August 4, 2016

Re-thinking Lock-In Contracts for your Business

News from Above with Philip Di Bella

One of my greatest frustrations with this industry is seeing cafe owners get locked into product supply contracts that do not allow them flexibility to exit the relationship if they wish to. I have always been an advocate for business owners retaining their freedom of choice when it comes to suppliers. A lock-in contract restricts the owner’s recourse if they are unhappy with the level of service or product quality.

As a business owner myself, I can of course understand there will always be circumstances where having a contract is necessary for ensuring the long-term success of the business. However, it’s important to keep in mind that someone always pays, so what seems sweet at the start can become bitter once you’ve signed on the dotted line.

So what happens when the product and service supplied is inconsistent or drops in quality? The owner is left with little choice but to wait out the contract terms whilst their business, staff and ultimately customers suffer from the effects of a sub-par supplier.

My advice to cafe owners is to push back on these suppliers and work towards developing an equally accountable relationship. Imagine if owners simply refused to sign contracts; suppliers would have to work harder than ever to secure and retain accounts.

Honest, upfront discussion and agreements should be had at the outset between the customer and supplier. This will ensure expectations are clearly identified and the customer receives what they want from the relationship. At the same time, this gives the supplier the opportunity to realistically evaluate if they can deliver on the expectations or not.

From that conversation, business owners should be looking to secure agreements that clearly outline the responsibilities of the supplier as well as defined timeframes as opposed to signing contracts that only outline the business owner’s responsibilities.

In the event that these promises aren’t met, the business owner will have the opportunity to request changes rather than being resigned to simply “putting up” with the supplier.

At Di Bella Coffee, we view service level agreements as our binding contract to the customer to deliver the highest level of service and product quality. It gives customers an assurance that their needs will be met and maps out the requirements our team must achieve.

I encourage all cafe owners to explore opportunities for an open dialogue with suppliers and to form positive working relationships. It could make all the difference for their business and their customers in the long-run.

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