How to negotiate with your suppliers – 7 top tips for sole traders

With the price of just about everything going up at the moment, many sole traders will be looking closely at their spending to try to find ways to cut costs so they can keep their cash flow healthy.

You may be one of them. If so, trying to negotiate better deals with your suppliers may be key to your self employed business-survival strategy, because putting up your prices to cover your higher costs might not be possible.

Negotiating is something that most of us do many times each day, in business and in our personal life. Some are good negotiators, but it doesn’t come naturally to everyone. If you approach negotiating in the wrong way, things can quickly go pear-shaped. Negotiating isn’t a question of arguing forcefully and refusing to budge until you get what you want. So, how do you get better results when negotiating with suppliers?

1. Prepare well before negotiating

Work out exactly what you want from the negotiation, what your other options are and what concessions you’re prepared to make. Think about what the other person is likely to want from the negotiation and what concessions they’ll be willing to make.

Top tip! Before the negotiation takes place, arm yourself with evidence to back up any claims you’ll make, because this will strengthen your negotiating position.

2. Use the right approach when negotiating

Different approaches are often required for different people and situations. While being more direct and firm might work well in some cases, it may backfire in others. Carefully consider whom you’re negotiating with, what you’re negotiating over and what outcome will work for both parties. This is the essence of successful negotiating. 

3. Negotiate at the right time

Never leave a negotiation to the last minute, so that a tight deadline can be used against you. If necessary, at the start of the negotiation, set out what you want to achieve, but never reveal any concessions that you’re prepared to make, because these must be negotiated where necessary.

4. Negotiate with confidence

Lack of confidence is damaging when negotiating. If you’ve prepared well, know what you want and take the right approach, believe in yourself. You should also look the part and your body language should be self-confident, but not cocky.

Top tip! Be firm but fair when negotiating. Remain open to questions and comments from the other person.

5. Keep it friendly when negotiating

Negotiations should be amicable, with both sides remaining professional and respectful. The conversation shouldn’t be argumentative or heated. Remain cool, stay focused and keep a smile on your face.

6. Listen carefully when negotiating

Only then can you properly consider the other person’s point of view, which is essential if you’re to reach mutual agreement. Don’t talk over them; aim to create a good conversation. Be patient, because negotiations should never be rushed. While talking, if you don’t understand anything, seek clarification.

Top tip! Never allow yourself to be bullied in a negotiation or rushed into decisions.

7. Give ground where necessary

Negotiating often means having to concede ground, but always ask for something in return. So, for example, if a supplier says they’ll give you a cheaper price if you order more, ask for free delivery or more credit.

Top tip! You must also be prepared to hold your ground if the other person’s expectations aren’t acceptable to you. Explain why and make a counter offer.

Negotiating – the last word 

• If you’re in a negotiation and an offer/deal isn’t acceptable – walk away and explore other options.
• Part on good terms, because the same supplier may be able to offer you a more acceptable deal/offer next time. They might even come back to make an improved offer far sooner than you expected.
• If you need more time to consider an offer made during a negotiation – take that time. Otherwise you risk rushing into an arrangement that you later regret.
• Crucially – never just negotiate on price – value is the key factor. Price is important, obviously, but the cheapest supplier may give you inferior products or materials, as well as poor customer service, which can ultimately cost you.

As a buyer, especially one who needs to reduce costs, you must drive a hard bargain, which can work sometimes. But if you are to create and maintain good relationships with suppliers, agreements must be fair for both parties. Where necessary, get the terms of an agreement drawn up and signed, so that everyone knows where they stand.

Sometimes a negotiation will bring you more than you expected, other times, you’ll have to settle for less. But, especially in these times, you must always try to get the best value you can from every penny that you spend. The future of your sole trader business could depend on it.

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