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 Vendors Eating Your Profits?
By James L. Silvester
Depending upon what you are selling, your vendors can make or break you in a hurry. Don't let the nice demeanor and smiling face of a sales rep draw you into a false sense of security. It's a war out there in the commercial arenas with profit margins at stake. It is a constant tug-of-war between you and your vendors and who captures the most margin for the dollar spent.
For example, if you are selling products over the internet, such as hardware tools, in some cases, the prices you pay for the same quality product can vary as much as 30 percent, depending on the wholesaler, sub-wholesaler, or jobber.
Even when you buy services to run your business, it pays to extensively shop around. Now I have never noticed much difference between Office Max and Staples in terms of pricing, but both are good sources. Both run item by item special sales on occasions. Buying your office supplies from a discount catalog supply house can produce additional savings of up to 65 percent. The same can be said of your printing needs in reference to business stationary.
One area you need to shop very carefully is insurance. Insurance rates for the same coverage provided by a highly rated mainline insurance company can vary as much as 50 percent. I have found that it pays to go directly to insurance companies that maintain their own sales forces or exclusive agents. They tend to be much cheaper. However, most of these are cookie-cutter programs. If your business calls for a unique insurance package, an independent agent may be your only choice because they specialize in many different kinds of insurance and represent several different insurance firms at the same time.
The most important thing to remember is that if you pay too much for a product or service your profit margin is going to suffer. Its money left on the table that spills into some else's pocket, like that smiling sales rep mentioned above.
It truly is a war of margins with distinct winners and losers. Just remember, vendors aren't your friends, they are smiling pickpockets.
Lesson:
List Vendors You Trust In General And The Ones You Know You Can Squeeze For Additional Margin. Play One Against The Other. Use Them Exclusively; Unless A Better Deal Comes Walking Through The Door From A Trustworthy Source.
Quote: Shop Shop Shop Until Your Drop.
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