Bad bargain for SMEs
May 10 2010
Small businesses are not searching for the best bargains
Small businesses are missing out on cost savings by shying away from haggling with suppliers.
Some 31 per cent of owner-managers say they do not see themselves as strong negotiators, while 13 per cent believe bargaining with suppliers doesn’t make a difference, according to a survey from T-Mobile. A further 10 per cent will discuss prices only when forced with cash flow problems.
Paul Bennet, founder of printed label company Fascia Graphics, says undergoing price reviews with suppliers is crucial to staying competitive. He comments: ‘We spend a couple of months doing research to see if anything in the market place has changed, for example if there are alternative suppliers offering cheaper prices, then we negotiate a new deal based on that data.
Adds Bennet: ‘If there’s not sufficient information to suggest that the market has changed, we don’t force down prices for the sake of it as we want to maintain good relationships with our suppliers, many of whom have been with us for ten years,’ he says.
Alexander Ehmann, head of enterprise policy at the Institute of Directors, says: ‘UK commercial growth remains fragile and small businesses continue to face serious pressures. In order to survive and grow their companies, business leaders need to keep control of their costs, which often involves negotiating with suppliers.’
Of the 1,000 small businesses surveyed, 71 per cent believe suppliers offer better deals to larger enterprises.
Comment by David Bell
Tuesday 18th May 2010Renogotiating supplier contracts and researching new suppliers is a vital part of managing business costs. Staying with the same supplier year in and year out may seem comfortable and safe, but it can lead to unnecessary spending, especially where new technologies or methods have been developed (e.g. VOIP).
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