Becoming a # 1 Preferred Vendor

Have you ever wanted to be a preferred vendor for a venue or retail establishment? Perhaps we should define what a preferred vendor is.

What is a preferred vendor?

A preferred vendor is someone who provides their product exclusively or not, to a venue or company. This is a great gig if you can land it.
 
An example of being a preferred vendor might be connecting with a bridal shop and when the bride asked, “Do you know a great cake decorator?” The sales representative replies “We recommend Elegant Cakes by Ellen, she is our premier-preferred vendor and an exceptional cake designer and decorator. Here’s her card, and let her know we recommended you. “Oh, thank you so much, I’ll give her a call this afternoon.”
 
You may also want to be added to more than one vendor list. Your product is not recommended exclusively, but you are recommended when a client wants a product that fits your specialty. (Caterer, florist, coffee shop owner, restaurants, diners, food trucks, etc.)
 
Before you commit, avoid referral fees. That defeats the purpose. Tell the person recommending you to avoid saying the client will get a good deal or discount. Again, that defeats the purpose.
 
You want a process where the client contacts you directly, the venue is not involved in the order process. Again, don’t pay any referral fees or kickbacks. Although you may want to drop off a small tin of baked goods to the referring representative from time to time.
 
Remember some venues or companies may ask for documentation. For example, a copy of the business license, liability insurance certificate, and food safety certification. Don’t be alarmed they are protecting themselves and their clients.

Selling to Local Retail Businesses

If you are interested in selling to local retail businesses there are a few things, however, you will need to know. I sold to three independent grocery stores and two farmers’ markets and here’s my food for thought.

Step 1
Is your product a good match for the retailer?

Research the establishment. Speak with the manager or owner. They may appear to be enthusiastic but remember, they are looking for a bargain, a deal. It doesn’t matter if they are not making your product, they want the biggest bang for their buck. Stand your ground when offering a wholesale price. You make money based on volume. The more items you sell, the more money you earn, but you must price for profit.

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Step 2
Determine how your product will be sold and when.

Are you selling individual cakes or slices? Are you selling individual pies or slices? What about cookies? Are they being sold by the 5 dozen? What is the shelf-life of your products? How long will your products stay fresh?

Products being sold for resale should have one of the following dates. Use what works best for you and the retailer.

Use-By: This label is aimed at consumers as a directive of the date by which the product should be eaten; mostly because of quality.

Sell-By: This label is aimed at retailers, and it informs them of the date by which the product should be sold or removed from shelf life. There’s no negotiation on this.

Best-By: This is a suggestion to the consumer on which date the product should be consumed to assure ideal quality.

Step 3
Where Will a Preferred Vendor Sell Products

Look for small vendors. You are seeking businesses that will work with you and be willing to push your products. There are a few red flags you need to be aware of, however. Veer away from vendors who want you to take the product back after the sell-by date. If they have too much of your inventory, they need to buy less. There are no buy-backs. These are perishable products.

Avoid signing a contract until you know there is a market for your product at that establish. It is not mandatory that you sign a contract. The down-side either of you can end the wholesale relationship at any time. If you want something in writing, seek legal assistance.

Step 4
Set up a Preferred Vendor Communication Process

Design a “what happens if list.” In the event, you cannot produce a product what is the contingency plan? These retailers are depending on you and one bad experience can ruin your reputation.

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How will the retailer communicate the establishment is closing due to bad weather or financial issues. Emergency situations will impact your bottom line.

Step 5
Preferred Vendor Sales is a Marathon Not a Sprint

Slow and easy wins the race. Never take on more than you can handle. Don’t set unrealistic expectations with the retailer. Try to be as transparent as possible.

A word about getting paid.

For many small businesses, offer net 30-day payment terms which creates a financial challenge. Many companies can’t afford to wait 30 to 60 days from the date of invoicing to get paid. You’ll need funds to pay for your immediate business expenses.

Whenever possible, you want to offer payment terms to only your best clients. This offer benefits your clients and gives you a tactical advantage over competitors. However, you also need to avoid offering payment terms to clients who have a high risk of not paying. You can use small business invoice software for payment upon receipt.

If you decide to offer a payment term, make it worth your while by asking the following:
“Please pay within 21 days” or “Invoice payment terms: net 30. Interest accrued at 2.5% per month thereafter.”

Preferred Vendors Use the Carrot & the Stick

Think of this as a stick-and-carrot approach. Yes, be polite (carrot). But don’t be afraid to show there’s a stick too! Advising vendors there will be interest charged on late payments gets you paid slower, but it also seems to ensure a higher percentage of invoices will get paid.

The easiest way to determine if a client has good credit is to review their commercial credit report. You have every right to request it and review it. A credit report can let you know if your prospective vendor has a good track record of paying other vendors. This track record is the best indicator of how soon they will pay you. Remember, your business, your rules. Stand your ground.

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