on a great idea and very little else. How much attention they pay to the practicalities usually defines how well that business survives. When it comes to something as pivotal as the price and quality of the raw materials, following these three steps will help you make the best deals possible.