Vendor relationships can be tricky; you put your reputation on the line by putting it in another’s hands, leaving a lot that cannot be controlled. Having a crucial vendor fail while on a tight timeline is a nightmare scenario. With businesses growing increasingly reliant on contracting vendors from all over the country, it is important to determine when that relationship is worth keeping, when it is worth pushing and when it is worth walking away.
According to a study published in 2018, the number of people employed by business service firms or vendors has expanded from under 2% of the working population to 8% in just over 60 years. Another study found that 70% of businesses turned to an outsourcing partner for cost reduction in 2020, attributed to the pandemic.
I’ve either worked with vendors or been one across many industries, states, and capacities over three decades. Determining whether a vendor is a good fit for you before going into business in the first place is not always possible, especially as we increasingly rely on contracting out to other companies. To help, here are some tips to help you build relationships with vendors and find the right ones for you.
1. Agree on what success looks like.
Agree on a goal, and create frequent checkpoints or opportunities to ensure that there is nothing surprising going on while reviewing contractual obligations and hours so you can note when you go off track. Checking in and keeping up to date with the process may give you more advanced notice of issues while learning about your vendor’s working style.
Having a vendor that is a good fit with your company is almost as important as having a vendor that sticks to timelines. If you cannot work with your vendor and problem-solve when needed, your relationship will not last, and your company will be out on both time and money, and the relationship may have exposed you to reputational risk.
2. Stand your ground.
The business community is small. Memories are long. In a small, interdependent economy like ours, there’s a big chance you’ll have another relationship with the same people in another chapter of your life.
If your vendor promised windows for your building within a month, and that timeframe has already lapsed, hold them accountable. You have to know where to draw the line and be clear about your non-negotiables.
If that vendor cannot find those furnishings you are waiting on in time and can’t come up with a solution, you are left doing all of the work without any of the savings—even if you can do the work your vendor was hired for in the first place. If a vendor continuously burns you, stand up for yourself.
3. Identify your leverage.
Have you gone past your scope of work at the request of your client or vendor? Have you had to make concessions on timelines or products with your vendor? These things can be used as leverage in negotiations. You’re not hanging things you’ve done over a vendor’s head but demonstrating that you deserve what you are asking for.
Know your contract, your source documents and your scope of work. It is okay to go out of scope from time to time as a vendor, but keep track of your concessions and asks. You can let them know that you’ve achieved their goals, and while they may want more and are frustrated you aren’t doing so, you have that contract and scope to refer to, or you can take on the extra work and keep that leverage in your pocket.
4. Know when it’s time to walk away.
There is likely nothing keeping you locked into a relationship with a vendor or vice versa. You can get along with them personally, but the work is not the best fit. Often, that is when it’s time to walk away from the vendor relationship before things get too contentious.
This is especially true when it comes to dealing with professional services as opposed to concrete physical goods. Fit reigns supreme, and if it’s just not the right relationship, sometimes the most compassionate thing you can do for both parties is to part ways.
When you need to end a working relationship with a vendor, it can be contentious. Ideally, if it’s a good fit but they just couldn’t do the work, you can agree to disagree. However, I suggest you give the parties an opportunity to rectify the issue before deciding if it is worth ending a relationship over.
I’ve had relationships with vendors that became contentious, which ultimately created more problems than they were solving. When you do have to end those relationships, take the high road with the intent to learn from it, as you never know when you will meet that vendor again on the other side of the desk. Be curious, gracious and professional, always.
Article originally published by Linda Varrell for Forbes Business Council