For Australian small businesses, it is crucial to diversify your supplier base in order to enhance resilience, uncover innovative solutions and position your business for long term success. The Optus
outage and more recently, the Westpac outage, opened our eyes to the detrimental effects of lacking a plan.
Millions of Australians were left without access to essential services when Optus went down, leaving retail and services businesses with customers that couldn’t pay, couldn’t speak to customer services, couldn’t use Google Maps to find their way to their business. Business owners lost potential customers who, through this technical difficulty, could no longer pay for their services.
According to data from BabelusAI, over 75% of businesses consider supplier diversification a high priority and plan to increase their total number of suppliers by 2025. While it’s impossible to completely safeguard your business from disruptions, diversifying your supplier base can significantly lower your vulnerability to these risks.
There are several benefits to diversifying your supplies:
- Increased competition: When you have multiple suppliers competing for your business, you can drive down costs and negotiate better terms.
- Access to innovation: Different suppliers bring different perspectives and expertise to the table, which can lead to new ideas and innovations.
- Enhanced resilience: A diverse supplier base can help you to weather economic downturns and supply chain disruptions.
Five ways to diversify your supplier base
1. Utilise a range of marketing channels
In today’s competitive business environment, a strong digital presence is essential for success. Businesses that fail to establish a well-rounded digital marketing strategy risk losing out on potential
customers, falling behind competitors, and decreasing their overall brand visibility. By diversifying your digital marketing channels, you can effectively reach a broader audience, adapt to changing trends, and support long-term success.
Top tip: A successful digital marketing strategy is not about dominating one single channel. It’s about creating a cohesive and effective online presence across multiple channels. As a full-suite digital marketing service, Localsearch can ensure your campaigns run in-sync with one another, giving you the best possible results.
2. Offer multiple payment options; open more than one business bank account
Relying on a single payment processor can be a significant risk for small businesses. If that processor experiences an outage, businesses may not be able to accept payments. Mobile payment systems like PayPal, Square, and Stripe allow businesses to accept offline payments using a smartphone or tablet. These systems are easy to use and can be a cost-effective alternative to traditional credit card processing. Offering multiple payment options is a great way to ensure your business can still accept payments even if one processor is down.
When a bank goes down, like we saw with Westpac, it impacts more than just their 13 million customers across Australia, for example. If a business uses Westpac, in this scenario, they might not be able to pay suppliers and customers might not be able to pay for the service. To avoid this, small businesses should open more than one bank account with different companies, to minimise their chances of being vulnerable to risk. By not putting all your eggs in one basket, and having two or more bank accounts, it allows for a safety net in case a similar situation arises.
3. Alternative internet connection or backup communication strategy
Many businesses who rely on EFTPOS machines were unable to serve customers, costing them thousands of dollars when Optus crashed. The “Big 4” bank, Westpac, similarly crashed, which meant some companies couldn’t process the necessary payments required for the functioning of their business.
Investing in an alternative internet connection or backup communication system is worth the expense. Small businesses can choose from various backup options, including mobile broadband, satellite internet, or even a dedicated backup phone line. The specific choice will depend on your business’s needs, budget, and location.
4. Expand your supplier base for inventory and equipment
By relying on multiple suppliers for inventory and equipment, small businesses can reduce the risk of supply chain disruptions. Almost 20% of small businesses surveyed in Localsearch’s recent State of Small Business Report 2023 revealed that they have already expanded their list of suppliers and partners to ensure supply chain resilience.
Top tip: Working with diverse suppliers is not just about reducing risk, it’s an opportunity to uncover new insights, introduce innovative solutions and negotiate lower prices.
5. Enlist a backup delivery service
A backup delivery service ensures that your business can receive stock promptly, even if your primary delivery provider encounters unexpected issues. Additionally, it’s a proactive step towards handling unexpected surges in delivery volume, especially during peak seasons.
These five tips can ensure that through supplier diversity, you can maximise your business’ preparedness against potential risks. Utilise a range of marketing channels, offer multiple payment options, prepare an alternative internet connection or backup communication strategy, expand your supplier base for inventory and equipment and enlist a backup delivery service. By taking these steps, you can contribute to the success of your business.
Daniel Stoten is executive chairman of Localsearch.