How New Is Too New for a Vendor?

How New Is Too New for a Vendor? on

Are there advantages to hiring a younger company? While they may not have a long track record, sometimes costs can be lower. Just make sure to take these extra precautions if you do decide to work with a new vendor.

Work experience doesn’t just appear out of thin air. Any person who’s just starting out knows the frustration of being told you lack the experience a client is looking for. How are you supposed to get that experience if you’re already supposed to have it?

Keep this concept in mind when searching for vendors for your association. You likely want to go with a company that has an impressive legacy of happy clients. Yet, keep in mind that just because a company is new, doesn’t mean they provide services that are lesser quality. In fact, their services could even be better than their competitors who’ve been around the block.

So, should you work with newer companies as vendors? Here are some potential benefits of working with a younger company, followed by extra precautions to take if you do decide to go this riskier route.

3 advantages of working with a young company

1. Costs may be lower

While any company, young or old, has to keep its pricing competitive, young companies are more likely to test out the waters with lower prices. They’re trying to make up for their lack of experience by offering a more financially appealing deal.

2. Tech-savvy

Newer vendors may also be more likely to embrace new technologies. They aren’t dealing with outdated systems that their employees have gotten used to and refuse to let go. They are often able to start fresh and take advantage of cutting edge processes that can give them a competitive advantage and may lead to better, faster service. This can mean a better outcome for your association.

3. Passion for their work

Another pro of hiring a younger vendor is that they’re probably pretty passionate about their business. In the early years, it’s exciting to run a business, and workers are often more willing to put in extra hours and go the extra mile for clients to keep their business moving forward. You’ll also have the satisfaction of knowing that you’re supporting a small business that represents someone’s dream.

Precautions to put in place for new vendors

If you do decide to work with a young company, there are precautions you should have in place so your association is fully protected.

First, make sure the vendor has all the necessary certifications and insurance. Just because they’re a new company doesn’t mean they should be able to get away with being uncertified or uninsured. Common insurance types that vendors must have, depending on the industry, include general liability, workers’ compensation, commercial auto/vehicle liability, and an additional insured provision that endorses your association as the policy’s additional insured.

Make sure that the vendor is licensed, certified, and insured in your state before signing a contract. This way you know you’re covered financially if something were to happen while they perform services.

Second, sign a vendor agreement that is clear, detailed, and protects your association from all scenarios that could go wrong. It’s always a smart idea to sit down with an attorney who can help you draw up a contract with all necessary protections and crucial terms for the arrangement.

Without a contract in place, what would your association do if the vendor doesn’t show up to perform the requested services? How will payments be made and when? What will the work schedule be? These are all important questions for any vendor relationship and must be clearly outlined in the agreement. Otherwise, you could get into trouble when expectations aren’t met.

Finally, even though the business is new, whoever is running it should still be able to offer references for you to contact, even if they’re personal or from previous professional positions. This will help you get a better understand of the people you’re working with, without requiring testimonials or reviews that the vendor may not have yet.

Whenever you’re considering hiring a new company as a vendor for your association, remember that there can be benefits of doing so. However, because they don’t yet have that impressive track record, make sure you put all necessary precautions in place to protect your association in case something goes wrong.

When you’re looking for vendors, our web-based tool at VendorSmart can make the process more streamlined. We connect community managers with vendors that are certified and qualified, and you can source vendors easily through our online vendor directory. Contact us today to get started.