Keys to a successful business-vendor relationship

Without a plan of action & constructive communication, you’re in for long-term failure

It’s common for small businesses to hire agencies to design their websites, create social media marketing strategies or handle payroll. Vendors help businesses free up more time to focus on what really matters to them – their customers.

But business-vendor relationships can only succeed if both parties express their expectations from the start of a project and exchange feedback on an ongoing basis.

Write easy-to-understand contracts

Most business-vendor relationships begin with a contract that outlines the legalities and expectations of the business and vendor. Well-written contracts help avoid legal intervention.

“You don’t want to go to court because it’s a huge distraction,” said Bill Dwyer, a volunteer mentor with SCORE Vancouver, which offers workshops and free mentoring services to start-up business owners.

When writing vendor contracts, businesses should use simple language, so both parties can clearly understand the expectations.

Some contracts allow an “out” if vendors don’t meet specific expectations, which could range from missed deadlines to dissatisfaction of the project deliverables.

“In our contracts, there’s an ‘out’ clause if a client isn’t happy,” said Eric Sawyer, area manager with Vancouver-based Barrett Business Services Inc. (BBSI), a management systems company with an emphasis on human resource and payroll services. “If we can’t fix the problem, I would rather get the problem solved somewhere else.”

Define expectations with a plan

Often both the business and the vendor don’t communicate their expectations, which sets up long-term failure.

“When I hire a vendor, we lay out a 30-60-90-day plan of what I expect and what they expect,” said Dwyer. “This plan will help solve problems before they begin.”

As a part of these plans, vendors need to know the customer needs that may affect their work. For example, a business can help a marketing vendor understand the customer persona – who they are, what type of content they want and how they want to receive it – before assigning the initial project. If a business assigns a vendor to write blog articles, the business should provide a list of topics and an editorial calendar.

At this time, the business should also define what it’s looking to accomplish – increased website lead conversions, a more streamlined payroll system, etc.

Scott-Carroll
Scott Carroll

Give constructive feedback

Once the project has begun, the vendor needs direct feedback. If the work isn’t what the business expected, then it may have picked a poor vendor. However, business owners often have unrealistic expectations when they hire someone, which leads to disappointment, said Dwyer.

Businesses should keep in touch with vendors to ensure projects are getting done on time. And when feedback is shared in a respectful way, it’s more likely to be heard and understood.

Open communication – via phone, in-person or even texting – lets the business and the vendor share what processes are going well and what things need adjustment.

Even though face-to-face communication is four to five times faster and more appropriate, it’s not always possible, said Dwyer. Phone and email may open people up to misinterpretation because body expressions and gestures are invisible.

For example, BBSI hired a t-shirt company to create its golf shirts and branding materials for a sponsorship project with the LPGA Portland Classic.

“I was in constant communication with the manager,” said Sawyer. “I knew when the shirts shipped from Nike, when the embroidery process was starting and when they were done and ready to be shipped.”

Handle tough conversations

“When we have a touch-base meeting [with a vendor], we first talk about things that are working well and then address any challenges,” said Scott Carroll, president of Centrixity, a Vancouver-based business management consulting firm. “Organizations get more from focusing on strengths than nitpicking weaknesses.”

But sometimes businesses must make difficult decisions. It’s time to end a relationship if neither the business nor vendor can resolve the problem at hand.

BBSI ended a relationship with a printing vendor that continued to make too many mistakes and wasn’t willing to correct those mistakes going forward.

“At the end of the day, you can’t let your judgment be clouded,” said Sawyer. “You’re responsible for what’s in the best interest for your company and your employees.”

Hire locally

Businesses have the option to hire vendors from all over the world. But a company, whose appearance to people in the community is important, usually works more with local than national vendors.

BBSI prefers to hire locally when it can. The company chose to hire a local t-shirt company over a national one for its LPGA Portland Classic sponsorship materials.

“We probably pay a few more dollars by doing it local, but I know the dollars are staying in the community,” said Sawyer.

To find new vendors, business owners can ask for referrals from similar companies and through local business alliances, including the Vancouver Chamber of Commerce and SCORE Vancouver. Once a business develops a list of candidates, it’s important to talk with multiple vendors about their values and terms before making a final decision.

“I want to be with a vendor I trust,” said Sawyer. “When I have that, communication is easy.”

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