Lesson

“No person’s an island, and that’s never as true as it is in trades. No business operates entirely on its own, and if you put a key supplier offside, you’ll find yourself stranded pretty quickly”.

In the recent years, social enterprises have become increasingly popular, serving as one of the main channels through which societies face and cope with various challenges. Therefore, in order for a social enterprise to create real social value and engage in commercial activities to achieve economic viability, it should adopt different business models. Social enterprises usually strive to find new and innovative ways to reduce the costs for production and delivery, in order to be able to propose affordable goods/services/experiences to those in need. That is why, they are often obliged to achieve their objectives by attracting resources from external stakeholders, such as sponsors, collaborators, customers, suppliers, etc. Furthermore, the established relationships with external entities often helps social ventures to increase their credibility and awareness in the market.

Yet in the process of developing the business plan for a social venture, it is recommended to identify several external actors and stakeholders. This step is of high importance for the successful functioning of each social enterprise, as suppliers, distributors and various partners have a strategic role to play in the delivery of any product or service, and in the whole process overall.

The list with external partners to consider might include the following:

Business (small and large);
Local business schools and other academic institutions;
Professional organizations;
Suppliers;
Direct or indirect competitors;
Local and regional associations;
Local and regional community residents;
Government institutions and authorities, etc.

If you struggle to decide and identify with which entity the cooperation will be the most valuable in terms of resources and benefits, you can ask yourself the question: “Which of these potential partners will support the mission of my enterprise well, while helping me make effective and efficient use of my scarce resources?” In order to identify external players whose vision, mission and interests fit with yours, start thinking about the social value that you, through your enterprise, would like to create for the society and establish your needs by working backwards from your objective. The partners that you would like to engage will be determined by what your needs are.

Once you have decided which of the partners or suppliers will add value to your social enterprise and to work with them will be beneficial, it is important to understand the essence of cooperating with providers and be cautious about specific aspects that will guarantee the smooth operation process.

You should know by then, that in the supply chain, the end user is only one, and all the others are suppliers. And in order for the end user to continue looking for your goods and services, you need to keep them through joint efforts with your suppliers. You can do that by following some of these basic steps:

Investigate supplier’s background – Providers influence the work of the whole social enterprise. That is why, you want to make sure that the suppliers you give access to your entity will have the necessary competences to cooperate with you on the proper level. Financial stability, no law violations, good market image, capacity, know-how, management, mindset and values are among the evaluation criteria at the beginning of your cooperation. If there is something that worries you about the background of the supplier, it is good to clarify it at this exact moment, instead of it threatening your relationship afterwards. For small and medium-sized companies, including social enterprises, the initial investigation of the suppliers of vital due to the lack of proper resources, where each mistake in choosing the right provider can lead to adverse consequences.
Focus on the contract – The contract should be seen as a “marriage agreement” between you and the supplier, i.e., this is the way to ensure that the long-term cooperation will benefit both parties. When you have a contract with the provider, the disagreements during its implementation will be less compared to the cases in which you do not have it. This is because, yet in the process of negotiating, the basic parameters for work are precisely outlined. Thus, even before the actual process of cooperation has started, you have already discussed everything and how you are supposed to act. The well-described rights and obligations in the contract give the both parties the opportunity to work calmly.
Search for innovation – Suppliers often offer new products and services enhancements. All of these improvements will give your social entity a chance to move forwards faster, and the results from the work which is done well motivates the parties to come up with even more innovative ideas – that is why a partnership is a must.
Assessment of the suppliers – It is recommended to evaluate and give feedback to your providers so that you can develop your strengths together and reduce your weaknesses. You should be aware of what exactly needs to be evaluated, as the standard criteria fall into several groups: price, delivery, quality and service. Annual evaluations help to identify the suppliers who are more trustworthy and who can be relied on in difficult times.

As an entrepreneur, you should create interrelations with various providers, contractors, stakeholders, etc. which you have identified as important for the delivery of your product or service on the market. If you miss this step yet from the beginning, it is very likely for your social enterprise to fail. Here are some important things to have into consideration in order to be able to establish strong relationships with the partners of your social enterprise:

Cooperation based on equal social goals can lead to prosperous economic conditions, but if you consider this as a primary basis for the partnership itself, you should make sure that the commitment from your partner is long-term;
If you have decided to work with partners with whom you share equal social goals, you should make sure that you understand their initial motivation to support the mission of your social enterprise and how embedded is that support in their own entity;
Make sure that you understand what are the needs of your providers and what is important to them. Always respect their way of doing things and try to comply with their processes and already established timelines;
Maintain regular communication with your providers in order to keep in touch and discuss what is working and what is not, i.e., what are the areas for improvement. Having a good conversation with your supplier might mi helpful by giving the opportunity for both of you to provide feedback and probably find new innovative ways to further strengthen your cooperation;
Try to reduce your cost, understand the way of work of your provider and think about ways in which they will incline to lower their prices for you. For example, if their cooperation with your social venture will improve their image among society, they might think to provide you with a discount in order to “return the favor”;
As a social entrepreneur, the most important asset that you can use to create strong partnerships with your providers and partners is by sharing mutual commitment to a social cause. If you are committed to a common social mission, share similar values and your partner believes in the approach chosen by you, you have the perfect opportunity to attract them and keep them close to your social enterprise. The major challenge would be to identify who is interested in your work and how to establish a fruitful relationship with that entity.

Here are five rules for successful management of relationships with suppliers:

Communication – This is the key to the successful relationships. You should be able to express yourself clearly and precisely, choosing the most appropriate communication channels depending on the occasion;
Respect – A relationship in which both parties understand and respect each other is already a successful relationship. Suppliers enjoy working with entities which appreciate them for the value they add through the cooperation with them. Moreover, respect helps building trust and mutual understanding which can provide endless possibilities to increase performance;
Openness – In order to gain respect, it is important for the social entity and the supplier to be open and honest with each other. This means that if there is a problem, it should be properly addressed and solved. Showing desire to solve problems means that both parties express willingness to work together and achieve the initially stated goals;
Fairness – If in some moment the supplier starts to feel that they are not treated fairly, it is very likely to feel unsatisfied with your cooperation. Just on the opposite, if your partnership is built on solid trust and fairness the provider will be willing to invest more and enjoy your mutual work;
Terms – Specific to supplier relationship management is the fact that the relationship is based around a contractual agreement. The contractual terms will state what each party has agreed to do. This may include prices, delivery and quantities. During the lifetime of the contract, the buyer will monitor these responsibilities to ensure the agreed performance is maintained.