2008 May
Going into a retail business for yourself means taking risks with your money and your future. Not only do you have to worry about finding customers and keeping positive cash flow, you have to keep a steady supply of merchandise. This means finding a reliable supplier or distributor. But with just as many fraudulent or overpriced suppliers as there are legitimate distributors, committing to a supplier can be a scary thing.
Good business sense can help you avoid many of the scams out there, but there is no way to avoid them all. Fortunately, a scammer’s charade is never impervious. By using the following tips, you can avoid everything but a skim across the surface of a bad business experience.
Just because it looks like a duck and sounds like a duck… There are many companies out there who claim to be wholesale distributors, when in fact they are drop shippers who buy their products from wholesalers and mark them up before selling them to you. This not only costs you money at the purchase, it costs you future profit potential, since you will have to raise the price of the product yourself to make any kind of profit. One thing you can do is to take note of the variety of products a supplier sells. Distributors that sell many different items rather than specializing in certain products might just be drop shippers.
Some things in life are still free… If you’re just starting to work with a distributor, they may require a small set-up fee or a minimum purchase to get started. However, this is the exception, not the rule. If a distributor tries to charge a subscription fee, add-on fees or per-item fees, ask them to explain the charges and plan to move on to another company.
No name, no number, no service… A legitimate business isn’t afraid to attach its name and contact information to its web pages, so if the supplier you’re looking at doesn’t have a contact number and address, tread carefully. Anyone can invent an email address and start a website, and you should be able to gather enough information from a supplier’s website to do the proper background research on them. When you do order product, your supplier should ask for your tax ID number.
Let your fingers do the walking–um, typing… In today’s information age, legitimate companies are easy to find. Even start-up companies will have a trace of information somewhere online. The Better Business Bureau maintains information on thousands of companies, and their website is easy to use. Whois.net is a great place to research a business website. Just by typing in the domain name, WhoIs will tell you if the site is registered under a company or an individual. If you see a person’s name as the registrant, you might be dealing with a middleman.
Sales Pitch 101: Your supplier shouldn’t be trying to sell you products. If you visit a distributor’s website and it includes a sales pitch, you’re probably dealing with a middleman. That isn’t to say that distributors won’t have any kind of marketing on their site, but they don’t have a need for aggressive sales techniques. On the same note, your supplier shouldn’t be trying to sell you other services. At the very least, this indicates that he or she is a dabbler and might not be around long.
Hello, Smith residence… If you really want to find out the legitimacy of a potential supplier, call their business number. If someone answers the phone with a simple "hello," hang up. Although many acceptable businesses are run from a home office, there should still be some kind of indication that it is a place of business. While not all companies can afford a receptionist, they will at least answer the phone with the name of their company.
If all else fails, contact the manufacturers of the products that you plan to sell and ask them who their authorized distributors are. They may suggest some strategies for selling and point you in the direction of their best suppliers.
Tags: advice, Product Sourcing, source, supplier red flags, suppliers, tips, vendors, warnings
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On March 3rd Ebay launched a few new features. One of these was Best Match. Has this addition helped or hurt their business? Let’s take a look and find out.
Now when you log onto eBay and search for an item, instead of getting several thousand items that only match the words you type in, you get millions of items that all have the keywords you typed in - some not having anything to do with the item you are searching for.
Best Match - Changes Made
Along with the best match feature, they also made changes to their feedback system. For the past ten years, you could be honest about your experience on eBay.
You could give a positive, neutral, or negative feedback to a person or business, depending on how well you felt you were treated after a purchase or sale. Now, you can only give positive feedback to anyone you make a purchase from.
That means even if you were to get ripped off, or never get your item, you still have to leave positive feedback.
Search Results Changes
eBay also changed the way search results are displayed. Now, the higher your feedback score, the higher your auction will be displayed when someone searches for products, instead of the way it used to be.
In the past, this feature would display search results from the auction ending the soonest to auctions with more time. Now, if you have a 99% feedback rating, your auctions will be listed higher than someone who has a 95% feedback score.
This has many of eBay’s top sellers thinking of finding a new place to sell their items. The longer a person or business has been a member on eBay the more they have dealt with people and developed a feedback score. Sometimes, no matter how much you try, you just cannot satisfy everyone - so the ones that are not satisfied may leave a negative feedback.
This can impact your score, and put your auctions at the end of the search results.
The Bottom Line - Better or Worse?
With your items at the bottom of the search list, you have to find ways of getting your auctions noticed. You can sell your products for a lower price, but you still have to make a profit.
You would have to get your merchandise way below wholesale to sell below wholesale and make a profit. Also, don’t forget that eBay will get 10-20% just for you selling on their site. Since the changes were made in early March, many eBay sellers have been losing more money than they are making.
With some of their top sellers looking for other places to sell their items, eBay has to be asking themselves if these changes were a wise move, or if they took something that was working well and made unnecessary changes that will cause them to lose business.
Tags: E-Commerce and E-Business, ebay, eBay Edge, ebay seller
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You may think you know what you’re getting into…but you have no idea. There are probably a few preconcieved notions you have about starting a business whether you think you’ve done your homework or not. So without further adieu here are the top 5 startup myths you should be aware of:
5. The government gives grants to small business startups - While some states may have special funding programs in place for people with disabilities, minorities or veterans, the federal government does not have any programs that give money directly to any business. Your best bet is to get involved with the Small Business Association (SBA) and see if you can work with them to have them back a bank loan. You can also contact your local Economic Development Corporation to get help regarding information and resources that will help small businesses.
4. The only reason you need a business plan is to obtain financing - Forget about the financing, a business plan should be made to give you a realistic perspective of the market and the competition. Preparing a business plan keeps you from discovering the hidden pitfalls that can lead to an early closing. Yes, a business plan is the best tool to use to figure out the startup and monthly cash needed to fund a business, but that is only a portion of why a business plan is so useful.
3. A unique product/service sells itself and doesn’t need marketing or advertising - Every new business owner believes their product or service is compelling, otherwise why would they invest their time and money in the business? In a marketplace filled with billions of product offerings, it’s the ones that use the power of marketing to their advantage who get the most customers. The worst thing a business owner can do is sit back and wait for customers. You need to work to grab the attention of your target market, because you can bet that if you don’t another business will. And, inferior products or not, they’ll get the business because they put their offerings in front of more people. It’s as simple as that.
2. Small business owners have more free time - Ah, the life of an entrepreneur: Lying around in pajamas, eating bon bons on the couch and leisurely typing away on the laptop - Ha! Try the complete opposite: Early mornings, late evenings, long workweeks and working on the weekends. Sure you’ll be able to see the kids off to school and take them to the dentist, but in order to grow your business, you’ll need to put in the extra time - and that’s especially important in the first three years.
1. Business owners can write off practically everything - Not unless you enjoy being audited by the IRS! Sure there are perks to being a business owner; you can write off business lunches, computers, office rent and utilities, but that doesn’t mean groceries, clothes, haircuts, etc. Some people think that just because they’re a business owner, they can magically deduct every purchase if they can somehow link it to their business ("I need a $5000 ‘power suit’ for the meeting"). The reality is, it just isn’t so, and that kind of thinking is likely to get you into serious trouble with the IRS.
Bottom line: There’s no easy way to the top. Good old fashioned knowledge and hard work is the key!
Tags: advice, myths, small business, Starting a Business, startups, tips
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Bartering is a tried and true (and ancient) business practice. It is still commonly used in many countries in every day business interactions. For whatever reason, it is not as common in the U.S. but this doesn’t mean it should be forgotten altogether!
If your small business is still afloat but you find yourself short on cash, give bartering and honest look. There are many barter exchanges which you can join and here’s how it works:
Step 1: Research the barter exchanges. Like I said there are a lot out there so do some research and pick the one you think will best suit you based on other members and how much you want to pay to join. You can find lists of these exchanges at nate.org , irta.com or itex.com .
Step 2: Join your chosen exchange. There are a wide variety of membership fees out there. Some have a one time fee of $800 for new members while others charge a much lower monthly fee in the $10 to $30 range. In addition to the fees, there can also commissions involved which, if you are a low-margin business, would make bartering a money losing venture. Run the numbers and find out.
Step 3: Barter away! You will receive "barter cash" for your and work you do/goods you offer which will be good only within the exchange you join.
Keep in mind these important factors (compiled by BusinessWeek.com ) when getting involved in a barter exchange:
Joining an exchange does entail costs, including fees and commissions. If you run a very low-margin business, those commissions may make bartering a money-losing proposition. Every business will want to limit its barter business to 5% to 15% of total revenue so that cash flow remains at healthy levels, says Ron Whitney, executive director of the International Reciprocal Trade Assn. (IRTA), a Rochester (N.Y.) nonprofit that promotes barter. And if you are bartering one-on-one, be careful. Misunderstandings can arise if you don’t have a formal contract. Then there is the IRS: Barter deals have to be treated like regular cash sales in federal and state filings. If a business owner uses barter services for personal reasons, the cost of the item is considered compensation on your income.
If anyone has tried this, I’d love to hear how well you think it works?
Tags: Accounting, barter, bartering, Business, cash flow, finanance, Finance and Accounting, money, small business
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The following is a great excerpt from an article on Forbes.com . It highlights some strategies retailers can use to help get themselves and their customers through the economic storm:
"In the short-term, retailers need to continue providing sales incentives, discounts and promotions that demonstrate value to the consumer. Incentive packages can be offered for cost-saving items such as fuel-efficient cars or energy-saving light bulbs. Innovative ideas to help consumers spend "extra" money will be critical. We have seen this happen already in the travel industry where some resorts are providing gas cards for guests driving to the destination.
Retailers with a strong, customer-oriented Internet presence are well positioned to take advantage of the momentum in Internet sales carried over from the 2007 holiday season. Retailers should explore new payment options for customers for online sales, including prepaid gift cards, which would have the added benefit of capitalizing on the increase of customers buying gift cards. Ultimately, e-commerce will help consumers save gas money while having the associated benefit of lower operating costs for the retailer.
Looking ahead to long-term positioning, retailers can improve return on investment for their stores by taking advantage of lower retail space costs for new store openings. With companies halting store expansion and announcing store closings, certain regions have experienced an excess of retail space. The industry should capitalize on better lease terms than we have seen in recent periods.
As mid-range and long-term strategies, retailers will need to focus on properly managing the mix and quantity of inventory held in their stores and distribution centers. In conjunction with maintaining inventory, retailers should seek alternative channels, such as the use of distributors or value-added resellers in lieu of a retailers’ clearance center approach.
Retailers will also be forced to reassess their suppliers and transportation, as well as storage and handling costs, as product costs from overseas, particularly China, continue to increase.
In the end, the U.S. economy is built on both consumer spending power and retail success. If retailers remain determined to help consumers weather this difficult time while bracing themselves accordingly, we can all hope to emerge strong in 2009."
Happy Memorial Day Weekend!
Tags: economic crisis, economic downturn, Generating More Sales, recession, Sales
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I’m sure you’ve heard all the ruckus surrounding American Airline’s announcment that it will initiate a checked bag fee as well as increase fees for other services on top of jacking up actual ticket prices. All in the name of the weak economy and soaring fuel prices.
There’s the saying that you can’t please everyone. And it’s true, especially if you are in an industry that serves millions of people a year. But what happens when you don’t please the majority of your customers? Sit back and watch in the next few weeks.
The following are some of the major issues that have come to light following the announcement:
Customer Service: First and foremost, whether AA had decent customer service or not, the fact is that it doesn’t have the kind of customer service that separates them from the pack. Therefore, fliers group them in with the rest of their bad experiences thusly creating their first big problem-customer trust and loyalty is compromised. When times get tough, these customers aren’t going to be understanding.
Price Jacking: Everyone knows prices are going up across the board. And they knew airlines would be no different. The problem here is where and how AA raised their prices. Ticket prices are constantly going up and down…had they lumped all their price hiking into the cost of tickets it would not have caused as much of a stir because it is an area people expect the prices to fluctuate. Instead, they tacked on charges for things that were previously "free" (checked baggage) or low cost. This gives people the impression they are being extorted and this, is problem number two.
Timing and the Blame Game: AA hasn’t given anyone enough time to adjust to the new price changes. As of June, it’s go time. What would have happened if they had increased prices slowly over time as gas prices went up? People still wouldn’t like it but they wouldn’t feel taken by surprise. Also, AA (and I’m sure other airlines to follow) is making it out like they are the only ones being affected by the economy and price of oil…well guys, we’re all suffering aren’t we? It surely is a reason, but it’s not one that is going to give customers warm and fuzzies about the situation. Instead of laying blame, find some positives and highlight them. If nothing else it’ll take the sting out of the price hike.
Take heed of this bad example and as you wade through the economic crises, learn from others mistakes. For some guidance on a different approach to price hike strategy, I suggest you read Markup on Cost Versus Gross Profit Margin .
Tags: american airlines, economy, fuel prices, oil prices, prices
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The Federal Trade Commission announced in a press release today that it will soon be publishing clarifications to the CAN-SPAM Act of 2003. The following topics are to be addressed:
(1) an e-mail recipient cannot be required to pay a fee, provide information other than his or her e-mail address and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single Internet Web page to opt out of receiving future e-mail from a sender.
(2) the definition of “sender” was modified to make it easier to determine which of multiple parties advertising in a single e-mail message is responsible for complying with the Act’s opt-out requirements.
(3) a “sender” of commercial e-mail can include an accurately-registered post office box or private mailbox established under United States Postal Service regulations to satisfy the Act’s requirement that a commercial e-mail display a “valid physical postal address.”
(4) a definition of the term “person” was added to clarify that CAN-SPAM’s obligations are not limited to natural persons.
Keep your eyes peeled for it. The good news is that if you are already conducting an ethical email marketing campaign, these specifications should not affect you one way or another. If not, you may want to revise your strategy. For some guidance, check out Keeping Your E-Mail Campaigns Legal .
Tags: CAN-SPAM, E-Commerce and E-Business, email marketing, law, legal, legislation, Marketing, Marketing Your Business, news
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I have beef with Twitter. To me, it’s an oddly socially accepted and encouraged form of stalking where the "victims" volunteer themselves.
Aside from the creepy factor, from its inception I have never really understood how thousands of people #1 care so much about what other people are doing that they would subscribe to and check instant updates via a personal feed, and #2 that said number of people actually believe that that many OTHER people care enough about their minute happenings so much that they’d consistently update these feeds.
Twitter’s usefulness has long been debated and I have clearly chosen sides. But I can’t argue with the fact that Twitter’s traffic numbers have nearly doubled in recent months . Looks like more and more people from my side are hopping the fence to join the other "volunteer victims" and "stalkers"…traitors…
Okay, perhaps I’m being a bit harsh on Twitter. But I really don’t see how it can keep up it’s stamina? Sooner or later, it’s going to loose steam right? After all, not everyone can keep up with everyone to that degree all the time and still make actual useful contributions to mankind…can they? Heck, I have enough trouble keeping up with my MySpace, Facebook and LinkedIn accounts!
Here’s how I see Twitter succeeding: in the business world. While people can really care less what their best friend ate for lunch today, they might really care what lunch specials their favorite restaurant is having. And while they might ignore that their little brother just beat Grand Theft Auto 4, they might really want to know that Best Buy is putting the game on sale for the next 12 hours for 50% off (that would REALLY be worth "tweeting" about don’t you think?).
If that’s the future of Twitter, sign me up. Otherwise, count me out.
Do you think businesses will be Twitter’s savior or am I completely off my rocker?
Tags: Business, E-Commerce and E-Business, facebook, linkedin, myspace, social networking, twitter
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Going global is a huge step. It’s an important one in every business’s growth. Considering the fact that times are what they are, it could mean the survival of your business. So before you step off into the global market, consider the following factors Entrepreneur.com has put together as a sort of "Pre-Going-Global-Checklist":
- Get company-wide commitment.
- Define your business plan for accessing global markets.
- Determine how much you can afford to invest in your international expansion efforts.
- Plan at least a two-year lead-time for world market penetration.
- Build a website and implement your international plan sensibly.
- Pick a product or service to take overseas.
- Conduct market research to identify your prime target markets.
- Search out the data you need to predict how your product will sell in a specific geographic location.
- Prepare your product for export.
- Find cross-border customers.
- Establish a direct or indirect method of export.
- Hire a good lawyer, a savvy banker, a knowledgeable accountant and a seasoned transport specialist,
- Prepare pricing and determine your landed costs.
- Set up terms, conditions and other financing options.
- Brush up on your documentation and export licensing procedures.
- Implement an extraordinary after-sales service plan.
- Make personal contact with your new targets, armed with culture-specific information and courtesies, professionalism and consistency.
- Investigate international business travel tips.
- Explore cross-border alliances and partnerships.
- Enjoy the journey.
For explanations of these factors click here .
Tags: Business, Doing Business Internationally, factors, global, tips
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The earthquake tragedy in China is only the most recent example of how harmful disasters can be. Not only are they costly in human lives and sheer destruction but also in the number of businesses that will never open their doors to customers again. Disaster can occur on a smaller scale as well such as burglary, fires, hardware crashes and many more.
A White Paper produced by HP and SCORE reveals that about one-third of all respondents to a survey in the paper said they backup their data rarely, if at all. Most of the rest did it less than monthly, and yet 70% of small businesses that suffer a major data loss will go out of business within a year.
We can’t prevent disasters from happening but we can do our best to prepare for the worst. Here are some ways to minimize the loss your business could incur in case something should happen:
* Of course, the easiest and most obvious preventative measure you can take is simply to backup your data , and not just in the same location, but remotely.
* Important documents should be kept in a fireproof safe.
* Software should be utilized to prevent computer worms and viruses from destroying your hard drives.
* Create a plan to keep things running if something should happen. Assign roles and responsibilities as a part of that plan and walk through them with employees. Then keep the plan updated.
Insurance is also another key factor in salvaging a business in the aftermath of a disaster. Check out Small Business Insurance and Why You Need It for more advice.
Tags: advice, Business, china, disaster, earthquake, insurance, news, tips
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