Re: I want to start before it's to late. -- Small Businesses Discussion Forum

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Subject: Re: I want to start before it's to late.

Author:
Dennis S. Vogel

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Date Posted: 00:38:46 02/14/04 Sat
In reply to: Tom 's message, "I want to start before it's to late." on 00:29:46 02/14/04 Sat

Hi Tom,

First of all, (that major retailer) was started by somebody who, to some extent, used the Ready, Fire, Aim method. He was willing to take small chances by introducing things without always having firm research data to light the way. It's pretty much taking a shot in the dark then turning lights on to find out where the bullet went.

What's a small chance for a big corporation is a huge chance for a small business. When multi-outlet corporations buy something, they can spread it out over a lot of stores. If it doesn't sell enough a product in a store, it'll be discontinued there but still be stocked in other stores.

You can't afford to get into a Ready, Fire, Aim shooting match. Jumping into a market because a big company is investing in it can lead to failure. We don't always see the product failures because thousands of products are sold everyday.

Plus major retailers can force wholesalers & manufacturers to guarantee sales. Which means if a product isn't popular, the supplier will pay to have have left-over products shipped back. Most small retailers don't have the clout to make that happen. So if people don't buy enough products at full retail, store owners end up marking the prices down until the stock is gone. There go the profits.

Plus, unpopular items take up retail or storage space that could be used for popular items. There go profits that will never come.

Even worse, the money store owners paid for unpopular products isn't available for buying what people want to buy.

Now for the good news. Since big retailers force suppliers to make very costly concessions including reducing wholesale prices, the suppliers have to make up for that somehow. So, some of them make the products with lower quality materials.

That major retailer has full time (more than 30 hours per week) workers in all or most stores who only process merchandise customers return. I've seen shopping loaded to overflowing with returned things. It has a special division with trucks to pick up the many pallets of the rejected things.

I don't know if what you have in mind is the result of a fad or a trend. If it's a fad, you might not have any time left to start. Sometimes fads are so short they're almost over by the time we hear about them. Then look for a trend to get involved in.

If - 1) you find a supplier with better quality products; 2) the superior quality can be substantiated; 3) people are willing to pay extra for the better quality; then you have a good chance of being successful. It's far from guaranteed because there are a lot of factors.

No company, no matter how successful will please everybody. Because of this, most major companies have many successful competitors.

After finding a high quality product supplier, you try negotiating terms. It's best to know how much you could sell in a period of time. Stores aren't built to hold products for long periods. If customers grab products from the shelves right after clerks put them there, that's great.

If you find retailers who are willing to sell products on consignment & can get a small supply, you could build a successful business. You could become successful enough to start your own store.

But trying to get suppliers to take you seriously may be hard. When they have accounts for thousands of dollars a day, they may not accept small orders. If you know a store owner who is willing to sell (the product you like), you may be able to split the costs of shipments. But before you place any orders, look for other retailers who probably wouldn't be able to convince suppliers to send them small amounts. Ask if they would accept products on consignment. If you find enough willing to do it, then find a lawyer to write a consignment agreement. You should have a formal letter agreement with the retailer you'll be splitting shipments with also.

If that retailer writes & signs a testimonial letter about the sales levels s/he gets from selling the product, that can definitely help you be credible to other stores owners.

Take it step by step so you reduce the number of mistakes you'll make. Don't expect to make mistakes, but don't be suprised when you do. Learn from them then move on.

I seldom get updates from those who take my advice, so please let me know how it works out for you. I may be able to guide more if you let me know what happens.

If, after reading this, you decide not to do it, that's OK too. I just hope you do it or don't do it for the right reasons. Make the decision that's best for you at this stage in your life.

Dennis S. Vogel
You don't need a miracle. You don't need magic.
You need powerful marketing. Here's where to get it.
http://www.thrivingbusiness.homestead.com
http://www.voy.com/31049/

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