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Excerpt from Character 19: Supplier

Michael Best
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on September 22, 2015

Supplier sketchThe daily challenges most small business owners face are numerous and varied in a Jack-of-all-trades kind of way. One minute you’re resolving an irate customer’s problem and the next refereeing a difference of opinion between two employees. You’re the owner. You’re the go-to person when issues escalate and the last thing you need is for supply issues to escalate to where they need your attention—by that point, disruption of supply might be imminent. And what a small business needs from its suppliers is stability and reliability so that it may in turn offer stability and reliability to its customers.

But supply disruptions can happen for any number of reasons—manufacturing and delivery delays, inventory shortages, import paperwork errors, erroneous or incomplete deliveries, and defective products, to name just some of the common examples. Then there is the age-old overdue payment reason. Suppliers like to be paid on time and will readily withhold delivery to reinforce this point.

The degree to which supplier problems constitute a headache for you depends upon the degree to which your small business relies upon a particular supplier. This brings us to an important consideration: whenever possible, before choosing to do business with a supplier, weigh the make-or-break effect it can have on your small business. Select thoughtfully.

My small business was tied to just a single supplier for each of about a half-dozen product types. This was due partly to the nature of the textile screen printing industry, which has a limited number of competitive manufacturers, and partly to my belief that brand monogamy would foster a closer relationship with suppliers and lead to advantages not enjoyed by brand polygamists—in retrospect, a decision I now regret. The rewards for supplier monogamy did not materialize. Instead, my business relied heavily on those few suppliers when a broader range of alternatives would have given us a greater variety of prices and quality options and hence greater market-penetration potential.

If you’re going to inextricably bind the future of your small business to the future of a single supplier and its brand, consider the pros and cons very carefully. It could be a double-edged sword.