Can you separate your suppliers into two groups i.e. “suppliers” and “strategic partners”. They are not the same thing even although they both invoice you monthly . . . .
A supplier supplies on demand. Its like buying bread and milk. There is little loyalty either way. It is a relationship that is based mainly on price because getting it cheaper is part of the relationship. There is an element of grudge based on price.
Here is the trap . . .
Don’t make the mistake of applying the “grudge” to those suppliers who are actually strategic partners.
Strategic partners bring expert knowledge and grow your business from the outside. They supply product but they also supply advantage. A good business owner can discern suppliers from strategy partners. I think it is a good thing for business owners to be able to discern one from the other.
We have a core of clients who treat us as strategic partners and we grown their bottom line year in and year out. We grow it from 10 to 50% per year – every year. We are not a grudge purchase. They don’t negotiate our fees and they don’t try to cut us out. We get all their work and all the work from all their friends – we never have to advertise.
A few of our clients however don’t get the concept of strategic partners and treat us merely as suppliers. We soon realize that we are a grudge purchase. They will use us and get rid of us as soon as possible, moving onto what they consider a cheaper solution. What they do not understand is that others can play the same game too. Suppliers recognize this type of client . . . and therefore you get a Catch22. Nobody really looses but nobody wins either.
Take away points for business owners
1. Business owners need to develop the skill to find long term strategic partners.
2. They need to develop the ability to accept and absorb expertise and leadership from the outside.
3. They know that in South Africa the long term, sustainable, tortoise approach never fails. Malcolm Gladwell’s 10000 hour rule always wins the day. Strategic partners are in it for the long haul.
4. They know that strategic partners are not negotiable on their fees (they don’t need to be) but they are negotiable on the terms of payment.
5. They develop a regular two-way conversation between themselves and their partners and implement the strategies discussed and suggested.