Business Relationships

Speciality Bites with

Paul Hargreaves

Chief executive of Cotswold Fayre

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• Can/should bosses really be close friends with their staff?

I recently had the misfortune to have to take an ex-employee to court, which is one of the few occasions in 15 years of running a business that I have had to engage the services of a lawyer. They don’t come cheap, do they?!

There has always been an account number within our accounts packages for ‘legal fees’, but thankfully it has generally been empty except for when we have moved premises and started a new lease.  Fortunately we not only won but were awarded all our costs, so justice was done.

However, these events started me thinking about contracts and legal agreements, which exist very little in the world of speciality food. Generally, all our business over the years has been done over a cup of coffee, or occasionally something stronger, and a gentleman’s (or lady’s) handshake. Apart from a few brands we import, there are no contracts or heads of terms of agreement, and supplier-customer relationships bumble along with no reference to the law. In many ways that is a good thing, but in some respects it does mean that realistic expectations are not in place.

For example, if we are going into an exclusive relationship with a new supplier, there should be some discussion around volume that is going to make the relationship worthwhile for both parties, what the supplier is going to do to help generate sales, and what the customer is going to do to hit the targets. Currently, too much is not talked about and expectations not attained, leading to disappointment, and this can result in activity on both sides that breaks the original gentleman’s agreement. I have seen this happen time after time, and it can all be prevented by some honest dialogue.

By no means am I suggesting that we engage services of costly lawyers, and ask all our customers to sign contracts, but a single sheet of A4 paper with targets and activities for both customer and supplier may be helpful in developing a fruitful business relationship. Now is the time of year when we take on loads of new brands for 2015 and this year we are asking our new suppliers, most of whom are exclusive, to sign a document which outlines what they need to do for us in Year 1 and in return what we and our sales team will do. This document is completely unenforceable legally, but is helpful in setting expectations on both sides. It can then also provide a useful review document for a year’s time.

It is clearly rude for a customer (whether retailer or wholesaler) to continue to make demands for discount or exclusivity without delivering a certain level of volume. It does annoy me when certain well-known retailers demand discount because of who they are, make no effort to drive volume and end up selling less than the local farm shop down the road. Most suppliers are then afraid to go back to that customer and renegotiate, which always has a positive result because it forces the discussion that should have been had initially. I would certainly have a lot more respect for a supplier that does this, rather than one bumbling along in a relationship that isn’t working on either side.

Partnership and good communication are the key to all this– let’s remember this into 2015.