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Finding the right supplier is vital for building a successful business. Think of suppliers as your business partners. Whether they provide you with services like internet, with distribution or raw materials, your supplier is an essential link in the chain of your business operations.

Where to find suppliers?

You can find suppliers through a variety of online and offline channels. Looking at different sources may give you more options to shortlist possible suppliers. No matter where you look, the search is likely to be easier if you know exactly what you're looking for.

Decide in advance what type of supplier you need and consider the levels of service, quality and price you are willing to accept.

Seek referrals and recommendations

Word of mouth can be a good place to start searching for a supplier. Ask friends and business acquaintances about their experiences. You're more likely to get an honest assessment of a supplier's strengths and weaknesses from someone who has used a supplier before.

Search business directories

If you're looking for a supplier in your local area, it's worth trying online directories. For example, the High Value Manufacturing Catapult operates a free-to-use UK Supply Chain Directory. You can use this online tool to: 

• find new suppliers and customers
• map the UK's capability in their sector or area
• inform national programmes in manufacturing

Find out more about the .

Consult business advisers

Business advisers can help steer you in the right direction when it comes to finding an experienced, well-regarded supplier.

You may want to approach local enterprise agencies and , or services such as where you can use market research reports, company databases and worldwide business directories to help you find suitable suppliers.

Contact trade associations

If your needs are specific to a particular trade or industry, there will probably be a that can match you with suitable suppliers.

Visit trade shows and exhibitions

These offer a great opportunity to talk to a number of potential suppliers in the same place at the same time. Before you go, check that the exhibitors are relevant and suitable for your business. Use the to find business events near you.

Check trade press

Trade magazines feature advertisements from potential suppliers. A selection of trade publications and trade press listings should be available at your local business library.

When you identify a number of potential suppliers, you'll have to assess their offering against your business' needs and requirements. Discover how to set and use criteria for selecting a supplier.

Suppliers play a critical role in helping companies succeed. In order to find the right ones, businesses need to consider a number of critical factors, including:

• price
• value for money
• quality
• reliability
• responsiveness
• flexibility

Shared culture and location can also play a key role in a successful partnership. Effective purchasing should focus on what your business needs and what you want to achieve.

Value for money

If you are a start-up, a key consideration in choosing a supplier may be affordability. However, cheap suppliers don't always represent the best value for money. If you want reliability and quality from your suppliers, you'll have to decide how much you're willing to pay for your supplies. It is important to strike a balance between cost, reliability, quality and service.

Quality and reliability

The quality of your supplies needs to be consistent - your customers associate poor quality with you, not your suppliers. Equally, if your supplier lets you down with a late delivery or faulty supplies, you may let your customer down.

Speed and flexibility

Being able to place frequent, small orders lets you avoid tying up too much working capital in stock. Flexible suppliers help you respond quickly to changing customer demands and sudden emergencies. If you want to cut down the time it takes you to serve your customers, suppliers that offer you a quick delivery service will rate higher than those that compete on other factors - for example, on price alone.

Strong service and clear communication

Communication is important in ensuring a good working relationship with your supplier. From the initial briefing, through continual feedback and routine meetings, your supplier should communicate openly and regularly. You need your suppliers to deliver on time, or to be honest and give you plenty of warning if they can't.

Financial stability

It's always worth making sure your supplier has sufficiently strong cashflow to deliver what you want, when you need it. A credit check will help reassure you that they won't go out of business when you need them most. You can .

How many suppliers do you need?

It's well worth examining how many suppliers you really need. Buying from a carefully targeted group could have a number of benefits:

• it will be easier to control your suppliers
• your business will become more important to them
• you may be able to make deals that give you an extra competitive advantage

However, it's important to have a choice of supply sources and carefully weigh up the advantages and disadvantages of single or multiple supplier strategy.

One of the key questions to ask when creating a supply chain strategy is whether to buy from one source or more. There are pros and cons to both approaches.

Working with more than one supplier adds complexity to the supply chain, but it also provides protection against certain risks. Finding a balance between these two concerns is a key factor in deciding your optimal supply chain strategy.

Advantages of using a single source of supply

Single supplier strategy commits to purchasing a given resource from just one supplier. If the supplier is well-matched and reliable, this can offer some benefits to businesses. For example:

• forging a relationship is easier with one supplier than with multiple ones
• partnership approach may help build trust and shared benefits
• costs may fall due to economy of scale if you order from just one supplier
• integration of systems may be easier with a single supplier

Disadvantages of single supplier strategy

Relying on single sourcing can expose you to the possibility of not being able to get critical supplies if the supplier's operations are disrupted. Common drawbacks of this strategy include:

• increased vulnerability of supply
• increased risk of supply interruption
• greater dependency between your business and the supplier

If you decide to source from a single supplier, and they let you down, go out of business or become unable to meet the demand, you may find yourself in difficulties.

Exclusivity may spur some suppliers to offer you a better service, but others may simply become complacent and drop their standards. This sometimes happens in cases of lopsided dependency, when the buying company becomes more dependent on the supplier than the other way around.

Advantages of using multiple sources of supply

Multiple sourcing strategy can benefit businesses that prefer to spread demand across a number of suppliers that, collectively, have more capacity and are more responsive to the buyer. It is also necessary when one supplier is unable to meet the total requirements of the buying organisation - for example, when a product has multiple components that no one supplier can produce.

Common benefits of multiple sourcing include:

• less reliance on any one supplier providing a safety net if a supplier runs into difficulties
• more flexibility to cope with unexpected events that could jeopardise capacity
• fewer bottlenecks as more suppliers are able to meet peak demand
• competition often provides an incentive for suppliers to improve cost and service
• competition between suppliers also often provides the buyer with more bargaining power

Disadvantages of multiple supplier strategy

Multiple supply sourcing may benefit dependency, flexibility and capacity, but it can complicate supplier relationships and require greater resources to manage them. As supplier numbers grow, the price tag often goes up and the following drawbacks can occur:

• information sharing may become more complex
• higher costs for contract negotiation, management, and process execution
• lower order volumes reduce bargaining power
• the ability to save through economies of scale in reduced
• challenges can come up in terms of quality control and efficacy

In general, smaller businesses tend to have less flexibility than larger ones when it comes to choosing suppliers. If you're considering multiple supply sources, you should balance the potential disadvantages of this strategy against the risks of supply interruption that could arise from having just a single supplier.

Remember to consider all other relevant criteria for selecting a supplier.

Focus your efforts on choosing and managing strategic suppliers who provide goods or services that are essential to your business. A strong relationship will benefit both sides. See more on managing supplier relationships.

The way in which you procure, brief and interact with potential suppliers is vitally important. It sets the foundation for your future relationship and, to a certain extent, the success of your partnership.

To begin shortlisting candidates, draw up a list of your fundamental business requirements first. Include the products or services you need, the level of quality, stock requirements, delivery times and, finally, price. Check your list against the common criteria for selecting a supplier.

What to look for when shortlisting suppliers

Once you have determined your supplier criteria, research and identify suppliers that have a good track record of providing the products or services you need. If you don't know where to start, here are some tips on how to find the right supplier.

When creating your supplier shortlist, ask yourself the following questions:

• Can these suppliers deliver what you want, when you want it?
• Are they financially secure?
• How long have they been established?
• Do you know anyone who has used and can recommend them?
• Are they on any approved supplier lists from trade associations, local or central government? .

Try to narrow your supplier list down to no more than four or five candidates. It's a waste of time for you and the potential supplier if you approach them when there's little chance of them fulfilling your requirements.

How to approach a supplier?

Once you create a manageable shortlist, contact the candidates to see if they are interested in forming a business arrangement. Provide a clear brief, summarising what your requirements are and giving an idea of the level of business you hope to place.

Rather than specifying exactly what you want to purchase, you may want to ask suppliers for their suggestions. For example, you might explain to technology suppliers what you want your new IT system to be able to do and ask them to come up with recommendations within your budget.

Compare potential suppliers

Once suppliers respond, evaluate their offers in terms of what matters most to you. For example, the quality of their product or service may be most important, while their location may not matter.

Price is important, but it shouldn't be the only reason you choose a supplier. Lower prices may reflect poorer quality goods and services which, in the long run, may not be the most cost-effective option. Be confident that your supplier can make a sufficient margin at the price quoted for the business to be commercially viable.

Avoid common pitfalls when choosing a supplier

Wherever possible, meet potential suppliers face to face and see how their businesses operate. Check if they will be outsourcing any work to subcontractors, or rely on other suppliers for critical components or services. If so, you may want to assess these suppliers as well.

Finally, remember that the labour practices and environmental record of your suppliers may affect your business' reputation. Read more about ethical trading.

Due diligence is a significant part of finding suppliers. Before entering into a contract, it's essential to make enquiries and carry out research on prospective suppliers to ensure that they are legitimate and trustworthy.

How to run checks on a new supplier

As a starting point, you should credit check potential suppliers to ensure they have the cashflow to deliver what you want, when you need it. This is especially important if you're entering into a long-term contract.

For example, if there is a single supplier in a certain market, and there are no substitutes for the product or services they are offering, you need to be sure that it isn't at risk of going out of business. The supplier will probably also run checks on you to ensure you have the means to pay for its goods or services.

As part of carrying out due diligence, you may also want to:

• check business registrations and public documents
• validate standards or quality accreditations
• ask for samples, if applicable, to assess the quality of their supply

The process can be as extensive or as brief as you want it to be. How much detail you go into should depend on how critical the supplier's product or service is to your business.

Check customer reviews and references

It's a good idea to get references for the supplier from other customers. The supplier should be happy to put you in touch with some of its existing or previous clients. If not, ask yourself what they might be trying to hide.

It is unlikely that the supplier will put you in touch with a dissatisfied customer, so make sure that you do some independent searching. You may uncover some information online, or across some supplier forums - it may be subjective, but it should give you an indication at least of how a supplier operates.

Sometimes a manager in a business bids for contracts and then passes the account to someone else. If this happens, make sure that you're happy with the person tasked to do the work - and that you can still deal with the manager if any problems arise.

See how to build strong supplier relationships.

Suppliers play a central role in the success of your business and your ability to grow profits. It is therefore important to manage your suppliers carefully, to maximise the value of these relationships.

Negotiate with your suppliers

Before entering into a contract, you will have to negotiate a deal with your suppliers. Negotiation commonly focuses on costs, but this doesn't necessarily mean that you must pursue the cheapest possible price. You may want to negotiate other factors such as delivery times, payment terms or the quality of the goods.

When you finish negotiating the terms and conditions of your relationship, it is important to draw up written contracts. See how to negotiate supplier contract.

Agree service levels

It's a good idea to agree service levels before you start trading so you know what to expect from your supplier - and they know what to expect from you. Make it clear what your priorities are and how you will assess their performance. A written contract can help you avoid uncertainty and minimise the risk of disputes.

Maximise the value of your supplier relationship

From the start, aim to build a good relationship with open communication between yourself and your suppliers. Regular contact allows you to deal with any problems before they escalate and find opportunities to work together more effectively.

Look for opportunities to deepen the relationship with key strategic suppliers. Explain the direction of your business, any new plans you intend to pursue, and consider how the supplier could participate. For example, your suppliers may be able to give you advice on new technologies and materials that you could use to improve your products.

Supplier performance reviews

Regularly review your suppliers' performance. The reviews are a key component of supplier performance management, which can help you reduce costs, mitigate risks and drive continuous improvement in your business.