Many entrepreneurs are embarking on the adventure of setting up a business in the building and civil engineering sector, in order to meet constantly growing market demand. The building trades are varied, encompassing the construction, finishing, fitting out and equipping of new and old structures.
In the first few years of setting up a business, new entrepreneurs need to redouble their efforts to get their company off the ground and into the black. Getting started can sometimes be difficult, as a number of parameters need to be taken into account, including the choice of financial suppliers.
Find out here how to diversify your financial suppliers as a building contractor, to avoid becoming dependent.
Steps in selecting financial suppliers
First and foremost, you need to know how to select your financial suppliers. Here are 4 tips:
- Ask them for their product catalogs, price lists, terms and conditions of sale, and find out about ancillary costs. It goes without saying that prices play a crucial role in your profitability.
- Try to negotiate prices, even though this may be difficult in the first year of collaboration. This will make it easier to manage your cash flow. You can also ask for discounts.
- Check the supplier's financial health by asking your professional network or consulting official websites. Ask about the supplier's reputation: does it meet deadlines? Does it offer quality services? Are they responsive? How is their communication? Do they have a reliable after-sales service?
- Then put the various financial suppliers in competition with each other and compare the different criteria. Above all, avoid becoming dependent on a single supplier, as no one is immune to breakdowns or even receivership.
How can you diversify your suppliers?
The key to successful diversification is to start by understanding your company's needs. Next, it's essential to build trusting relationships with all your financial suppliers, to keep an eye on changes in financial products and prices, and to never stop looking for new business opportunities. Minimizing risk is of the utmost importance to ensure the smooth running of your business.
By following these principles, you can ensure greater stability and resilience for your construction business, while remaining adaptable to market fluctuations.
Give preference to local financial suppliers
Short distribution channels are currently gaining in popularity in all sectors, and the concept of "consuming local" is booming. However, as a construction company, this is not just a trend to follow. By turning to local financial suppliers, you can benefit from other significant advantages.
When you work with a local financial supplier, you can get immediate assistance when you need it, establishing a privileged relationship. In the event of a problem, you can talk directly to the supplier on site, face-to-face, rather than over the phone. This makes it easier to negotiate discounts, exchanges or refunds.
Although local financial providers can sometimes charge slightly higher rates, it's important to consider the additional benefits you may gain. Local support can mean better availability of products and services, increased responsiveness, andgreater flexibility in business arrangements.
Turn to international financial providers
There's nothing to stop you looking for international financial providers. Some services can be very competitive. On the other hand, while this strategy can reduce costs, it also entails its share of risks. The advantages and disadvantages need to be carefully weighed up.
Indeed, the COVID 19 pandemic has clearly taught us that in the event of a health crisis, just as in the event of a political or climatic crisis, companies involved in international trade have every interest in diversifying their geographical areas of supply.
It's essential to look for providers offering the lowest interest rates, reasonable transaction fees and flexible loan terms. Take the time to study the offers available from different financial providers and compare them carefully. There are many online comparison sites that will help you find financial service providers suited to your situation.
At the same time, it is also advisable to use risk management tools to diversify your sources of financing. These tools enable you to assess and manage the risks associated with different financing options, spreading out your investments and minimizing dependence on a single source of financing for your construction business.
The benefits of having several financial suppliers
It may seem that, in order to simplify procedures and reduce fixed costs, the approach of working with several financial suppliers is not ideal. However, it is important to bear in mind thata limited number of financial suppliers leads to increased dependency, despite the reduction in administrative and accounting tasks.
Having a wide range of suppliers means you can negotiate prices. Supplier diversification is therefore crucial to the survival of your business.
By broadening your options, you avoid becoming overly dependent on a single source of benefits. This allows you to better cope with possible market fluctuations, benefit problems or price variations. What's more, by developing relationships with several financial suppliers, you can exploit competitive advantages and find the best deals for every type of product or service you need.
Diversification of financial suppliers offers many advantages, such as the possibility of negotiating more advantageous terms and minimizing the risks associated with over-reliance on a single supplier. It's an essential strategy for ensuring the sustainability and success of your business in the construction industry.