Purchasing Processes 101 for Small Businesses (1–50 Employees)

Why Small Businesses Need a Purchasing Process 

In many small businesses, purchasing happens ad hoc: an employee orders supplies, a manager negotiates with a vendor, or invoices pile up until finance sorts them out. 

While this might work in the very early days, it quickly leads to: 

• Overspending and missed cost-saving opportunities. 

• Inconsistent supplier relationships. 

• Lack of transparency into what’s being purchased and why. 

That’s why even small businesses (1–50 employees) need a structured purchasing process. It doesn’t have to be complex—but it should be clear, consistent, and scalable. 

What Is a Purchasing Process? 

A purchasing process (sometimes called procurement) is the step-by-step workflow your company follows to acquire goods and services from suppliers. 

It ensures that every purchase is: 

• Necessary. 

• Cost-effective. 

• Approved by the right people. 

• Delivered on time. 

The 5 Key Steps in a Small Business Purchasing Process 

1. Identify the Need 

• Define what needs to be purchased and why. 

• Confirm it aligns with business priorities (not just a “nice-to-have”). 

📌 Example: A marketing team needs new software for campaign tracking. 

2. Request Approval 

• Employees submit a purchase request. 

• Managers or finance review for budget alignment. 

📌 Tip: Use a simple form or project management tool (like monday.com) to track requests instead of relying on email threads. 

3. Select a Supplier 

• Compare vendors based on price, quality, and reliability. 

• Negotiate payment terms and service levels. 

📌 Small Business Hack: Don’t just go with the cheapest option—look for suppliers who can grow with you as your business scales. 

4. Place the Order 

• Create a purchase order (PO) with clear details: items, quantities, delivery dates, and price. 

• Send it to the supplier and get confirmation. 

📌 Why it matters: POs create a paper trail, reducing confusion and disputes. 

5. Receive & Reconcile 

• Check the delivery against the PO (right items, right quantity, right condition). 

• Match the supplier’s invoice with the PO and delivery receipt before payment. 

📌 Pro Tip: Automate invoice matching where possible—it saves time and reduces errors. 

Best Practices for Small Business Purchasing 

• Standardize Requests: Use a simple template for all purchase requests. 

• Centralize Documentation: Store POs, invoices, and contracts in one place (like SharePoint or a knowledge hub). 

• Leverage Automations: Tools like Zapier or monday.com can automate approvals, reminders, and invoice tracking. 

• Review Regularly: Revisit suppliers and contracts to ensure pricing and terms stay competitive. 

Why Processes Make a Big Difference 

Even in a business with fewer than 50 employees, purchasing can eat up time and money if unmanaged. A simple purchasing process: 

• Improves cost control. 

• Reduces risk of fraud or errors. 

• Strengthens vendor relationships. 

• Makes scaling smoother when your business grows. 

Final Thoughts 

Purchasing doesn’t have to be complicated—but it does need to be structured. With a clear, repeatable purchasing process, your small business will save money, improve efficiency, and be better prepared for growth.