The goWholesale Blog

What is a Business Plan

June 25th, 2007

Individuals running small self-owned units with low revenues and lower profits are prone to ask - What is a business plan? They did not grow, simply because they didn’t have one, and never bothered to find out before. Evidently they don’t care much where their business is headed.

Others wish to expand their business but have no idea how to go about it. Ask them what is their business plan and they shake their head, skeptical. Simply wishing will not lead to success. You need to chart down your goals and figure out the way to reach them. This is exactly what a business plan is all about. It guides the enterprise towards stated objectives through carefully chalked tracks and processes, taking into account future conditions and contingencies.

It is your company resume and includes, among others, the following: a current and pro forma balance sheet, a statement of income, and an analysis of cash flow. An enterprising business plan is crucial if you want serious consideration of that important loan application. The plan will contain specific and organized company information and loan repayment method and details. It will also describe the company’s business model and guide your sales team and suppliers.

Your resources may be plentiful today, but only a business plan will help you allocate them wisely. Even with meager means, firms have managed to show record growth, due to careful planning. Good business decisions do not emerge from instant brainwaves; they stem from a predetermined strategy based on detailed financial projections, market forecasts and careful analysis of risks and uncertainties.
The next time someone asks you what is your business plan, be prepared with answers. Tell them a business plan is what helps you stay afloat in bad times and lets you tower ahead of competition in good days. Planning generally pays.

Article written and copyrighted by Growthink Business Plans . Reprinted with permission.

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Getting Paid Without Getting Ripped Off

June 25th, 2007

Unless you have an all-cash business, you may not receive the payments you expect. Bounced checks, credit card chargebacks, and even scams can keep you from getting paid. Here are ideas to ensure payment.

Other than the corner hot dog truck, most companies today transact business with checks, credit/debit cards, PayPal, gift cards ("smart" cards), or electronic transfers. According to February 2007 statistics from FreshBooks , 16% accepted Visa, 7.8% MasterCard, 4.3% Amex, 6.5% PayPal and 65.5% other payments (checks; account credit). These seemingly "secure" payment methods can be anything but secure. Merchants bear the financial risk for fraudulent credit card use. Here is some guidance on potential payment rip-offs and how to protect yourself and your business.

The scams
Recognize potential rip-offs so you can avoid them. Examples:

–Credit card charging scams–For cards swiped at point of sale (e.g., in stores), look for customers trying to distract the salesperson during the card approval process - this could indicate that the card is stolen or fraudulent. Immediate returns (the purchaser leaves the store and immediately comes back for a refund) can be a way to obtain cash. Splitting charges among two or more cards can indicate that the cards are not good. It is more difficult for merchants to win their claim in a chargeback dispute when multiple cards are involved.

–Chargeback scam–charging a payment so you ship the goods. The customer then requests a that the credit card company reverse the transaction, claiming that he/she never received the shipment, or it was damaged, or it was not what was ordered, etc.

–Overpayment scam–sending a check for more than the amount owed to make the merchant send a refund check for the difference, only to learn that the original check was no good.

The protection
Obviously, the key to protection is awareness of the potential for fraud. Understand that receiving an authorization code from a credit card company when processing a transaction does not guarantee that the cardholder is legitimate or that you will ultimately retain payment. Merchants bear the risk of loss for fraudulent credit card use. Here is a checklist of some best practices to ensure payment:

SIDEBAR
Cut merchant authorization processing fees
Credit card companies’ fees that merchants pay when they accept credit cards can eat away at profits. Know your Merchant Bill of Rights (www.merchantbillofrights.com ), which was established in 2006 to promote fairness and transparency in credit and debit card processing by small and mid-size businesses–use a processing company that adheres to these rights.

Big Ideas for Small Business(R) 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

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Filing Taxes for eBay Sales

June 19th, 2007

Q. How do I go about filing income tax for eBay sales?

I’ve never had a "real" job where I’ve had to do income tax, so I don’t know how to do this…I’m a full-time student; but I do sell stuff on eBay occasionally (about 2 items/week, sometimes more, many times I go weeks/a month without selling/listing anything), stuff I usually buy at the mall or buy from websites and then sell it on eBay for a profit.

How would I go about keeping records of my expenses and profits for tax purposes? Do I need to keep an itemized list of expenses, sales and profits or can I just add all the total money received (including final bid price + shipping buyer paid) and subtract the expenses (original price for item, tax I paid on item, shipping I paid on item to have it delivered, eBay fees, shipping I actually spent to send item to buyer)?

I’ve only started selling since last September or so…

A. If you only sell items on eBay occasionally, then you are most likely a sole proprietor (some eBay sellers will incorporate their business but most eBay sellers are sole proprietors).

Sole proprietors report their eBay income and expenses by completing Schedule C - Profit or Loss from Business and attaching it to their personal income tax return (Form 1040).

You should report your gross income (the sales price before any fees or discounts), then deduct your business expenses to arrive at your net profit.

Business expenses that eBay sellers typically incur include:

There are more expenses that you may incur, but these are the most common for eBay sellers.

It’s important to keep good records so that you get all the deductions you are entitled to. And yes, you should keep itemized lists of your income and deductions - the more detailed your records, the better, especially if you are ever audited by the IRS.

You are only taxed on the net profit, but you have to pay self employment taxes on your profit in addition to your ordinary income taxes. The self employment tax is 15.3% and your ordinary income tax rate can range from 10-35%, so these taxes can add up quickly! This is another reason why you should keep good, detailed records.

To keep track of your income and expenses, I would suggest either Excel spreadsheets or an accounting software program such as Quicken Home and Small Business or QuickBooks. eBay also offers an accounting assistant (fee applies) which allows you to download your eBay activity into your QuickBooks software (very cool!).

The IRS is targeting eBay sellers and other small business owners who may be under-reporting income (or not reporting it at all), so good for you for being proactive and learning your responsibilities as a small business owner.

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Buying Clothing Wholesale - Clothing Suppliers

June 19th, 2007

If you want to make a profit by buying and selling wholesale clothing, there are a few important things that you will need to know. You can’t just take a leap into the business unaware of what you should buy and what customers are looking for. Many wholesale businesses will fail because they went into business blindly. Follow these three suggestions and you are sure to be a success.

Odd Sizes can be a Good Thing

When you are purchasing wholesale clothing you have to realize that the odd sizes can be a very good thing. First of all odd sizes can be purchased really cheap and you can sell them at a huge markup. The reason for these cheap prices on odd size clothing is that retailers will avoid them because they can be hard to sell. For this reason, clothing wholesalers will sometimes offer you some great deals.

The fact of the matter is that people are all built differently and they are all shapes and sizes. When someone is an odd size they have a hard time finding clothing that will fit. If you purchase odd sizes you will quickly see that these people are more than willing to pay top dollar for something that will fit. So never overlook odd sizes because you are afraid that they won’t sell.

Get Good Quality Clothing

If you are in the business of selling clothes then you do not want the reputation of selling cheap low quality items. Buy clothes that are only of the highest quality. Buy clothing that is the real thing. If it is a leather jacket you are selling, make sure it is genuine leather. A plastic looking leather coat looks bad and it is uncomfortable. People not only want to look good in their clothes, but they also want to feel comfortable with what they are wearing.

Cross Sell, Cross Sell, Cross Sell

You probably want to put a lot of concentration on women’s clothing, but it is still a good idea to throw in some men’s and children’s clothing as well. For the most part, the women who buy your wholesale clothing are also wives and mothers. In order to get the most from your business, you have to offer clothing that can be cross sold. Offer a few men’s shirts as well as boy’s and girl’s clothing in your product line and you will see your profits soar.

Often times people will go into the wholesale clothing business with no idea what direction they should take. Follow these suggestions and get the most you can out of your business.

Brent Crouch is the owner of Jillian Distributors , a leading clothing supplier. He has spent the last 5 years taking his startup company from his garage to over a 1 millon dollar business selling clothing and other wholesale products to retailers.

Article Source: http://www.ArticleBiz.com

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Retailing Tidbits - June 2007

June 5th, 2007

Pacific Rim Liquidated
THE thirty-year-old gift and home decor company Pacific Rim which went into bankruptcy earlier this year completed the last step of their sad tale, complete liquidation. This once extremely popular gift company succumbed to the pressures of the changing marketplace and unable to sustain, filed for bankruptcy protection with the hopes of finding an adventurous suitor to continue its legacy.

UNFORTUNATELY there was no knight in shining armor and early last month the company went into liquidation mode. Handled by the national liquidation company, Great American Group, lots both large and small hit the auction block in Seattle and there was rapid fire bidding to liquidate over $18 million worth of product and assets. Auctions were held both on-site and on-line as the rich history of one of our industry�s leading suppliers made the pages of businesses of the past. Buyers will notice the empty showrooms during market week as well as no new lines from this once brilliant supplier.

Vegas Has High Demand For Retail
NOT everything revolves around cards and dice in Las Vegas! The city has shown a high demand for retailing which has sparked development which have sent retail vacancy rates plunging and rental prices to all-time highs.

WITH a near 300% increase in population over the last two decades, Las Vegas ranks among the nation’s fastest growing cities. The retail market in Vegas ranks number four in the United States and has been enjoying an annual growth rate of 7%, well above the national average. In fact demand is so great that vacancy rates have dipped to 4.2% last year and new retail properties are sprouting everwhere you turn.

THE only downturn for retailers is that the higher rental prices have created lower yields for store operators and real estate investors. Fueling the retail market 39 million visitors to the city last year doesn’t hurt sales and this number is expected to climb this year.

Bling Blink
A new agreement between eyewear maker Kuxottica and Tiffany will bring eye
bling to the masses. This agreement marks the renowned jeweler’s entrance into the lucrative eyewear market. The offerings will include sunglasses as well as prescriptives and hit the stores early next year.

WAL-MART wants to own it all!
They have filed an application with the Patent office that would secure the exclusive use of "EDLP" (Every Day Low Prices) and "Rollback". Supervalu and the National Grocer’s Association among others is challenging the application claiming the terms are generic and descriptive and used widely throughout the retail industry.

Money Matters
The treasury Department spent over $4 billion changing our money and is now being challenged by the Council for the Blind saying it is too difficult to distinguish the bills.

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Avoid these Five Mistakes for a Successful eBay Business

June 5th, 2007

Building an eBay business is in many ways similar to building any business. To be successful everything has to work: Marketing, Sales, Quality, Pricing, and Customer Service. Selling on eBay, however, has some unique features that differ from traditional retail businesses.

On eBay, a seller’s customer service reputation (Feedback Rating) is out in the open for everyone to see. Imagine, if every store in the shopping mall had a sign outside where customers wrote comments about their products and service. Would you stop to read the comments before entering the store? Negative feedback is the number one reason eBay sellers fail. A negative feedback rating, however, usually has its roots in other problems.

Here are the top five reasons why eBay businesses fail:

1. Poor Feedback Rating
New eBay sellers typically underrate the importance of quickly building a great feedback rating. I am amazed when I click on an auction description and see a seller with a feedback rating under "10." How could this person know anything about selling on eBay? Experienced eBay bidders are cautious of sellers with a feedback rating under 25 - 50. Admittedly, getting your first twenty-five feedback comments as a seller can be a long process. Don’t forget, feedback comments as a buyer count as well (although eBay does show the difference). Before you rush into selling on eBay, you need to get some experience buying. There is nothing better than putting yourself in your customer’s shoes.

I wouldn’t start to sell on eBay until you have completed a dozen or more purchases, paid for them promptly and received good feedback from your sellers. Don’t be afraid to ask the seller to post feedback in your payment email. Sellers like to be paid quickly. Sending payment by credit card or PayPal will build your feedback rating quickly as well.

When starting your eBay business, you should bend over backwards to provide exceptional service. Remember, you are fishing for compliments. When you have a positive feedback rating over "100" bidders will look at your rating number and then make their decision on whether or not they like your product. If your feedback rating is less than a 100, people tend to actually look back through your comments and read them. There is a big difference between "Nice transaction — good seller" and "FIVE ***** SELLER, EXCELLENT PRODUCT- FAST SHIPPING" Whether you are a new seller, or a veteran eBayer, building excellent feedback comments should be a daily goal.

Poor communications between buyer and seller is the leading cause of negative feedback. Make sure your first email to the successful bidder is clear, and complete. You should not only be polite, but be effusive in your congratulations. Remember: Some people shop on eBay for bargains, but most people shop on eBay for fun. Make the transaction a fun experience. Be personal. Don’t sound like a bureaucrat or a big corporation. Make the buyer feel good and close the sale by complimenting them on the great deal they made.

Make sure your payment instructions are clear and your shipping methods and charges are clearly spelled out (this should have been in your auction, but many people can’t remember). If a buyer wants to pay by credit card, suggest PayPal, or explain how to access your secure credit card server. If they want to use a check, explain how they can speed up the payment and delivery by using PayPal’s electronic check service.

I am not trying to be a walking advertisement for PayPal, but the simple truth is: it works! Anything you can do to speed up payment, shortens the time it takes a customer to receive their purchase. Nothing will improve your feedback faster than getting purchases to your customers quickly.

As the seller, you have the most to lose by negative feedback. It is only a question of time until you run into a difficult or irrational buyer. He or she may be rude, or unresponsive, or both. Once your feedback rating is secure in the high hundreds, you can afford to take a tough line and weather the negative feedback that inevitably follows. But while you are building your feedback rating, sometimes you just have to swallow hard and be extra diplomatic. I always give people the benefit of the doubt and try and work something out. I would rather lose a sale than risk negative feedback from an irresponsible person. If a buyer won’t complete the transaction, its better to report them to eBay, than to get into a feedback war. Once eBay determines they are a non-paying bidder, they will not be able to leave feedback against you.

To summarize, make your communications fast, friendly and complete and your feedback rating will soar!

2. Not Accepting Credit Cards Turns Away Bidders
Thousands of bidders worry about Internet fraud. Several studies by eBay and Yahoo have positively concluded that accepting credit cards will increase your auction bids anywhere from 100% to 300%. This is even more true on web site sales, where accepting credit cards can boost sales over 500%!

Setting up a merchant credit card account can cost between $195 to $425 in set-up fees and anywhere from 2.5% to 7.5% per transaction.

Fortunately, Paypal offers an elegant solution. There are no set-up fees and transaction costs are 2.2% or less. Here is an important tip: Some buyers don’t know what Paypal is, or how it works. Place a PayPal logo on all your auctions and a link to PayPal in emails to your successful bidders.

In your auction, place a line of text above the PayPal logo that says: "To pay with a credit card, click on the PayPal logo below." Do the same in your email to winning bidders. Use a statement such as: "If you would like to pay by credit card, click on the link below to register and pay securely using Paypal." Then place your PayPal referral link after your signature.

If you have a web site (most successful auction sellers do), instead of setting up a merchant credit card account, you can now use PayPal’s WebAccept to take credit card orders on your web site. Connect to PayPal’s "Web Tools" link, and type in the product, pricing and shipping info. Then copy/paste the html code onto your web page. You now have a credit card shopping cart for each individual product.

3. Weak Headlines and Poor Auction Descriptions Lose Bids
There are over seven million items listed on eBay every day. Your headline must stand out above the competition to attract bidders. A great headline should contain two key elements: "Key words" that are searchable, and "emotional words" designed to attract attention.

Over 60% of bidders find the item they are looking for by using the "Search" feature. Unless you use the key words bidders are looking for, you will miss many bids. For example, if someone collects Ferrari Formula 1 model cars, they will search "Ferrari" rather than "Formula 1" or "model cars." A search of Ferrari turns up 41 items, while "Formula 1" turns up a few thousand items. A search of "Blue & White" will turn up thousands of listing in the pottery section, but a search for "Liberty Blue" (a specific type of blue & white pottery) turns up only a few hundred items.

Your headline should also include "emotional" words designed to attract a bidder’s attention. These words include: new, rare, unique, sexy, secret, unbelievable, super-value, etc. You should not call something "rare" if it is not. But, there are other adjectives that work well in headlines. Besides the emotional words you can use words such as exquisite, charming, wonderful, mint, perfect, clean, superb, etc. Just make sure you are accurate.

Once you catch the bidder’s attention with a great headline, you need to "sell" them with your item description. Too many bidders simply describe the item they are selling. Yes, it is important to completely and accurately describe the item, but too many sellers leave it at that. Take the time to "romance" your item. Sell the benefits.

Before writing the auction description, ask yourself: "Why would someone want to own the item you are selling." If you are selling something you use, say so. Tell the potential bidder why you owned the item, how you used it, what benefits it brought you. Sell not just the features, but the benefits and the romance.

Here is an example:
"This Sterling Silver bracelet is five inches long set with zirconium stones that look just like diamonds."

Now lets add some romance:
"This exquisite Italian Sterling Silver bracelet is set with five glimmering zirconium stones that sparkle like diamonds. The silver is finished to a high polish. It’s so bright, it looks like white gold. Whenever I wear this bracelet my friends ask: "Wow, are those real diamonds? Where did you get that bracelet?"

Your auction descriptions must also be complete. A clear photo is critical to the success of the auction, but remember, photos don’t always show all the details a bidder needs. If you are selling an antique, collectible or any used item, be sure to describe any and all flaws. The fastest way to build negative feedback is to over-describe the item, or over-promise performance.

4. Poor Images Can Turn Off Sellers
The saying "A picture is worth a thousand words" is never more true than with on-line auctions. Not having a photo of your item will greatly reduce your bids, and lead to unprofitable or unsuccessful auctions. Not only must you have a photograph of what you are selling, the photo must be accurate and revealing.

It is not necessary to be a professional photographer. Ebay bidders understand that most sellers are taking snapshots of the products they sell. But, your photo should be clear, and show the product as completely as possible. Here are some tips for good photos:

�If the size of an object is not obvious, use a reference such as a ruler or a coin.

�Show any flaws or defects. Point them out in the caption if necessary.

�Don’t use a flash. It causes reflections. Take your photos in open shade or using indirect window light.

�Do not use "stock" photos. Bidders want to see a picture of the actual item they are bidding on, not a scanned photo from a brochure.

�Use a tripod to make sure your shot is sharp.

�Keep your photos to less than 300 pixels. Larger photos take too long to load and impatient bidders will click away from your auction. The "e-mail" setting on most digital cameras works just fine for most auctions.

�Except for flat items such as prints, photos, stamps, cards and so on, scanners often produce an inadequate image for most items. If you don’t have a digital camera, you can now take a 35mm photo to most Kodak processors and they will digitize your images and return them to you on a floppy disk or CD. This will cost just a few dollars more than the processing.

5. Not understanding your costs is a prescription for disaster
It is very easy for a new seller to get caught up in the excitement of selling and not pay attention to the costs involved in selling. Before deciding whether to sell an item on eBay, and what to sell it for (i.e. reserve or Dutch auction price), you need to understand all the costs involved.

First of all there is the "listing fee." There is also a "selling fee" that will be set by what price the item actually sells for. There may be a fee to process a Billpoint, PayPal or credit card sale. If you use an auction management service such as Andale or AuctionWorks then you have their fees. Don’t forget shipping, and the cost of the shipping materials.

If you are selling items you purchased wholesale, were there shipping charges to get it to you? Did you pay sales tax on the item?

Many businesses fail because they are either under financed, or because they do not understand their costs. A program such as Quicken’s "Quick Books" could be one of your best investments. Quick Books will allow you to track every expense, down to the penny, and allocate the costs to different categories so you will fully understand where every dollar is going and if it was well spent.

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Is it Possible to Become a Wholesaler and Call it a Home Business

June 5th, 2007

The short answer is yes. You see, there is this thing called the "China Price". This started with manufacturers in China selling their goods so much below the normal price that it sent shivers down the backs of manufacturers world wide. In the past, factories wanted to ship very large minimum quantities and have exclusive agents. With increasing competition and manufacturers from other countries having to offer the China Price the minimum order quantities demanded by factories have come down and exclusive agencies are getting less prevalent.

In theory, you can now order a product of a small enough quantity, store it in your house and sell it to retailers in your area. If the products are well chosen and you handle the business well, this can make serious money.

Let us take for instance a product that is below average in potential income to illustrate what is meant by the proposition here - instant electronic thermometers. You can buy these for about US$1.70 to US$1.80 delivered to you depending on where you live and the tax that has to be paid on them. They normally retail at between US$ 9.95 to US$14.95.

The sales can be to existing retailers, fund raising events and people who sell at weekend and night markets. These sales could be priced in the range of US$ 4.00 to US$ 5.00.

In addition, you could sell at markets yourself at perhaps US$ 8.00 per thermometer to make them very attractively priced.

It would be great to help the local school, club or charity organization by selling to them at wholesale prices so that they could resell at the normal retail price. This would extend your income greatly and you would be helping them raise money.

How many of these can you sell on average per week? That is like asking how long a piece of string is.

Sales per year depend on many factors, how big a market do you intend to tap, your commitment and skills and many other factors.
Take a reasonable example of a city of one million people as your market; the likely total potential market for instant electronic thermometers would probably be in the order of 80,000 thermometers per year. Since you are local and you have concentration on one product and if you are committed, it would be reasonable to assume you could sell 20,000 thermometers per year.

How much could you make from that? That again depends on how your sales are distributed. Your margins on sales to current retailers, market sales people and to schools, clubs and charities could average $2.50 each and your own sales at the markets, to friends and neighbors could average $6.00 each.

If the overall average margin is $3.00, you would have an income of $60,000 per year.
How much money do you have to invest in all this? It should be well under $10,000.

How many hours would you have to work on this per day? That depends on you. For the example above, it should not take a well organized person more than 3 to 4 hours average per day.

You could then add a complementary product and double your income.

This is just a basic overall view and there are many pitfalls and things to watch out for and things you have to do. A series of articles are being written to help you step by step to achieve your goals. Watch out for them.

Jag Kaurah, is CEO of MarketClub , located in Melbourne, Australia. MarketClub is an online shopping site and offers a variety of Home Business opportunities operable in any part of the world. Jag can be contacted at jag@marketclub.biz.

Article source: ArticleCity.com

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