‘Make personal connections with the people you do business with’: why supplier relationships are key to SME success

There are few things more important to a small business than its suppliers, and with recent supply chain crunches showing just how easy it is for things to go awry, businesses are more aware than ever of the need for resilience.

From the Ukraine war to the shortage of lorry drivers, to hot weather in Europe affecting the supply of fresh food, these tumultuous times have created a heady mix of challenges for businesses to contend with and have highlighted how interconnected many small operations are.

For Sarah Maloy, founder of Shop Zero, a zero-waste store in Nottingham and online, the quality of her suppliers is fundamental to her business’s success. Built on sustainable and ethical principles, she has spent years creating a network she can trust and spends significant time scrutinising new suppliers. “I do a lot of research into my suppliers and the supply chain. It’s often quite difficult to source things.”

She points to bamboo products as a good example. “Bamboo is sustainable in many ways, because it grows quickly, it doesn’t need much water, it doesn’t need pesticides. A lot of things like toothbrushes are made from bamboo, but I can’t and won’t just go and buy the cheapest brushes I can find because invariably that means that somebody along the supply chain isn’t getting paid. For my business, it’s not only about the environment. It’s also around social responsibility, and making sure that workers are well paid and well looked after.”

She advises all businesses to research new suppliers closely, first online – looking for detail – then by getting in contact. “I often ring people to have a chat with them, because you can get a true sense of what they know about their business. Having a person to contact is useful, because you can tell if it’s a business you’d like to work with by the way they respond.”

Business resilience
Stacey Sterbenz, general manager, UK Commercial, American Express, agrees that strong relationships with suppliers are an important part of maintaining business resilience. “It’s about making personal connections with the people you do business with. Such relationships count even more when something goes wrong or there is a problem that needs fixing.” She adds that SMEs are increasingly keen on face-to-face contact. “Our research reveals that 42% of business leaders use travel rather than remote working tools, such as video calls, to build relationships with new or existing contacts.”

Sterbenz argues that supply chain resilience needs to be a key strategy for any business, with all staff working towards it and with resilience considered in any contract with a supplier. She adds that those without a clear view of their network should map their supply chain, and prioritise the risks to limit potential disruption. “If a supplier is hit by bad weather, how can they overcome this? Or what if they suffer an IT failure that brings down their systems? How can they get around that to ensure customers still get their orders? These things need to be considered ahead of time so everyone in the business is aware of the plan.”

Community support
For Maloy, her strong supply chain network has helped her weather the aftermath of the pandemic – her city centre shop served many commuter customers who haven’t returned in the same numbers as more people work from home. One company which usually sells products in packs of three agreed to make single-item packs after she requested it. “We do support each other. I’ve had things like more flexibility on minimum order quantities, and slightly longer payment terms.”

Financial products can also be important when it comes to facilitating enhanced payment terms, which can help businesses maintain good relationships with suppliers. “For example, businesses can make prompt payments to suppliers using their Amex Business Card, well within the standard 30-day payment term,” says Sterbenz. “Not only is the supplier happy to receive quick payment, but the business can often benefit from discounts for paying quickly. They then get up to 54 days to pay their bill*, and earn rewards on their spending that can be reinvested into the business.”

Maloy adds: “Independent retailers generally really want to support each other. It’s a close-knit community and we are like a little ecosystem. I think if my business folded there would be 60 or 70 others that would be affected by that.”

Sterbenz says there are broader benefits in building these communities or networks. “As well as helping small businesses to navigate supply chain shocks, it can also open up opportunities for collaboration, knowledge sharing and access to new markets.”

Maloy says another benefit comes from a sense of belonging or camaraderie with people in a similar boat. This is backed up by a recent survey of 1,000 UK SME owners by American Express, which found that 37% of small business owners turn to fellow entrepreneurs for business advice and support. “It helps knowing there’s a network of people out there who believe in what we’re doing, because it can feel quite lonely,” adds Maloy.

While it’s not always easy running a small business, building strong relationships with suppliers will help – leading to a more effective operation, and connections to people who want your business to succeed.

^{* The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date.}

Discover how American Express’ range of Business Cards help small business owners better manage their cashflow, strengthen supplier relations and reward them for their business spend. With up to 54 days to pay for purchases, business owners can keep cash in their account for longer, keeping cashflow more flexible. Earned on every transaction, Membership Rewards^® allow business owners to use their points however best suits them, whether that’s stocking up on office supplies, redeeming for business and leisure travel, or treating hardworking employees.

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