Guide to Evaluating Competing Vendors

Narrow your options with an eye for price and service level

By Jennifer Nichols, Online Marketing Specialist

Building a team of reliable vendors isn't always easy, though. It requires patience, persistence and a keen knowledge of what works for your business and what doesn't. Key to success is starting with a long list of options, and ending with a short list of chosen vendors, a dream team of select suppliers. In narrowing down your list of potential vendors, keep the following top of mind:

1. Your service requirements
2. Your budget
3. Your technical requirements

Action Steps
The best contacts and resources to help you get it done

Build your initial list of candidates

Compile a list of potential vendors using local suppliers, or broaden your horizons by including out-of-state and even foreign vendors.

I recommend: Locate a variety of small business vendors based upon your specific needs at Respond.com, where you can browse a vendor directory and read vendor referrals. BuyerZone also is a premium location for comparing vendors across hundreds of business purchasing categories.

Automate your evaluations

If you plan to evaluate several vendors, you may want to create a Request for Information (RFI), a Request for Quotation (RFQ), or a Request for Proposal (RFP) from your vendors in an effort to make the playing field as level as possible. An 'RFx' is the general term to include all three types of documents.

I recommend: Make yours an Electronic Request for Proposal (eRFPs) by using a web-based solution from Sysoft to automatically consolidate and track responses as they come in from each vendor.

Use word of mouth

Recommendations from your peers are always your best evaluation tool. Ask around to find out who your friends and fellow business owners have worked with.

I recommend: If you want to consult a more "official" source, visit the Better Business Bureau (BBB) and find out what others have to say about the vendors on your list. If you're doing business online, the site provides a list of Internet-friendly companies that are safe to work with.

Bid for good deals

Online bidding isn't just for large corporations. Also called 'reverse auctions,' this is a tool to evaluate a large number of vendors, mainly on price, to save you lots of money.

I recommend: Hedgehog can manage the entire auction process for you and your suppliers, or you can purchase its software to do it yourself.

Assess technical capabilities

If you currently use a Customer Relationship Management (CRM) program in your organization, you'll want to make sure competing vendors are willing and/or able to use it.

I recommend: CLP Suites is an inexpensive solution that uses the Web for its CRM platform; there's a tiered pricing system based on the size of your business.

Negotiate and evaluate

Take notes at vendor meetings to help you remember what terms were discussed. Refer back to your notes during contract negotiations if necessary, and use them to barter with competing vendors, who may be able to offer the same suite of products or services at a better price.

I recommend: The Council for Entrepreneurial Development (CED) in North Carolina provides negotiation tactics for entrepreneurs just starting out, while MyWorkTools.com sells a vendor scorecard with which to evaluate and select winning vendors.

If necessary, customize

Don't stop looking until you find the vendor that will give you what you're looking for. If you choose a vendor, and find out later that they can't make good on their promises, there are many more fish in the virtual sea. Move on.

I recommend: At GlobalSpec.com, you can find an engineer to design, build and test any gadget you dream up.

Helpful advice for making the most of this Guide

• •  Notify existing suppliers of your search for new vendors in order to leverage better deals with them.
• •  Ask potential vendors thorough questions in order to solicit honest, objective answers.
• •  Find out when a vendor can and will ship your purchase, as shipping can be a huge differentiator when you need items quickly.