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Big companies often have big staffs and the ability to manage many things in-house. Small businesses and start-ups take advantage of the tremendous value that outsourced professionals bring. For a fraction of the cost of bringing a full-time employee on board you can have a highly experienced expert on your team.
Who should you be hiring? What I’ve seen is that most small- to medium-sized companies benefit from the services of the following:
• Business Transaction Attorney – Your business transaction attorney can help you form a corporate entity, and then ensure that this entity remains in compliance with board minutes, state filings, etc. on an on-going basis. Your attorney can also provide advice on day-to-day legal matters, such as contracts and regulatory compliance. When it comes to contracts, keep in mind that if their attorney wrote it, it’s written in their best interests…not yours.
• Tax Accountant – Look for an experienced CPA who is familiar with your industry. Your tax accountant will provide tax planning and services, and be available to help you with special projects as they arise.
• Insurance Broker – A good insurance broker will start by spending the time necessary to really understand your business and then create an appropriate risk mitigation plan for you. Your broker can obtain quotes from reputable carriers that understand your industry, and help you take advantage of the carrier’s safety programs and discounts for best practices.
• Banker – Unless you have so much capital that cash flow is not an issue, your banker can be your business’ lifeline to both fixed term and revolving working capital loans. A banker will also tailor your banking services to your company’s needs, such as by providing remote check deposit services, zero balance accounts, and more.
Like the other professionals on your outsourced team, a good banker will take the time to know your business and its CEO and Senior Management Team. This enables your banker to tailor your loan covenants in a way that will help your business grow.
• Part-Time CFO – Much more than “just” a “numbers person,” a CFO is a business person with many skills. Long before you have the need for a full-time CFO, you can bring in a part-timer (like me!) and start reaping the benefits of a CFO’s expertise.
Your part-time CFO can help you develop a strategic plan, review your finances to help you understand if you’re adding value to your company, identify and eliminate wasteful spending, and much more. This person can even help you assemble the rest of your outsourced team of seasoned pros!
A while back I was working for a firm in the oil business. We had an “exclusive vendor” supply contract with an independent petroleum refiner for certain service stations. We committed to ensuring that these service stations would purchase an agreed-upon amount of the refiner’s gasoline over a five-year period, and that they would only purchase the refiner’s brand gasoline. In exchange, the refiner covered the costs associated with branding these service stations, and paid for a national advertising campaign for their brand of gasoline. It was a “win/win” for everyone involved.
Should you pursue exclusive relationships with your suppliers?
Many organizations find it beneficial to enter into exclusive vendor contracts whereby they agree to make a particular supplier their only supplier for a given set of products or services. The potential benefits include better prices, better service, marketing assistance, and the ability to sell products that have brand recognition.
On the other hand, there is one major drawback: Exclusive vendor relationships make you dependent on one supplier, which always carries certain risks. As with any decision, you’ll want to analyze the pros and cons of each particular situation before moving forward.
What can you do to nurture your supplier relationships?
What I see in the field is that most businesses know who their top five customers are, and place a lot of value in that. But they don’t realize that it’s just as important to recognize who their top five suppliers are, and value them in the same light.
Whether or not you have exclusive relationships with your suppliers, your vendor relationships are just as important as your relationships with your customers or your bank. Some of the best ways to nurture these relationships are to:
• Be loyal.
• Provide adequate lead times.
• Pay your bills on time, and within the agreed-upon terms.
• Honor any volume-based purchase commitments.
• Be pleasant to work with and treat them fairly.
• Keep them informed about what’s going on in your company.
• Communicate about any issues that may be preventing you from honoring your commitments. For example, your needs have changed and your primary supplier is not offering what you need. Or maybe other suppliers are now offering better pricing. Give your primary vendor an opportunity to work things out with you.
Your vendor relationships are like partnerships. They want you to be successful so you can continue to buy from them. And you want them to do well so they can continue to meet your needs.