Purchase from your customers

Aside from making sales and winning customers, selecting your suppliers is one of the most important decisions your start-up will make.

When it comes to choosing a supplier, depending on your sector, there is an option you should consider: Making your customers your preferred suppliers.

Now, obviously, how possible it is to purchase from your customers will depend in large measure on your sector.

For example, if you’re an importer, or if you have a large national business as a sole or major supplier (as is the case with some franchisees), obviously the idea isn’t practical.

On the other hand, if your customers are predominantly other businesses, you might be well placed to purchase from a customer. For example, if you’re a web developer or run an IT firm, and one of your customers is a bookkeeper or accountant, you’re ideally placed to make that firm both a supplier and a customer.

Likewise, if you’re in retail or hospitality, it might be a good idea to find out which industries your regular customers work in. If it’s a sector you might need the services of, ask them for a business card.

On the web, if you have any forms where your customers supply their details, finding out is even easier: Just add a mandatory ‘occupation’ and ‘business name’ to any web forms you use. When you need to find a service in a particular industry, have a search through your database for someone suitably qualified.

Of course, this raises the question of why you would want to. In truth, there are a number of good reasons.

First off, you help the cashflow position of your own customers by using their services rather than someone else’s. You’re also helping their businesses to grow.

The effect of this can by symbiotic. An accounting firm that looks after the books of an IT firm gets more hours of work as the IT firm grows. Meanwhile, as the account firm grows, it requires more hours of IT support, which helps the IT firm to grow. What you end up with is a virtuous cycle.

Aside from symbiotic growth, purchasing products from your customers can also help to ensure they get locked into using your products and services. After all, it is easier for them to walk away from one their major suppliers than it is to walk away from a major customer.

Finally, if the amount you spend purchasing their goods and service is roughly equivalent to the amount they spend on yours, what you can end up with is a form of cost-price bartering emerging between two business partners. In effect, you get a key expense covered for the cost of your goods and services – and likewise for them.

So do you have any suppliers you can sell to? Or a customer who supplies goods and services you use in your business? If so, it might be time to give them a call.

Get it done – today!