Manage suppliers

- Suppliers are an important part of your business, and you need to explain how you're going to manage those suppliers. In my view, you should do what you're great at and focus on your core competencies, and then partner or outsource everything else. This is a critical strategic concept. And if you'd like more detail on it, check out my Strategic Planning course, where I cover how to think about your core competencies and how to leverage them in the marketplace. For your business, as you write your business plan, think through what your major inputs are to making your product. And then, who are the suppliers? Do you have backups for those suppliers? Do you have a diversity of sources to mitigate supplier risk? How are you going to manage the costs of the things you buy from your suppliers? Do you intend to have long-term contracts? Will you conduct a scheduled bid? Will you have any partners, joint ventures, alliances for key components, something like Intel Inside, where Intel chips are in major computers from a variety of manufacturers? Supplier risk is a huge risk for your business. If a major supplier goes down or decides to renegotiate rates, what's your backup plan? What financial risks do you face from supplier concentration, and how are you going to mitigate those risks? What operational risks do you face by insourcing things that you're not great at, things that aren't your core competency? What reputation risks do you face in your supplier strategy? If you partner with someone or you buy a lot of product from a supplier, and they do something wrong, what's the risk to your business? Think through some of the large companies who have partnered with famous athletes or movie stars, and that athlete or star does something that isn't so great, and look at the risk that that company who sponsored them faces. These are all risks that you should be articulating in the supplier section of your business plan. So understand where you're going to get your product, what the concentration risks are, and how you're going to mitigate it to have a clear and compelling piece of this operating plan.