One challenge facing today’s small businesses is negotiating with large regional suppliers. These massive corporations may hold monopolies over specific geographic regions, limiting their customers’ access to competitive options. Sometimes, these large entities leverage this control into price hikes or minimum orders, taking advantage of seemingly weaker local businesses.
Clever entrepreneurs must employ some creative tactics to meet this challenge. The following tips can help business owners gain leverage in contract negotiations with these powerful suppliers.
4 guidelines to help small businesses negotiate
The following four tips can help executives gain some pull when dealing with regional monopolies:
- Add more value: Large companies do not find success without capitalizing at every opportunity. Clients can entice these large suppliers by taking on riskier orders and offering long-term deals other clients do not. Clients who become gateways into new markets and help the supplier expand their reach will find more avenues for friendly negotiation.
- Alter purchasing: Clients can send the supplier a message by changing their purchasing habits. Clients who order across a supplier’s product line can pare down their orders to just the essentials. Often, a group of companies that all patronize the same supplier form buying consortiums to bundle higher-volume orders to secure price breaks that the community can share.
- Find a new supplier: Some prices may get so unfavorable that clients can find more value paying higher costs for non-local suppliers. All an outside competitor might need to break into the region is an eager client willing to help. Some ambitious entrepreneurs may even attempt to become competitors themselves, researching and building the infrastructure required to produce the supplies they need. The original suppliers may be willing to negotiate if it means preserving their hold on the region.
- Play hardball: Obstinate suppliers may only respond to threats of litigation. Taking time to review price increases may reveal shady dealings and a well-timed subpoena may inspire a partner to deal. These regional monopolies fear government regulation more than anything.
Upcoming negotiation? Consider legal help
Arizona business owners who regularly deal with massive companies find more success working with a lawyer. An attorney familiar with Arizona business law can help review contracts, brainstorm negotiation tactics and work with government regulatory bodies.