Business Information for Entrepreneurs by an Entrepreneur

Any small business retail owner will tell you that the success of his or her business depends a great deal on both the suppliers and vendors he/she chooses. A good supplier can bring a bounty of profits and happy customers, while a tough and inflexible supplier will provide a mountain of stress, worry, and woe.

What can a small business owner do to ensure that a supplier or vendor is the right one to provide the needed materials? Rather than picking a supplier or vendor haphazardly, you should do a thorough and pre-formulated rating and evaluation. It is critical to ensure that the supplier and vendor choices you make are capable of delivering what you need and when you need it, as well as meeting your requirements for quality and performance standards.

Popular Rating Metrics

While there could be an endless list of possible metrics on which you can make a supplier evaluation, even down to the dress code of the supplier's employees, here are the most popular rating methods that businesses use to make sound supplier decisions.

Cost - The cost you pay to your supplier or vendor can make a big difference in your profit margin. If you have a supplier that is selling you wholesale items at a price per unit that is too close to your retail selling price, you end up making very little profit.

Talk to your supplier about purchasing in bulk to save money. Perhaps you can negotiate a contract where you promise to purchase solely through that supplier for reduced rates.

The same goes for your vendors. The items you don't resell but use in your business are directly related to your profit margin. Carefully consider who you choose as your vendors. Even a choice in office supplies can save you hundreds, even thousands, of dollars a year.

And while cost is a major and important factor in choosing a supplier, it should not be the only deciding factor. Consider the following as part of your analysis as well.

Delivery Accuracy - Can your supplier deliver the right goods? How often do you find mistakes in the delivery process? Is the accuracy of your supply deliveries directly related to your manufacturing or assembly timeline? This can be a very important factor if you depend on accurate orders from your suppliers.

Delivery Timeliness - Will your supplier meet your needs on time? This is a question that should be raised. Suppliers will at times have stocking shortages and even flat tires on delivery trucks. But if your orders are constantly delayed or frequently late, consider using a different supplier.

Responsiveness - Does your supplier or vendor respond to your inquiries or concerns? When you need to make an order, are you able to get direct contact to your sales rep? Or if you have a concern about an order, will the supplier work with you to your satisfaction? This type of responsiveness can save a load of heartache that is no fault of your own.

Capability/Flexibility - Is your chosen supplier or vendor dependable to meet and accommodate your needs on a regular and long-term basis? How secure is the business? Have they been doing business for a long time and have a great reputation? Or is the supplier or distributor new to the industry and have yet to get a good review? Is the business at risk of suddenly closing down, putting you at a sudden loss of materials? Be sure you can depend on your suppliers and vendors to meet your needs.

Quality of Service - How are the people you deal with? Consider the service of the owner, your sales rep, your delivery drivers, and even the accounts receivable people you have to deal with. Are they people you enjoy dealing with? Or are they tough and brusque?

Take the time to evaluate your suppliers and vendors. Evaluate as much as you can before you choose a vendor or supplier. In many cases, you must actually use the vendor or supplier in order to make a sound evaluation. But the more you expect of your suppliers, the more profit you can make in your business.

Software as a Service (SAAS) has become the standard for software delivery and integration. While the old paradigm of installing source code and purchasing license agreements to run software on your own servers is a phenomenon of the past, there is still much to be considered from the ease of utilizing software via an internet or other network connection.

Your SaaS contract spells out how your software is to be used by your company, and it outlines the expectations for both you and the service provider. However, SaaS contracts are not boilerplate. You have every right to negotiate anything and everything.

If you have chosen a SaaS company, here are a few important things to consider:

Get What You Want - And Opt For More

Much like installed and licensed software, SaaS can be purchased and utilized in modules or components.

For instance, say you are purchasing an accounting SaaS. You would be paying too much if it came with every possible component or feature, but you only utilized a few of them. That is why a SaaS company allows you to choose features you need.

Say that you just need the general ledger, A/R, A/P, reports, payroll, and invoicing. You can then opt to buy up when you need additional features like sales, inventory management, capital asset management, cost accounting, etc.

Support and Maintenance

Unfortunately, there will be times when your SaaS product is not working properly. Or you may have a special project which includes your SaaS. Or you may simply have a question about how your SaaS works. Who will you contact?

You should insist that your SaaS contract must include a clause for maintenance and support. Spell out clearly when the SaaS company should be available, including days, hours, nights, weekends, etc. It should also include how and whom to contact for emergencies or escalated issues, and even how an issue will be escalated.

Do be aware that the more you put your SaaS provider on call and available, the more you will have to pay.

Liability

What if the SaaS provider makes a mistake? What if there is calamity or disaster with their servers? Are you protected if your company loses data?

Liability is a common issue, and a liability clause should be included in your contract so you are protected should you lose valuable data or revenue due to negligence on the part of your SaaS provider.

Escape Clauses

Situations may arise where you need to modify or even relinquish your SaaS contract altogether. Consider the following:

• Price modulation - You may determine at some point down the road that you are not using all the modules for which you are paying. Include an escape clause that allows you to re-address your pricing structure while your contract is active.

• Termination due to provider action - At some point, your SaaS provider may move their entire location and equipment to a different location that does not suit your needs. Or they may make changes like outsourcing their data servers after your contract is in place. Keep a clause in the contract that allows you to address these issues and walk away due to certain actions.

What About Undesired Service Provider Situations?

What happens if the SaaS vendor goes away, is acquired by another entity who won't support the software, goes bankrupt, or simply discontinues the software? What would happen to your business?

You can negotiate in your license contract to operate the software yourself in such instances. Whereas in cases of software licensing, a client can negotiate a "code escrow" in the contract so that if any of these instances happen, the client can get access to the source code.

However, with SaaS, you need to build in your own protection. Consider negotiating the following:

• Acquisition - If a SAAS company is acquired, put into your contract that the acquiring company must run the application under the same terms for the duration of the contract. This is also a good thing for the acquiring company because they know they have a built-in source of revenue.

• Data Restoration - If the SaaS company stores your data, how will you get it back? Be sure you clearly outline in the contract how and when your data is returned to you.

SaaS can be a great and cost effective way to utilize outstanding software. However, be sure you protect your company to save money, data, and get the most from your SaaS provider.

Entrepreneurs have always worked evenings and weekends.  You can see in our web log below that traffic to morebusiness.com spikes around 9:00 a.m. and then climbs again between 8:00 pm and midnight.  (Each colored bar in the charts represent a metric related to traffic from our stats tool, AWStats. For this post, the details of each bar aren't as important as the trend.)

Many of you can probably relate to this.  When I started my businesses, I spent long hours over a long period of time doing research, building a customer base and managing all of the details in getting established.

MoreBusiness.com hourly traffic (U.S. Eastern time), March 2011

My brother and I planted the seeds for morebusiness.com back in 1994 and in 1996 launched it as a full blown site after seeing site traffic grow steadily.  We have built several other businesses since then, among them MailerMailer, our email marketing service.

As the publisher, I peruse our web traffic statistics regularly.  Every week, traffic to morebusiness.com is always high Monday through Wednesday, takes a little dip on Thursday and Friday and then goes a bit lower over the weekend.  The numbers seem logical.  Small business owners are usually energized at the beginning of the week to try and accomplish as much as they can.  Our web site is full of resources to help them with their business so it makes sense that traffic is higher earlier in the week.

A New Trend?

I've always seen business traffic dip on Saturdays and Sundays, with Sundays being only slightly higher than Saturdays.  I could relate to that.  Saturdays represent a nice breakpoint to recharge, buy groceries, do the laundry, take the kids to their soccer games, you know the drill.

Then, a while ago I noticed spikes occuring on Sundays.  I started to monitor our weekend numbers more closely.  For a solid year and a half, our Sunday traffic has been within 4% of our Friday traffic.

MoreBusiness.com traffic by day of week, March 2011

The numbers were telling me that more people were doing research online on Sundays. Saturdays still continue to be the lightest work day, but Sundays are extremely close to Friday levels of web activity.  A disclaimer: this is not an in-depth study examining the work patterns of business owners.  Rather, it is trend information backed by data: our morebusiness.com's web log files revealing traffic patterns to our popular site designed specifically for entrepreneurs and small businesses.

What Does This Mean?

What can you do this information?  If you are small business owner, you know that it can be lonely.  Your friends and family who haven't gone through the same rigor may not appreciate why you drive yourself to work so hard.  So my fellow entrepreneurs, look at the data - when you're burning the midnight oil or working on Sunday afternoon, take solace in the fact that you are not alone.