As much as you may love design, staying in business always needs to be top priority. Becoming a successful interior design business owner involves more than a love of design and hard work. To become successful, you need to focus on establishing and maintaining profitability on day one. Your love of design and hard work won’t keep the doors open if your company is not earning more than it is spending. Financial success for your firm results from remaining focused on the bottom line. In addition, the art of negotiation is a very important business skill and relates directly to that bottom line. Negotiation goes beyond just asking for a better price. It involves leveraging your buying power. So let’s look at some of the ways you can leverage your buying power when it comes to your relationships with your vendors.
Build strong vendor relationships
Relationship-building is at the top of the list to leverage your buying power. Once you have established that relationship, it’s more likely that other opportunities will open up.
Identify vendors who share your values and culture and manufacture or represent lines that you can use often. Being open to new vendors is great, but focus on strong relationships with your key vendors. Those are the vendors who are more likely to work with you to solve challenges, meet special needs, etc. They are in business too, so your relationship is mutually beneficial. Reps from these vendors will respond quickly when you reach out and be more willing to discuss different pricing options.
Treat vendors as valuable employees or partners. Maintain open communication to address questions and challenges quickly and with positive results for both parties. Relationships are important in business as well as your personal life, so build strong ones!
Don’t forget that your vendors are industry experts too. Treat them that way and ask for their help in learning more about their products. In addition, ask them to share their knowledge of the design field from their perspective. You’ll not only gain knowledge, but you’ll also gain their respect. Everyone loves being asked questions and getting to talk about their passion!
Additionally, maintaining consistent communication and showing respect can lead to more favorable terms. For instance, a procurement team that responds to all vendor communications within 24 hours can quickly improve vendor relationships, leading to more flexible negotiations and often preferential treatment. Don’t overdo it, of course, but a little respect will go a long way.
Understand your buying power
Leverage volume and repeat business. Do your research so that you are aware of all the brands and products a vendor carries. This knowledge will allow you to consider items in addition to what you normally purchase from them. Increasing your volume of purchasing from a vendor increases the opportunity to leverage your buying power with them.
If the vendor represents various manufacturers, ask if you can bundle orders from multiple manufacturers for better pricing. Make economies of scale work in your favor!
Pull levers other than just price
Enhance cash flow. Even if the vendor is firm on pricing, there are other options to use in negotiations. The ability to get favorable payment terms allows you to improve your cash flow. You will have more flexibility managing expenses, and you may have the ability to invest in marketing or other business opportunities. You might negotiate for free shipping for larger orders. If you are considering a new product, you might ask for a reduction in the quantity of your minimum order as compensation for the risk of trying a new product.
Offer reps the opportunity to meet with other designers for presentations in your office or at another location. This is a win-win for everyone involved. You can introduce other designers to the vendors, giving the designers more choice and the vendors more clients. Even if the vendor does not show appreciation through better pricing, getting early access to limited products, reduced shipping on bulk orders, or access to group purchasing are less concrete than a price discount, but can be just as valuable in the long term.
Join a Group Purchasing Organization (GPO)
Buying groups can usually get better pricing as their volume is much greater. GPOs offer the purchasing power of multiple companies to get better purchasing deals. It also may give you the option to purchase from vendors who have a minimum purchase requirement that you can’t meet on your own. Do your research to find out if this would be a viable alternative for you and other designers in your network to leverage your collective buying power.
As you incorporate some of the above options to leverage your buying power, don’t forget that a successful business owner reviews their business processes regularly. This review should include how you can leverage yourself to vendors and build beneficial long-term relationships. As your firm grows, the options available to leverage your buying power may also change. Stay current on what options may best fit your business. Remember that increasing your firm’s purchasing power helps you meet your firm’s financial goals and grow its bottom line. Every advantage is an investment in your future!