Vendors

It makes a lot of sense to outsource certain tasks for you personally and professionally.  I’m amazed that many businesses and associations don’t take the time to perform due diligence on vendor services.  Someone’s brother-in-law provides technology, a friend of a friend uses a certain marketing firm, or you meet someone who provides cleaning services and seems nice so you sign up.  It can work out great and it can work out poorly.  You might get the best price or end up paying three times the going rate.  If you’re looking for a vendor, personally or professionally, please follow these steps before you hire.  The steps don’t take very long and can save you enormous amounts of time and money in the long run.

Step 1:  Define.  Write down the services that you want to be performed.  This sounds so simple and is often overlooked.  For example, if you want a cleaning service, what do you want them to clean, how often, dusting, wash the floors, clean up the break room?  If you are hiring an accounting firm, what are your expectations – monthly financial statements, budget preparation, tax planning and preparation?  The more details the better – too often I’ve seen people find their expected services turn out to be “added” services with an additional cost.

Step 2:  Three.  Find at least three companies that can provide the services you’re looking for.  A great resource for local companies is the Chamber of Commerce, or ask your colleagues who they use.

Step 3:  Cost.  Have each one of these companies submit a proposal for the services you’ve outlined in Step 1.  Ask for pricing on any additional services they might provide, in case you want more in the future.  Make sure you understand what commitment they are expecting – no contract or continued contract?  Understand what the pricing might be for a shorter contract.

Step 4:  References.  Ask for a list of clients with contact information.  Call as many as possible and find out how long they have used the vendor and what their experience has been.  Beware if a vendor is reluctant to share a client list.

Step 5:  Insurance.  Ask for a copy of the vendor’s business insurance.  To understand what insurance coverage a vendor should have, ask a local commercial insurance agent to give you a list of the coverages and amounts a particular type of vendor should have.

Step 6:  BBB.  Google your area better business bureau to see if there have been any complaints lodged against the vendor.  If there are and you still like the vendor, ask them to explain the circumstances.  Some complaints may or may not be valid.

Step 7:  Contract.  If you’re signing a contract, have your attorney review the document.  Make sure there is an “out” clause and under what conditions it might apply.  Good relationships with vendors can turn sour when the economy changes, personnel changes or the company is sold.

Going through these steps is important to protect yourself and your business.  Take a little extra time to ensure you’re choosing the right partner.

What have I left out?  Are there more steps that you’d add?  What has your experience been?  Share your comments below.

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