ENTREPRENEURSHIP / APR. 11, 2014
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5 Steps to Becoming an Approved Vendor

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An approved vendor is a supplier or service provider who meets the criteria put forth by a government agency, corporate firm or non-profit institution. These organizations often create and maintain approved vendor lists, which comprise suppliers of items such as office stationery and equipment, construction materials and groceries. Although the minimum requirements for approval vary by institution, prospective vendors must generally produce business registration documents, offer competitive prices, and pass on-site inspections that focus on determining a vendor’s ability to provide quality services.

1. Secure a Permit

Registering your business with your local government not only gives you a legal lease to trade, but also enhances your chances of becoming an approved vendor. As thumb of rule, most organizations typically require vendors to provide business registration certificates as proof of valid business registration. This certificate also furnishes potential clients with crucial information such as business name and postal and physical addresses.

2. Prove Compliance

Organizations such as government departments and agencies that use public funds to procure goods and services require vendors to provide tax compliance or clearance certificates. Therefore, small business owners looking to qualify as approved vendors for public organizations in the United States can obtain tax compliance certificates from the Internal Revenue System or state tax or revenue offices. This certificate shows a business is properly registered and confirms compliance to income tax and employment laws.

3. Price Services/Products

Because purchasing institutions need to get value for their money, they give preference to vendors who can sell products and services at discounted prices. As a small business owner, you have to prove that you can deliver products at competitive prices to join an organization’s approved vendor list. For example, apart from lowering prices for goods and services, you can offer incentives such as increasing discount rates as clients make more purchases.

4. Profile the Business

The business profile also matters. For example, what's its financial strength and customer base? Entrepreneurs can provide financial statements, such as balance sheets showing their businesses’ annual sales, and documentation proving previous dealings with major customers. Purchasing institutions use this information to determine prospective vendors’ financial ability to deliver products in bulk on short notice.

5. Impress Inspectors

After meeting these requirements, most public and private organizations conduct onsite inspections to verify business locations and measure ability to provide quality services. For instance, an academic institution can inspect a prospective vegetable vendor to determine the general hygiene of employees and cleanliness of business premises. Depending on your business structure, ensure your employees are always organized, improve workplace safety and keep products stocked

Get on the List

In a competitive marketplace, meeting these requirements alone might not be sufficient to get into an organization’s approved vendor list. Vendors must submit their proposals to the purchasing organizations and undergo a vetting process, which ends up with some bids accepted and others rejected. Vendors can enhance their businesses’ chances of getting on these lists by submitting proposals to several companies, looking out for government contracting opportunities and building business relationships with large businesses.

Do you have any experience working with or for an approved vendor? Have you ever tried to become an approved vendor? Your thoughts and comments below...

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