Small Businesses Cut Costs by Renegotiation

It’s days like today that I appreciate being an independent blogger rather than a corporate employee.  I doubt that I would have covered this topic in my past position.  As it is, I may step on a few toes with this post, but I’m not worried about that.  My job is to help you.

In an article at the Wall Street Journal online, Raymond Flandez points out that in the current economy almost anything is negotiable.  In a recent survey, 15% of small business owners and managers said that they had recently renegotiated long-range fixed-cost supply contracts.

As Flandez points out, money talks.  If you have traditionally paid on time you stand a better chance of cutting a better deal. Vendors have inventory and they need cash, making it a buyers’ market for companies with good payment history and cash flow.

Here’s where I may rub some people the wrong way.  Now is the time to ask your vendors for concessions. They need sales to pay their own bills, especially fixed-costs like rent.  They also have payroll to meet.  If you can help them turn inventory into cash, you’re in the drivers’ seat.

The Journal piece offers some case studies of companies who got very creative in their negotiations with key suppliers, including Atlanta Refrigeration Company who got their supplier, Heritage Food Service Equipment, to actually hire four Atlanta Refrigeration employees in exchange for an exclusive supplier agreement.

The key thing to remember here is that every negotiation should end in a win/win situation.  Atlanta Referigeration saved four employees jobs while Heritage Food got additional business right away and the promise of much more when the economy improves.

The days of “us vs. them” negotiations are over.  But, if you can put together a package that reduces your costs and offers an advantage to your suppliers, you stand a good chance of saving a lot of money, if the suppliers can count on you to pay your bills.  If your current suppliers balk, then maybe it’s time to shop around.

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2 Responses

  1. Hi. I am a long time reader. I wanted to say that I like your blog and the layout.

    Peter Quinn

  2. Thank you very much.

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