How to Manage Third-Party Vendors, Suppliers, and Contractors

Is it time to stop constantly burning the midnight oil? Or are you ready to throw away the many hats you've been forced to wear through your company's latest growth phase?Yes, growing a business is no small feat--and neither is recognizing the need to delegate responsibilities. Hopefully, you're in the process of building your dream team to help your company handle the latest expansion. But even if you have your ideal team in place, you'll still need to work with the occasional vendor, supplier, or contractor to fill in any growing-pain gaps. And similar to building your internal staff, managing these third-party relationships requires a certain approach.Here are a few things to keep in mind when managing any relationship with a vendor, contractor, or supplier.

Do your research

Knowledge is power--the more you know about your vendor's area of expertise, the better. This will help you:

• Avoid paying too much for things you don't need.Think about this in terms of buying a car. If you don't do your research beforehand, you could end up paying a high price for features you don't really need. The same principle applies to your vendors. Learn everything you can about their field, and determine what it is you absolutely need before asking for quotes.
• Find the right vendor for the job.Sure, you might be tempted to hire your friend's cousin's sister to run your social media accounts, but does she know how to run a successful Facebook ad campaign? Does she have the writing or design skills necessary to create effective posts? When you do your research, you'll have a better idea of what your company needs and if the vendors you're considering are the right ones for the job.

Leverage your network and ask for referrals

After you've done all your research on possible vendor options, don't be afraid to ask your network for recommendations. You may also want to reach out to the clients the vendor has listed on their website. They might be able to provide a more transparent testimony of working with the vendor than what they have listed in their marketing materials.You can also use your network when it comes time to reviewing any vendor proposals or quotes. For example, if you have a colleague who's running a tech company, ask them if they have a few minutes to look over a quote you've received from a freelance software developer you'd like to hire.

Review legal contracts carefully

This one is obvious but bears repeating: before starting any new relationship with a vendor, contractor, or supplier be sure to carefully review any contracts. Best case scenario, you have a lawyer look at anything you're about to sign, but I know this can be tough when bootstrapping. If funds are low, you might need to get creative. Ask for quotes or take advantage of free online legal advice sites.The reason it's crucial to review contracts is that you want to ensure:

• There are no hidden fees--especially when it comes to ending the contract or the relationship.
• The payment terms are fair for both you and the vendor.
• The standards of service are well defined.
• You're protecting the security and privacy of your company, employees, and customers.

This list could go on forever, but the key thing to remember is to never blindly sign anything. What you establish in the contract will dictate your entire relationship with that vendor. Read everything and don't be afraid to propose changes if necessary. If the vendor is unwilling to make changes to the contract that are important to you, then consider taking your business elsewhere.

Sell the value of your company

Similar to any job interview, while the vendor tries to sell the value of their business, you'll also want to sell them on the value of yours. You could open up a whole new market for that vendor--and it could be one they've been wanting to get into. You also want to assure them that taking you on as a client won't be a risk. Vendors often struggle with clients who don't pay on time or at all (if business goes sour). They're likely looking for a solid and stable partnership between your business and theirs.

Make backup plans

Things happen. Shipments get lost. Contractors get sick. And online software can get hacked. Keep all of this in mind when starting any third-party relationship. You'll want to make backup plans for worst-case scenarios--especially if it could impact your customers.

Invest in the relationship

At the end of the day, you're not working with a vendor, contractor, or supplier, you're working with people. These people have their own networks that could expand into territories that could benefit your business. But if you don't take the time to invest in these relationships, you'll never find out. Consider your third-party partnerships as another working relationship you need to nurture.

Final word

In addition to building your dream team, establishing effective vendor, supplier, and contractor partnerships can help you save time and money. By offloading certain tasks or capabilities to third-party businesses, you can focus on what you do best--bringing your business's vision into crystal clear focus.