2007 July
It is very essential to understand the importing basics if you plan to begin international trade that requires importing something from foreign countries to your country. History of importing goes as far back as the beginning of trading because you have to get those goods and materials that are not available in the country where we are doing business. You may need to import a particular material, even if it is available in the country, when you can get it from another country at a cheaper price. Whatever may be the reason for importing, you must understand some practical aspects related with the importing of goods. These include the legal aspects as well as the method of getting the required goods in to the country.
Importing Business Things to Consider:
Importing basics for international trade require that you plan in such a way that all the elements of the process fit together for smooth operation. For example, take the advice of legal experts when you sign contracts with your foreign counterpart. Also keep in mind the due dates of the payments for the material you are importing from the other countries. Do not expect that the exchange rate will remain unchanged after you have placed the order. Take care that you are complying with all the rules and regulations in this regard. Moreover, plan for transportation, storage, insurance and documentation. Get all the terms of the contract examined by legal experts. Also, ensure what the implications will be if the imported product is not up to the mark in quality.
If there is any rule that states that a license is necessary for importing in international trade, then collect information about it and get the required license from competent authorities. Another importing basic in international trade is management of transport. First, determine the quantity of goods you are planning to import. The quantity of goods is a major factor in deciding the means of transport. For example, if the quantity is too much then it may not be feasible to import by air transportation. Another factor is the length of time taken in the process of transportation. If the material you are going to import is to be used as raw material for the production of some item then considering this duration becomes more important.
There are two kinds of importers of goods for international trade. Some importers directly import the required goods. On the other hand, there are people who depute someone else to handle all the issues related to the importing and purchase from him. However, direct importing requires that you be personally in touch with the overseas supplier of the material. Profitability is more in this case but you have to face the problems of language, exchange rate fluctuation and extra costs.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community.
Article Source: http://EzineArticles.com/
Tags: doing business internationally, import, International Market, shipping, Small Business Consulting
Posted on July 31st, 2007 in Uncategorized | No Comments »
Randal Pinkett is best known for surviving Donald Trump’s scathing boardroom criticism on season four of NBC’s "The Apprentice" and impressing the billionaire real-estate mogul enough to hire him. But before that, Pinkett was known around his college campus at Rutgers as a student entrepreneur who juggled business classes with running a thriving CD business out of his dorm.
Now as CEO of BCT Partners, a Newark, N.J.-based consulting firm, the "Apprentice" winner hopes to use his experience to help other aspiring young entrepreneurs start and grow their own companies. We talked with Pinkett about his new book, Campus CEO: The Student Entrepreneur’s Guide to Launching a Multi-Million Dollar Business (Kaplan Publishing, 2007), as well as his views on the rising trend of student entrepreneurship and his secrets to business success.
Q: What did running a business teach you that you couldn’t learn in school, and how did your entrepreneurial experiences give you a competitive edge on "The Apprentice"?
A: Running a business taught me a lot of things that I couldn’t learn in the classroom, like how to generate profit, mark up products, do taxes, respond to customers and put the right systems in place to do my accounting, recordkeeping and inventory. I learned a lot of the fundamentals of business by doing them. It was great preparation for being on the show because we were required to wear different hats in different circumstances on different days. I went from being a student leader, an athlete and a business owner to a product manager, a producer of a commercial and a designer of a parade float. Having the ability to adapt and get up to speed quickly helped me.
Q: What’s the biggest challenge campus CEOs face?
A. Establishing credibility. While there are many benefits to being a student entrepreneur, at the end of the day you’re still young, and you’re still a student. You have to establish the kind of credibility that will ensure that adults on the other side of the table take you seriously. That means coming prepared with your t’s crossed and your i’s dotted. It means having a solid business plan and competitive analysis and market research, so the minute you sit down at the table your language is reflective of someone who understands the business and demonstrates seriousness. You may have to work harder to overcome the predisposition of those who might say, "You don’t know what you’re talking about."
Q: What’s behind the rising trend of teens and college students who are starting business while still in school, and what’s unique about today’s young entrepreneurs?
A: We’re the sons and daughters of a generation that experienced corporate downsizing and layoffs. We watched our society shift from one where you could expect to work for a company your entire life to one where you couldn’t. It changed the dynamic for my generation, causing us to think more independently and not put the fate of our careers in the hands of one employer. Today’s young people have a natural mastery of technology and, as a result, are innovating and pursuing business opportunities because of that. The rising cost of getting an education was a contributing factor for me starting a business. My business wasn’t a multimillion-dollar enterprise, but to be able to pay for books and still go out on a date occasionally, I had to be able to offset the costs. That’s a situation that’s very real for a lot of students. What’s unique about today’s student entrepreneurs is that they’re indeed running and growing successful enterprises. It’s common to see first generation, student-run businesses delivering food and laundry services to dormitories or selling used books. YouTube, Google and Yahoo are all serious businesses that were started by college students and have grown into public companies and multibillion-dollar enterprises. This generation is really pushing the envelope and challenging long-standing preexisting companies to say, "Hey, you’ve got to take us seriously."
Q: What are some misconceptions students have about what it takes to start a business?
A: Many succumb to the myth that they’re too young or inexperienced, or they need a lot of money to start their own company. When it comes to money, one out of every 10 high-growth business starts with $1,000 dollars or less. As for lack of experience, owning a business challenges you to assume a wide range of responsibility - more so than an internship or a part-time job might. It was young people who were able to see that there was no Facebook and create it; it was young people who saw the need for the first Kinko’s and the first national pizza chain. Being young is an asset because you’re able to see opportunities that interest other young people - opportunities that might be difficult for someone who is older and more experienced to see.
Q: How can teachers best encourage and guide students who dream of starting businesses?
A: Aspiring entrepreneurs naturally approach their business ideas with enthusiasm, energy and sense of limitless possibilities. While those are great characteristics, those ideas must be tempered at times with a reality check. Students need to know that they have to do their homework, and that it takes rigor and time to validate a good idea. Teachers have the opportunity to ask the right questions, prompt the right thinking and challenge students to show them that something they believe in can really work.
Q: In the book, you talk about balancing a business with getting an education. What’s the key to this?
A: You need to become a student of being a student. Part of being a successful student entrepreneur is learning about how you can best learn and going out and getting materials on things like how to study, take tests, manage stress and balance multiple demands on your schedule. It’s different for everyone in terms of what works best.
Q: What’s the secret to launching a successful business?
A: It begins with having a solid business plan that forces you to answer critical questions about your market, your customers and your business model. Secondly, it’s about building a great team. Many, if not most, of business success stories are not just about the entrepreneur; it always takes the team to grow a successful enterprise. At any company, the most valuable asset is the people - that’s certainly the foundation of my company. It boils down to getting the right plan and the right people in place, so you can leverage that energy with different talents and bring people to the table so that it’s not just you alone fighting the good fight.
Q: What advice would you give to aspiring young entrepreneurs who are contemplating starting a business?
A: Either put the wheels in motion and get a plan developed or look for ways to use your idea in a class project or an independent study. If you write a business plan as part of a class, you have no choice but to do it (or flunk), and you walk away at the end of the semester with a tangible project. If you can’t wait to pursue your idea, find someone - a professor, a relative or a graduate who works in the industry - who you can bounce ideas off of and who will give you feedback. There comes a point in time when you just have to decide you’re going to do it. Part of being in business is that you can learn a lot through failure. You can’t be afraid of failure. All great entrepreneurs have experienced moments when things didn’t work out as they expected, but they were willing to give it another shot and try again.
Article used with permission from the National Federation of Independent Business. NFIB is the leading advocacy organization representing small and independent businesses. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its members in Washington, D.C., and all 50 state capitals. Visit www.NFIB.com to learn more.
Tags: advice, campus CEOs, National Federation of Independent Business, NFIB.com, Start ups, Starting a Business, student entrepreneurs, Tips
Posted on July 31st, 2007 in Starting a Business | No Comments »
Q: I am planning on opening my first business in the fall. Do you have any words of wisdom to share?
Elena
A: Let me share a story: I have a friend named Robin who studied dance for years and dreamed of opening up her own shop, selling ballet shoes, leotards, that sort of thing. Though she knew little about business, that didn’t deter her, and after raising some money, she finally became an entrepreneur.
At first, Robin stumbled, and had a very difficult time getting customers in the door. Then one day, she noticed that the large consumer electronics store down the street seemed to have a sidewalk sale every other month or so. Robin thought that if it worked for them, it might work for her too.
So she began to plan a huge parking lot sale of her own. She bought extra inventory, advertised via flyers in dance studios and in the newspaper, and prayed. On the day of her sale, the sun was shining and the turnout was better than expected. She tried it again the next month, tweaking her advertising strategy just a bit, and the results were even better. After her initial success, when the weather was right, Robin held a 2-day sidewalk sale every month.
Robin stumbled upon an important business lesson. It’s what I call "finding a successful recipe." Here’s how it works: When a chef wants to create a dish, he uses a tried and true recipe, one that works every time to create the same result. The same is true for a baker. If he wants to create a loaf of bread, he uses a reliable recipe to create the dough.
Well, if you want to make more business dough (sorry - no one said you wouldn’t get a bad pun or two along with some good advice here!) then you too need a good recipe, a business recipe. In fact, all successful businesses have a recipe that they can rely upon to bring in money consistently:
- Starbucks was simply a groovy coffeehouse before learning that it could sell not just coffee, but music as well, thereby creating a new recipe.
- Nordstrom’s recipe for success is great customer service and an amazing return policy. That creates loyal customers.
Creating your own successful recipe is a three-step process:
1. Brainstorming. Sit down and write down every kooky idea that comes into your head about possible successful formulas that might work for your business. It could be an ad that you run in your local newspaper. Maybe it would be a direct mail campaign. It could be a sale, or an outlet at a local flea market. Who knows? There are countless ways that you can distinguish your business and create a successful recipe.
Once you have some ideas, eliminate the bad ones, and then get some feedback. Speak with people whose judgment you trust, and talk to other entrepreneurs you know who are successful. Come up with your top two or three ideas.
2. Testing: Once you have a list of potential goldmines (which is what a good business recipe is - something you can mine again and again), try them out. Yes, it would be great if they all worked, but the idea here is to discover your very best option, the one plan that can be repeated over and over again to bring in customers and money. Figuring that out is a great moment in the life of any business because it means that you will be able to be a long-term success.
3. Repeat. You must make sure that you will be able to duplicate this success time and again, with measurable, predictable results. And once you have done that, you will have created a reliable, steady source of income that you can always count on. Doesn’t that sound nice?
If the good news about being an entrepreneur is that you are on your own, the bad news is that you don’t get a paycheck every two weeks. A good recipe can eliminate that negative.
Today’s tip: I recently read that customers don’t really want money back guarantees. What they want is for the product or service to be right. Something to consider.
Steven D. Strauss is one of the world’s leading small business experts. His latest book is the Small Business Bible. A lawyer, author, and public speaker, Steve has spoken around the world about entrepreneurship, including at the United Nations, and he has been on CNN, CNBC, MSNBC, The O’Reilly Factor, and many other television and radio shows. If you would like Steve to speak to your group, help your business grow, or if you would like to sign up for his free newsletter, "Small Business Success Secrets!" please visit his website - www.MrAllBiz.com.
Tags: advice, MrAllBiz.com, small business expert, Start ups, Starting a Business, Steve Struass, Tips
Posted on July 31st, 2007 in Starting a Business | No Comments »
What type of Wholesale Business is the best for you? It really depends of many factors including what you like, your capital, abilities, time and more. You should start by deciding the types of products you would like to wholesale and distribute. To do this you can look at business models, pricing structures, and distribution options. Now, to start, you should just "look around" and find products you like.
Think of any product that you might have in your home right now. Chances are good that it went through the wholesale process unless it was made by hand and given directly to you from that person that made it. If you’re thinking about getting into the profitable business of wholesale distribution, it can help to understand that types of distributors there are and where you might be able to fit in.
One of the fastest growing markets is the health and beauty distribution. Everyone needs certain health products on a daily basis, and stores need to be able to provide these goods at lowered prices. You might want to focus your efforts in this area when you’re first beginning a wholesale business. Not only are these kinds of products inexpensive to purchase, they are also in high demand on a consistent basis. You will also find that they are easy to transport and that you will be able to manage them without a large truck or warehouse. These products are also much easier to mark up in terms of price, which can lead to larger profits for you.
Electronics has always been a great wholesale distribution market as everyone wants the latest in consumer goods. When you look at things like video games and personal electronics, these items tend to be quick sellers, even when they’re not new. Whenever a new item comes into the market, consumers flood to get their hands on it. You can use this to your advantage. By realizing that electronics will never be a fading trend, you can start focusing your efforts on a certain category of electronics - personal digital music players, for example - and keep a wholesale business running based on that knowledge. Even those that aren’t interested in buying the newest models will want to have the technology that everyone else has, but offer it to their customers for a lower price.
Another good market for wholesale distribution is nutrition. Creating a wholesale business that focuses on nutritional supplements or gadgets is a clear winner as people are more interested than ever in making sure that they are healthy and fit. And these kinds of items aren’t limited to nutritional stores anymore as well. Even your local gas station is now carrying the latest energy drinks so that travelers can get a little boost of energy. And you can make sure to cash in on that trend.
The truth of the matter is that if there is a product that you like, there is generally a distribution market for it. Take some time to look around your favorite stores to see what kinds of items are in demand and what you might be able to offer them. You may be surprised at what is missing from the market place and where you might be able to help fill these kinds of gaps.
Jorge Olson is a consultant, speaker and entrepreneur and owns several Wholesale Distribution companies. His latest Website teaches you step by step how to get started and make money in Wholesale Distribution. You can find it at http://www.LearnWholesale.com
Tags: jorge olson, learnwholesale.com, Product Sourcing, wholesale, wholesale products
Posted on July 24th, 2007 in Product Sourcing | No Comments »
Do you have a product or service that you enjoy offering to grateful friends and family members? Perhaps you’ve been thinking lately that going professional would be a great way to earn some extra money, or even start your career as a small-business owner. While many successful businesses have been built on a hobby’s foundation, so have many failed ones. Here are a few precautions–and tips for proceeding if you decide this is the right move for you.
Precautions
Loving what you do isn’t enough
What are your reasons for wanting to turn your hobby into a business? If your only reason is really enjoying your hobby, this simply won’t cut it. While having passion for what you do can be a factor in running a successful business, there are so many other considerations in starting up and running one. Also consider that even if you love what you do, running a business will still be work, and you may find yourself loving what you do less and less when you’re required to do it instead of wanting to.
Make sure the logistics work
Let’s say you edit and offer suggestions on your friends’ term papers and are thinking of offering your services campus-wide for a fee. How long does it take you to read and critique a single paper? How much time could you devote to this enterprise without affecting your own studies? If you took on more essays, would you still be able to offer the time and care you’re currently taking, which is what makes your service valuable? Could you charge enough to make it worth your time? Figure out all the pertinent logistics before leaping ahead.
Scope out the competition
Sure, your friends might love the mittens you knit them at Christmas, but that doesn’t necessarily mean they’ll be willing to pay for them. Take a trip to the businesses in your area that offer the same services. Compare their pricing with what you’re planning to charge and compare quality, too. Can you offer something the competition lacks? If not, it might be hard to draw existing customers away.
Proceeding
Don’t skip any steps
Even if you’ve been at your hobby for years, going into business with it is still an entirely new venture. You’ll need a business plan, including cost and earnings projections, space and supplies needed, and so on.
Enlist friends and family to help with the transition
Making the people close to you part of the business launch perhaps will alleviate some of the tension you might feel over asking them to start paying for the services you’ve always given them for free. Ask them for testimonials and other marketing help. You can offer them a discount for their help, which could further dissipate any awkwardness.
Manage your time like a professional, not a hobbyist
When this was your hobby, all you had to think about was making the product and perhaps filling a few orders. Now you need to think like an entrepreneur, budgeting time for all aspects of your business, such as research and development, marketing and more.
Turning your hobby into a business can be a great thing. You likely have a built-in customer base who knows you’re passionate about your offering and will happily help you spread the word. Just take the necessary steps to ensure that your passion can sustain all the headaches (albeit often rewarding ones) that come with owning your own business.
Article used with permission from the National Federation of Independent Business. NFIB is the leading advocacy organization representing small and independent businesses. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its members in Washington, D.C., and all 50 state capitals. Visit www.NFIB.com to learn more.
Tags: career change, National Federation of Independent Business, NFIB.com, start up, Starting a Business
Posted on July 24th, 2007 in Starting a Business | No Comments »
Q: Steve - I always enjoy your inexpensive / innovative marketing ideas. Do you have a favorite?
Sharon
A: What surprises me actually is just how many different ways there are to market yourself or your business today. Whenever I give a speech or workshop that includes a marketing and branding component, I almost always end up learning something new from one of the attendees; something they have tried and used that I had not considered previously.
So while no, I don’t have a favorite per se, I do have a bunch of new favorites, such as:
YouTube: I recently had the opportunity to do a shoestring marketing workshop with about 200 people. As we went through my usual suspects (co-op ads, pay-per-click, etc.) one gentleman told me how his consulting business exploded after he started posting on YouTube.
Here is what he did: Once a week he creates five, minute-long consulting tip videos around various topics he specializes in. Each video ends with his URL. He then posts one of these videos a day on YouTube. Cost: $0. Impact: Apparently high.
e-newsletters: Let’s say your target market is women who are about to get married. Sure, you could advertise in bridal magazines, but that is not cheap. Consider this alternative: Research the most popular bridal websites and find one that you like and which seems to match your desired clientele. The site almost assuredly will offer a free e-newsletter, and quite possibly more than one. Find the e-newsletter you like (and which contains ads.) Buy space in that e-newsletter.
Advertising in that e-newsletter should not only be highly effective, but pretty inexpensive to boot. Yet even so, you will be reaching a highly qualified list of brides-to-be who opted in to this newsletter and who look forward to getting it every week. Moreover, because you will be associated with this website, you gain instant credibility.
You could use this method with almost any industry.
Publishing your own e-newsletter: If you have valuable information to share, an e-newsletter allows you to:
�Stay in touch with your prospects and customers
�Create credibility
�Develop brand awareness
�Build future business
�Sell space to advertisers (see above!)
Local e-marketing: Of course we all know the power of Google ads these days, but sometimes left out of the equation is the ability to use not only Google but many other sites to advertise locally. Many businesses think they can’t really use Google ads because they do not sell nationally. The good news is that, not only can you confine your online ads to a specific geographic region, but doing so is very cost-effective because the reach of your ad is limited to your area.
Here are just a few places to explore local online ad opportunities:
�Yahoo Local Listings
�CitySearch
�AOL’s CityGuide
�Craigslist
�Local.com
�YellowPages.com
The publicity stunt: Maui Beverages changed the name of the title of its Chief Executive Officer (CEO) to "Chief Entertainment Officer", and from its Chief Technology Officer (CTO) to "Chief Tasting Officer." The result? Plenty of good press.
In 2000, Half.com paid Halfway, Oregon $100,000 to rename the city Half.com for a year. Halfway also received new computers for the local school and other financial considerations. Half.com received immeasurable worldwide publicity.
The ability to build a brand and get ahead without spending big bucks is greater today than ever before.
Today’s Tip: A few months ago I reported that, according to Part I of Intuit’s Future of Small Business Report, a new breed of entrepreneur is emerging in this country, and maybe not who you would expect.
According to the latest installment of the report, success tomorrow will depend even more on your ability to adapt to, and adopt, technology. "Tomorrow’s successful small business owners will be far more reliant on technology than their current counterparts. They’ll be more connected in a mobile world, market to customers in ways only imagined today, and blur the lines between the virtual and physical worlds."
Steven D. Strauss is one of the world’s leading small business experts. His latest book is the Small Business Bible. A lawyer, author, and public speaker, Steve has spoken around the world about entrepreneurship, including at the United Nations, and he has been on CNN, CNBC, MSNBC, The O’Reilly Factor, and many other television and radio shows. If you would like Steve to speak to your group, help your business grow, or if you would like to sign up for his free newsletter, "Small Business Success Secrets!" please visit his website - www.MrAllBiz.com .
Tags: e-newsletters, expert advice, Marketing, marketing ideas, MrAllBiz.com, small business expert, steve strauss, Tips, youtube
Posted on July 24th, 2007 in Marketing Your Business | No Comments »
Credit cards are a small-business owner’s best friend. They’re easy to obtain and convenient to use. More than one-third of small businesses use business credit cards (also called "corporate cards" whether or not the business is organized as a corporation) and nearly one half of small-business owners use their personal credit cards for business.
The Uses
Purchasing power. Businesses that are experiencing tight cash flow can obtain the goods and services they need by charging items on a credit card. For instance, say you have outstanding receivables but need to purchase something immediately. You can charge it today with the expectation of being able to pay it off in full within a month or two at most when you collect the receivables. In this situation, since the cost of financing is modest because of the rapid pay off, the use of a credit card is wise.
Recordkeeping. Credit card companies may keep better records of the things you’ve charged than you do. Their statements are broken down into categories useful in your financial reports and tax returns (e.g., one category is travel and entertainment expenses). The statements run from January 1 through December 31, even though your billing period may be fixed at a mid-month date.
Idea: Request an annual statement if you do not receive one automatically–usually you have the option to view this online.
Managing employee plans. If you have certain employee plans, credit cards are an ideal way to track expenses. Use a company card for:
–Reimbursements from flexible spending accounts (FSAs) and health reimbursement accounts (HRAs). Issue a card to employees with instructions that it be used only to pay reimbursable expenses. The IRS has approved this reimbursement method.
–Accountable plans for travel and entertainment costs. Issue a card to employees for charging business expenses, such as meals, gasoline and hotel stays, where appropriate. The credit card statement helps employees substantiate their travel expenses to you, as required for an accountable plan.
Obtaining rewards. Certain business credit cards may generate frequent flyer miles, gasoline credits and other cash-back rewards for card usage. For example, MasterCard now offers an eBay credit card where you can earn points that can be redeemed on eBay (www.mastercard.ebay.com). As long as you use cards for convenience and not for long-term financing, these rewards are icing on the cake. However, you’re overpaying for these rewards if you receive them while incurring monthly finance charges.
The Abuses
Substituting for conventional financing. The cost of borrowing through a credit card is substantially higher than borrowing through commercial loans and lines of credit. There is no interest ceiling on credit cards, which may charge as much as 30% (on an annualized basis) or more. In comparison, small-business loans can be one-third as costly or even less.
Idea: When buying equipment or merchandise, rather than simply charging the purchase to a business credit card, ask the seller about its financing options. You may be eligible for seller-financing at interest rates substantially below those for credit card borrowing, even if you might otherwise have difficulty qualifying for a conventional bank loan or line of credit.
SIDEBAR
Find the right card for you
There are dozens of business credit cards to choose from. They differ in many ways, including annual fees, monthly interest rates and credit limits. To research offers, compare cards feature-by-feature and even apply online, go to CreditsCards.com and click on "Business Credit Cards."
Big Ideas for Small Business is a free monthly online newsletter from Barbara Weltman, author of The Complete Idiot’s Guide to Starting a Home-Based Business, Third Edition, and The Complete Idiot’s Guide to Starting an eBay Business. www.barbaraweltman.com
Tags: advice, Barbara Weltman, BarbaraWeltman.com, credit cards, Tips
Posted on July 17th, 2007 in Uncategorized | No Comments »
It is prudent to avail of business plan advice from known experts than to present a shoddy document that fails to fulfill its purpose. Since the plan will evaluate every aspect of your business, it necessitates detailed knowledge of every facet.
The most commonly given business plan advice relates to its length. All the experts agree that long and cumbersome business plans fail to retain the interest of the readers. The relevant information should be presented in a simple and concise fashion for maximum impact.
Start by identifying the intent and target of your business plan so that the written document can fix concrete goals and devise practical action plans. Seek business plan advice to take care of the problem sections and lend your own experience and knowledge to develop a plan that best reflects your unique style and innate strengths.
The prospective investors closely study the company description segment. Present a glowing, but true account of the management’s special talents and crucial industry experience. Don’t forget to mention your business consultants; the name of a reputed law or accounting firm will instantly shoot up your credibility ratings.
A practical business plan advice mooted by most investment analysts is to seek funding in stages. Once the revenues on initial funding start flowing in, it boosts investor confidence and eases the path of future funding.
Proceed in reverse order; write the first section, i.e. the executive summary, the last. It will be easier to write the summary after completing all the other sections of the business plan since it will highlight their main points and contain investment returns and loan payback details.
The singular most important business plan advice would be to review and edit your business plan closely before submission. Proofread it a number of times to rid it of typos that detract from a professional look. Check for incomplete or unsubstantiated statements to lend it an authentic touch and increase your chances at success.
Article written and copyrighted by Growthink Business Plans . Reprinted with permission.
Tags: advice, business plan, Growthink, Small Business Resources, Start ups, Starting a Business, Tips
Posted on July 17th, 2007 in Starting a Business | No Comments »
One of the most effective ways to improve the gross margin you earn on each sale is to focus on gross margin rather than markup on cost.
As I have written many times, it’s easy to get into a markup rut; that is, into the habit of using the same old markups over and over again to arrive at your sell prices. While this is certainly a convenient way to price merchandise, it is not healthy for yours or your company’s gross margin.
One of the most effective ways to optimize gross margin when pricing is to "think gross margin." In other words, think in terms of how much gross margin you wish to earn on a sale and price accordingly.
The way this is done, of course, is to divide the cost of the product(s) you sell by the inverse of the gross margin you wish to achieve.
What’s the inverse of the gross margin you wish to achieve? Well, here’s how you calculate it: To arrive at the inverse, subtract from 100 the gross margin you wish to achieve. The example I used in my gross margin book was 44%.
When you subtract 44 from 100, you get 56, which is the inverse.
Then divide the cost of the product by 56 and you’ll arrive at the price you must sell the product for to earn a 44% gross margin.
If your cost were $1 and you divided $1 by 56, you’d arrive at a sell price of $1.79, which would yield a gross margin of 44.13%.
But if you really want to optimize gross margin, you need to go one step further by testing what the market will bear. Right now, a lot of your competitors are low-balling commodities to try and buy some business, but there are several thousand products that you sell every month that don’t fall into the commodity category. If you experiment with what the market will bear on those products, it will help offset the gross margin you may be losing right now on commodities.
When I say test, I mean just that…test. If you’re selling a non-price sensitive product now for $22.49, try $22.89. If after a week or so you don’t receive any pricing resistance at $22.89, you might try $23.26, then $23.52, etc.
Nine out of ten companies use arbitrary markups or gross margin calculations when they price the products they sell. These same companies are leaving gross margin dollars on the table because they aren’t paying attention to the ultimate pricing criterion: what the market will bear or what a customer is willing to pay.
The better job your company does at differentiating its offering from its competitors’ offerings, the higher price the market will bear. The higher your customers perceive your personal value and your company’s value to be, the higher price the market will bear.
Always remember that there are a lot more factors that affect sell price than merely the cost of the product. If you think about it carefully, cost really should have absolutely nothing to do with the calculation of sell price. What you sell something for should be determined by what customers will pay for it.
Try these techniques for a few months and watch your gross margin improve.
Bill Lee is author of Gross Margin: 26 Factors Affecting Your Bottom Line ($21.95) and 30 Ways Managers Shoot Themselves in the Foot ($21.95) Plus $6 S&H for the first book and $1 S&H for each additional book. To order, See Shopping Cart at http://www.BillLeeOnLine.com
Article Source: http://EzineArticles.com/?expert=Bill_Lee
Tags: billleeonline.com, cost, ezinearticles.com, gross profit margin, growing your business, pricing products, Sales
Posted on July 17th, 2007 in Generating More Sales | No Comments »
For e-commerce start-ups the realities of product sourcing often come as a shock to the system. With so many online "wholesalers" to choose from these days, it’s common to assume that the process will be easy. If your store is to be profitable, however, your sourcing methods will require just a little more effort and creativity than you think.
1. Search clever.
Avoid using general terms when sourcing products online. Googling "wholesale widgets" may bring up a huge number of results, but you’re unlikely to find a worthwhile supplier among them. Most will be non specialist companies that act as middlemen between you and the real wholesalers. This means profit margins on their goods will be virtually non-existent.
Instead, try qualifying your searches with terms such as "distributor", "manufacturer", "designer" or "trade" and rather than searching for generic terms such as "widgets," try taking a more specific approach. Use individual product names and model type wherever possible.
Image searches will also give you more focused results. Many products are sold online using stock photos created by the original manufacturer and this can be an excellent way of tracking them down.
These tactics will improve your chances of success; but don’t despair if you don’t find what you’re looking for. Google is a great research tool but it’s only one of many in your arsenal. Resist the temptation to spend hours and hours surfing the net looking for "secret" deals and sources that do not exist. Traditional retailers have never relied on the internet to find suppliers and neither should you.
2. Consult traditional business directories.
It’s amazing how often resources such as the white/yellow pages are overlooked these days. It must be because we automatically assume the internet to be a superior source of information. Well this isn’t always the case. There are a lot of wholesalers out there that don’t have an online presence, but that doesn’t mean they don’t have telephone numbers.
3.Subscribe to trade publications
Trade magazines related to your niche will be packed with ads from relevant manufacturers and distributors. It’s how offline businesses have done things for years and you should too.
4.Trade fairs.
Attending trade fairs takes more effort than surfing in your pajamas but the pay-off can be enormous. They provide unparalleled scope for sourcing and networking. Plus, establishing personal contact with suppliers makes it a lot easier to negotiate prices further down the line.
5.Ask an expert.
Find someone who already stocks what you want to sell and ask them where they got it. This isn’t as absurd as it may sound! Obviously emailing a rival online store is never going to work because nobody wants to knowingly help out their competition; but a more personal approach conducted in the offline world can yield excellent results. Find a "widget" store and get talking to the owner, preferably once you have made a purchase. People love talking about their businesses and if you are suitably charming they will often recommend a supplier or trade magazine.
You’ll be surprised at how helpful people can be when you don’t represent a threat. This tactic has worked well for me in the past - the worst thing that can happen is they refuse.
6.Contact the manufacturer.
If you can’t find a supplier but you know which company makes the product, give them a call and ask who their distributors are. Again, there is a tendency for new e-merchants to see this kind of information as somehow privileged or secret and they often approach such conversations with trepidation. Remember that these companies want your business. Just because you don’t have a traditional bricks and mortar establishment doesn’t mean your money is no good.
7.Check product packaging.
This is a fool proof method. If you don’t know the manufacturer of a particular product and all else fails, buy it yourself. All goods, virtually without exception, will include some reference to the manufacturer on the packaging. In some cases the name of a supplier will be there as well.
Once you know the manufacturer, the information you require is just a phone call away!
Matt Davies runs an online gift store selling Regalos originales
Article Source: EzineArticles.com
Tags: e-merchants, ebusiness, ecommerce, ezinearticles.com, matt davies, online business, Product Sourcing, Tips
Posted on July 9th, 2007 in Product Sourcing | No Comments »
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