Dealing with Suppliers

If external suppliers are critical to your business, it’s vital you know how to deal with them.

From a legal perspective, a lot of businesses get in hot water when they deal with suppliers or 3rd parties. It is very common in our experience of advising small business that people are far too trusting of:

Most small businesses rely heavily on external experts or suppliers for their businesses to work and too often they find themselves being ripped off, left high-and-dry or over-serviced for what they need. The consequences are usually dire for small businesses as they are already strapped for cash and being taken for a ride usually has far greater consequences than it would for some businesses with larger cash-flows.

A lot of consultants have come from corporate backgrounds

Despite being experts in their fields, if they’ve come from corporate backgrounds, most consultants are not used to dealing with small business. They don’t understand the pains, the limited resources or the timelines involved.

Some business owners find themselves having the wool pulled over their eyes by sales-driven consultants who promise a lot, but deliver very little – after taking large deposits or paying month’s of invoices and not seeing any results.

This happens a lot in areas which business owners have little experience in, e.g. tech or those areas which they don’t want to be involved in e.g. book-keeping.

Over-servicing is rife against small business.

That’s not to say that there aren’t plenty of great service providers out there, but for most small business owners who are inexperienced in picking a really good provider in a new area that they’re not familiar with, they’re quite hard to find. You’re very lucky to land on someone you can trust first time.

Don’t be afraid to challenge the terms and conditions

Some bigger suppliers have a take-it or leave-it approach to their terms and conditions and this can be intimidating particularly if the supplier is critical to your delivery.

However, ‘if you don’t ask, you don’t get’ and often businesses are open to amending their standard terms and conditions to suit clients, as long as they are not too onerous or complicated.

Having clear and well thought out engagements with these external providers is essential for small business as they rely heavily on others to help them, as they wear all the hats in the business.

Recommendations

The big issue is that small business need to treat suppliers and 3rd parties with a lot more caution than what they are doing.

Often, being recommended people from a group of trusted entrepreneurs is still not enough to ensure that they will take care of you. Just because they’ve impressed someone else with a piece of work, doesn’t mean that they will do the same for you. Critically evaluate them like you would a prospective employee. Interview them a few times, ask as many questions as you can – prepare for these. Really think about what the big ticket items are and stress them when you speak to them and engage them in a contract.

Make sure you have a detailed written contract with them. If they don’t have a contract to submit to you, you should be very wary. Let them know that unless you have something in writing, you’re not prepared to move forward.

Make sure you’re dealing with the correct legal entity and that it is registered and current. See further tips we have in Law-In-A-Box on this.

Remember, your business is your baby. You wouldn’t trust it to a stranger.

Contact us today if you require any assistance with preparing or reviewing your contracts.

(c) Progressive Legal Pty Ltd – All legal rights reserved (2020)

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