Suppliers

You’ll need to do some research to find suppliers you’re happy with.

For example, you could:

Once you have a list of potential suppliers, work out which ones best fit your business. Here are some of the factors to consider.

Price

Affordability is important, but cheap doesn’t always mean value for money. You risk damaging your business’s reputation if you pass poor quality products on to customers or compromise on service because of your supplier.

Reliability and trust

You need to be confident that the supplier can deliver the right goods or services on time.

Check if your supplier’s customers are satisfied by reading online reviews. You can also ask a supplier for references and contact other businesses they deal with. 

Do a simple background check by searching for the supplier on the Australian Business Register. This helps you confirm the business is a legitimately registered business.

You can search the Personal Property Securities Register to make sure the goods they’re supplying aren’t being used as security for a debt.

Size

Large suppliers usually have the resources and systems to still deliver on time if anything goes wrong.

However, you may be able to build a closer relationship with a smaller supplier.

Time in business

An experienced supplier can be a better choice for your business, particularly if you want a long-term contract.

However, a new supplier may be able to provide a better, more personal service as you grow your businesses together.

Location

Suppliers that are far away can mean longer delivery times and higher freight costs. And if you’re importing goods from overseas, you might need to pay extra fees and customs duties.

Local suppliers might be better if you need something quickly.

Sustainability

A sustainable supplier meets standards and consumer expectations around environmental and social issues. This can help your business with its own sustainability.

Ask a potential supplier about their sustainability initiatives. They should be able to give you a statement or a list of the steps they're taking, along with evidence.

Some questions you might want to ask:

• Do you have a sustainability action plan or policies?
• Do you have targets for reducing greenhouse gas emissions, energy, water and waste?
• Have you done a risk assessment in the past year?
• Where are the facilities you buy your supplies from? Have you inspected them?
• How do you make sure employees are treated fairly and ethically?
• How do you support community development?

You can also look for suppliers who meet formal sustainability standards or certifications.

Once you’ve chosen a supplier you want to do business with, you can negotiate a contract with them.

Document the terms as a written contract to minimise disagreements about each party's rights and responsibilities.

Your contract should include:

• the goods or services to be supplied
• price and payment terms
• timeframes
• delivery terms
• quality standards
• warranty periods
• insurance responsibilities
• dispute resolution terms
• termination and exclusion clauses.

If you want to do business with the supplier in future, it’s important to negotiate outcomes that both parties are happy with.

Your relationship with suppliers can directly influence your business. Once you’ve found the right supplier it’s important to develop a productive and professional relationship with them.

These tips can help you build good working relationships with your suppliers:

• Set up regular times to talk with your suppliers.
• Communicate openly and honestly.
• Report any issues or concerns early.
• Keep track of your supplier’s performance.
• Actively listen to advice and feedback.
• Agree on a standard ordering process.
• Pay your accounts on time.
• Try not to change or rush orders.

Your business is important to your supplier, but you’re just one of their many customers. Give your suppliers the benefit of the doubt if your needs aren’t instantly met.

Even if you’ve developed strong and productive relationships with your suppliers, disputes can happen.

You can resolve most disputes quickly and easily by following these tips:

• Check your facts – if you have a written contract, read it carefully. Your contract can help you understand the problem any dispute resolution clauses.
• Contact your supplier – you can often solve the problem simply by talking through the issue with your supplier.
• Listen – you may not know all the circumstances or facts. Put yourself in your supplier’s position to better understand the issue from their side.
• Keep records – records of your communication with the supplier helps you keep track of what has happened. You might need these records if you take the matter further.

Issues with suppliers are often simple misunderstandings. Give your supplier the benefit of the doubt and work with them to resolve the problem.

As your business grows, your priorities can change. Sometimes this means you need to update your contract or change to a new supplier.

Here are some common reasons you might need to change:

• You’ve found another supplier that offers better value for money.
• You need to cut spending to increase your business’s bottom line.
• Your business has grown and you’ve found a supplier who can better meet your changed needs.
• Your current supplier is closing or no longer stocks the items you need.
• Your supplier contract is expiring, and you want to check out other suppliers before renewing the contract.

Whatever your reason for changing suppliers, take the time to think about it carefully. Changing suppliers means having to rebuild trust and relationships, which can take time and energy. It might be more cost-effective to stay with your current supplier and renegotiate your contract.