#8 Choose Your Vendors – Start A Small Business Series…

You and your team will not be running your business alone, you will be using vendors. Companies in every industry exist to partner with you and help you run your business better. The vendor-selection process can be a very complicated and emotional undertaking if you don’t know how to approach it from the very start. B2B (business-to-business), a type of electronic commerce (e-commerce), is the exchange of products, services or information between businesses, rather than between businesses and consumers (B2C). A B2B transaction is conducted between two companies, such as wholesalers and online retailers. When choosing your B2B partners, you will have to choose carefully. These companies will have access to vital and potentially sensitive business data from your company. Not every business will need the same type of vendors. But there are common products and services such as a credit card processing provider and an accountant that nearly all businesses will need.

The Process

The main objective of a vendor selection phase is to minimize human emotion and political positioning in order to arrive at a decision that is in the best interest of the company. Be thorough in your investigation, seek input from all stakeholders, and use the following methodology to lead the team to a unified vendor selection decision:

  • Do a preliminary review of all vendor proposals.
  • Record business requirements and vendor requirements.
  • Assign importance value for each requirement.
  • Assign a performance value for each requirement.
  • Calculate a total performance score.
  • Select the winning vendor.

Vendor Contracts

Vendor contracts may not be at the forefront of your mind when you are creating or growing your business, yet these contracts ensure operations continue without interruption. Being conscious of the essential elements within vendor contracts ensures you are building a strong foundation for your business to operate smoothly upon.

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