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As Deficit Declines, Small Businesses and Manufacturers Encouraged to Export

Thursday, December 18th, 2008

While the U.S. current account deficit declined more than expected, efforts in promoting overseas exporting remains persistent among the government, economists, and industry experts.

The reason why: a trade deficit of more than $214 billion, which they say is more than enough evidence that the United States is still consuming more than it is producing.

The current account is the broadest measurement of global economic activity by the United States, as it incorporates investment flows with trade of goods and services. Its deficit current amounts to $174 billion, down 3.7 percent from $180.9 billion.

Peter Morici, a University of Maryland international business professor, believes that the trade deficit is almost entirely responsible for the current account deficit, and that cutting it in half would pull the country out of its recession.

“Every dollar spent on imports that is not matched by a dollar in exports reduces domestic demand and employment,” he wrote in Seeking Alpha.

The manufacturing sector in particular has suffered under the trade deficit, with a 1.6 percent decline in production last month and over 4 million jobs cut since 2000.

Over the years, the National Association of Manufacturers has watched domestically-centered manufacturers suffer as exporting-oriented manufacturers prosper, with a 17 percent growth in production since the end of 2005.

“If your company is not exporting, it needs to,” said Dan Akman, assistant vice president for marketing and business development, to World Trade Magazine on Dec. 3.

Meanwhile, the U.S. government continues to believe in the exporting potential of small and medium-sized businesses. In 2006, the International Trade Administration reported that such businesses exported $263 billion in revenue. To date, more than 250,000 of them are currently exporting, according to U.S. Secretary of Commerce Carlos Guitierrez.

“It’s especially important that our entrepreneurs and small business owners have the tools they need to take advantage of expanding international marketing opportunities,” he said at last month’s Small Business Administration’s International Trade Symposium.

Tags: Carlos Gutierrez, christina lee, current account deficit, exporting, manufacturers
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Wholesale-Distribution and the Economic Crisis

Saturday, October 11th, 2008

Each day this week, Wall Street investors watched in astonishment as the Dow Jones Industrial Average plummeted at unprecedented rates. Very few, if any segments in the wholesale-distribution industry are safe, experts say — but every day that passes is an opportunity to optimize the market.

“What it comes down to is making the best strategic decision, under any circumstances,” said Chuck Miller, vice-president of marketing communications firm CommCentric Solutions, “and when you have fast-changing conditions that occur with the challenges of today, you have to be able to respond quickly and appropriately.”

The most recommended solution in times like these: collaboration that pushes down barriers of competition. That competition, according to Richard Sherman, refers to manufacturers and retailers, “not necessarily other wholesalers down the street.”

But while initiating these new relationships, wholesale-distributors of all sorts must make sure that they add value to their services and make that value known — starting now.

“They need to wake up,” said Sherman, president of Gold and Domas Research and supply chain management expert. “In fact, I happen to be working with some wholesaler segments — and I won’t say which ones — that don’t need a wake-up call. They need a wake-up two-by-four.”

The Market’s Current State

According to research by the Manufacturers Alliance , manufacturing production growth is expected to decline by 0.5 percent in 2008, following a low 1.7 percent growth last year. Its research institute does expect growth in 2009, but only by 0.2 percent.

The only growth expected this year is in investment in equipment and software — by 0.8 percent in 2008 and 2.3 percent in 2009. In addition, the research institute predicts that the largest percentage gain in capital equipment spending will go toward the high-tech sectors.

“Distributors in the IT industry have an advantage in such circumstances. In tougher times, everyone wants to cut costs and find ways to be more efficient,” Miller said.

But, as the former communications director of Tech Data Corporation — one of the world’s largest technology product distributors — can attest, the advantage that the industry has is no guarantee.

“It is very difficult to see how everything will unfold,” he said. “It is contingent on the actions of the Fed, and how that overall affects the business climate. That obviously affects IT spending and how much stability or how much decline may occur.”

Ben Worthen, a Wall Street Journal blogger, also announced to readers Tuesday that “The Tech Sector Finally Gets Hit.” His entry discussed the loss in revenue by SAP and RightNow Technologies — proof, he says, that “tech companies may have cash, but their customers aren’t so lucky.”

Wholesale-distribution experts expect very little, if any segments of the industry to remain intact.

“The wholesale-distribution industry as a whole is going to be impacted in a very general way as is the economy — which is pretty devastating,” said Jim Olsztynski, editor of plumbing distribution magazine Supply House Times. “We all see what is happening to the stock market, and everything else that is going on. I think we’d be whistling in the dark if you think the wholesale industry is going to prosper.”

Past Sufferings

Wall Street only presents the latest of obstacles the wholesale-distribution industry has had in over the past ten years. More than 20 years ago, manufacturers and retailers began making efforts to distribute goods themselves — a process that cut out wholesale-distributors and, as they thought at the time, reduced both costs and risks.

Beginning in 2000, layoffs in the technology distribution industry came as a result from, as Miller described, “a combination of the dot-com explosion and large-scale build-up for the Y2K conversion.” Dell became renowned for its direct-model approach — the manufacturer’s unique way of adverting the industry’s downturn.

In the end, manufacturers and retailers did not reduce either cost or risk by much, according to Sherman. Still, they saw wholesale-distributors as little more than “middlemen” that had to prove themselves worthy again

“Mr. Wholesaler, you have to begin to articulate the value of those services and value of inventory management, and buffering risk against uncertainty in the last mile of that distribution,” he said, to sum up his advice given in a 2001 Material Handling Management article, “Wholesale Distribution — Back in the Chain Game.”

Part of this redefinition, as wholesaler-distributors found, became the creation of a new relationship with manufacturers and retailers. They began providing extra packaging lines so that they could send out personalized case sizes of material — thus, reducing costs manufacturers had to pay for packaging material, labor, and equipment.

How Crisis Becomes an Opportunity

A reexamination of history — in particular, when distributors were being overlooked ten years ago — could lend solutions for today’s crisis. More than ever, wholesale-distributors need to learn fast how to deal with an increased crunch in and competition for cash flow, credit and capital.

With this, “the bigger businesses are going to get bigger, the smaller businesses are going to get smarter, and the medium-sized businesses got to really look at their strategic intent,” as Sherman said.

One of the first steps wholesale-distributors must take is to evaluate their inventories.

“A lot of capital gets tied up in those inventories,” Sherman said. “Managing inventory in light of tight credit is an opportunity to free up working capital.”

In addition, as they had to do ten years ago, wholesale-distributors must again add value to their services and collaborate with manufacturers and retailers. Experts advise that distributors offer to take care of supplying to regional retailers or to other small to mid-sized clients, so that manufacturers can focus more on their national buyers.

“It’s the wholesaler that has to educate their former supplier or other suppliers of the capabilities they bring to the table,” Sherman said.

As he has already seen in the technology distribution industry, Miller says that reimplementation of two-tiered business — and with that, “solution selling” — in other industries will soon prove to be more cost-effective.

“The solutions that are used by all businesses, large and small, are comprised of multiple products. The single vendor providing direct sales doesn’t have that solution that the all-products-in-one-place has,” he said. “This is a very significant plus that has always been there for distributors and is even more pronounced during tough times.”

Regardless of what steps distributors decide to take, experts agree as well that the current financial situation will surely lend lessons of its own.

“A lot of people don’t realize how interconnected business really is,” Sherman said. “For those people who don’t think that their business is in an ecosystem, and that a little bump here could cause a big bump somewhere else: this should be a real education opportunity.”

Tags: christina lee, Chuck Miller, CommCentric Solutions, economic crisis, economic downturn, Gold and Domas Research, Jim Olsztynski, manufacturers, retailers, Richard Sherman, Supply House Times, wholesale distribution
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Contract Manufacturing - Saving Time and Costs

Friday, January 25th, 2008

At some point in your life as a business owner, you are going to come to the realization you can’t do everything. While you may like to be in control of most aspects of your business, if you need parts and pieces made for your end-product, you may not have the means to do it, nor the money to build a complete manufacturing facility. This is when it’s time to turn to contract manufacturing.

In this article, we’ll take a look at the ins and outs of contract manufacturing. By the time you’ve finished reading, you’ll have a good idea as to whether or not it will work for your particular business.

What is Contract Manufacturing?

A contract manufacturer is someone you hire to create products or components for your products. If you need a machine part, statue, collectible coin, or other item that requires a lot of machinery to create, you would enter into an agreement with a contract manufacturer to create those items for you.

Is This A Viable Solution For My Company?

There are a few questions you will need to ask yourself to answer this. First, are you capable of making the part or item yourself? If not, you need a contract manufacturer. If you are able to make it, how much will it cost in base materials? Next, how much time and manpower will it take to create the item?

Once you add these things up, is it worth it for you to do this in house? Or would your company time be better spent on different aspects of the projects at hand?

After you have the answers to these questions, you’ll know if contract manufacturing is right for you.

How Much Does It Cost?

The amount of investment you will be required to put into a contract manufacturing agreement will vary with the kind of work you are having done and which parts of the job you are doing, compared to which parts of the job the contractor is expected to complete.

For example, if you are creating a commemorative coin for a special promotion, then you’ll either need artwork for the contractor to work with, or you will be charged for their artists to come up with a rendering.

Next, you’ll have to pay for a mold to be created of your piece, then a die, that will be used to cut the design out of metal.

These are all up-front costs, before the first coin is ever created.

Once production gets underway, things get much more affordable, and come down to a per-piece price. Most manufacturers will give you a complete estimate that will let you break down all those first time charges as well as the per-piece price of having your items made.

Shipping Costs

If you are making small items, then this may not be a consideration; but if you are having larger items created, you should take shipping costs into account. While the production cost may be low for the products, if the contract manufacturer is all the way across the country, or in another country altogether, then shipping fees could get out of hand quickly.

Generally, if you need a special item or product components created for your business, contract manufacturing is the way to go. While there may be some initial setup fees, and shipping fees, it is still much cheaper than the cost of the manufacturing facility you would have to build, and the labor you would have to hire, to do it yourself.

Tags: contract manufacturing, Leeia Ladipoh, manufacturers, manufacturing your product, saving time, working with manufacturers
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Sourcing Direct From the Manufacturer Is Not Always Easy

Tuesday, December 18th, 2007

Many newcomers to the retail business assume that when it comes time to buy their products, they’ll just ring the manufacturer and place an order. Well, for many products, that may not be the case. For big companies that sell electronics or computers, it’s truly next to impossible.

Why? Because a product manufacturer is plenty busy with designing, manufacturing, packaging, marketing, advertising and public relations. Basically, they’re doing what they do best - and that’s why their products are in demand to begin with.

It makes a lot more sense for a manufacturer to work with a company that specializes in selling products to retailers - a wholesaler that has hundreds of thousands of buyer contacts for both large and small stores and websites.

Take Canon for instance. You can buy their cameras almost everywhere - from the big box stores to small websites. So how are all these thousands and thousands of stores buying Canon’s products? From Canon’s factory-authorized distributors. Depending on the size of the manufacturing company, they may just have one distributor, or they might have several - each typically covering a different region of the country.

Finding a manufacturer’s factory-authorized distributors

That’s the easy part. Yes, really! All you need to do is call the manufacturer and ask. You might even be able to find the information right on their website. Then you can call the factory authorized distributor and ask them about pricing, minimums, etc. It’s the closest most companies will ever get to buying products directly from a big manufacturer.

When can you source directly from the manufacturer?

Many times if the manufacturer is a small company you can buy directly from them. The best way to find out is by calling or emailing and asking. Be sure to inquire about quantity discounts as well.

If wholesaling is your game and you want to become an authorized distributor, contact the manufacturer and get information on their requirements for this (they normally have them - most large manufacturers are very choosy about who they authorize to distribute their products).

Also, while most electronics and computer manufacturers don’t wholesale directly, many manufacturers from other industries will. For instance, in the pet industry, Nylabone brand’s parent company sells direct to retailers. Obviously they are a big company and they have factory-authorized distributors that sell their pet products to thousands of stores, but they also take orders directly too.

So, what’s the best way to buy wholesale products?

First, figure out what brands you want to carry. Then, call each manufacturer and ask if they wholesale directly. If they don’t, then ask who their factory-authorized distributor is. You should only be buying from either of those companies. There are plenty of scam companies on the internet that claim to be wholesalers of big manufacturers’ products, but in reality they are just buying from the factory-authorized distributors and then marking it up!

Now that you’re in the know, getting the best prices on wholesale products is easy. Just remember to always start your search with the manufacturer and never take a company’s word that they are a factory-authorized distributor without checking with the manufacturer first. You might also decide that buying from a factory-authorized distributor is easy, as many times they are the wholesalers for many manufacturers in a particular industry. Many times, buying from a wholesaler means that you can buy from several manufacturers all with just one order.

Tags: advice, Carrie Hinkel, manufacturers, Product Sourcing, source, sourcing products, tips
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Basics of Wholesale Product Outsourcing: Small to Medium Business Owners

Wednesday, November 14th, 2007

The business environment in the past decade or more has changed rapidly. It is now possible for a small to medium-sized business to flourish with the help of thorough market research and efficient wholesale product sourcing.

This kind of sourcing has its advantages and its pitfalls: if the source is genuine, profits are guaranteed, but if the source is defective in one way or the other, the entire business can fail. To ensure continued success in wholesale product sourcing, here are a few basics that a small to medium reseller needs to keep in mind:

Before buying wholesale, the buyer has to be sure of an existing target market in which the products can be resold at a profit. You should only buy a product on wholesale if there is a demand for it, feeding an existing demand is easier than creating one. Equally important: what is of no value to you could be of high value to someone else.

If a wholesale source seems too good to be true, it is probably a scam. Sourcing products on a wholesale basis is never easy, and needs a lot of legwork. Research is your best friend in finding a genuine wholesaler, there is no cheap shortcut to finding a wholesaler who would meet his or her end of the bargain.

A wholesaler should not be contracted till he or she is verified as having existed for a considerable period of time, factory-authorized, and working from a solid infrastructure. One of the best ways is still to call the wholesaler, and if possible, to make a visit.

Middlemen have to be avoided at all costs; these are the people who do not have access to the goods themselves. They arbitrate between the buyer and the seller while marking up the cost, sometimes posing to be legitimate wholesalers themselves. You must always verify if the wholesaler has a real, longstanding relationship with the manufacturer.

The idea is not only to be able to find a wholesaler who is selling the goods you want, but one who is also selling them at enough discount for you to be able to make a profit. Discount does not mean a compromise in quality, however.

A small-medium business owner can choose from amongst the following types of wholesalers:

Dropshippers: For a small to medium-sized business owner, drop shipping can be an excellent option. This means that you simply open a store, advertise a product chosen from the wholesaler and take orders. You charge your customer a retail rate for the product and pass the order to your wholesaler. Your wholesaler processes the order by packing and shipping the product directly to your customer, charging you the wholesale rate.

You do not need to have an inventory, only a small back-up store in case your wholesaler fails you, which you can order in "light bulk" from a supplier. The prices do go up in this case, because dropshipping can be expensive, so you have to ensure that you still make an adequate profit out of the amount you charge your customer.

Manufacturers: Most big manufacturers are not accessible to small businesses, but if you can find a way to get in touch, you might be able to buy wholesale directly from the manufacturer. Most small to medium or new manufacturers are more than happy to become wholesalers themselves, all you will need to deal with them would be an ID, tax license and resale license.

Since there is no distributor between you and the manufacturer, your profit margins would be higher. One of the best ways to source products from manufactures is to attend Merchandise marts and Trade fairs.

Liquidators: This can be attractive for small business owners as liquidators often sell stuff for pennies which can later be sold for dollars. The important thing is to find why the liquidation is taking place.

If it is happening to clear out the warehouse of a business that is closing down, but the goods are ok, then this is a good deal. But sometimes liquidations also happen because a product has no demand, or is defective, and this is where caution comes in.

Distributors: Wholesalers and distributors are those who buy in bulk from the manufacturers for resale to retailers. If you can find a factory-authorized distributor for a product and develop a long-term business relationship, you can place re-orders easily, and lower your buying price significantly.

Importers: Cheaper markets in Asia, especially China, have become very attractive to small-medium business owners because of the low cost of products: importing is now a viable option in order to achieve higher profit margins.

Importing involves more risk, higher volumes and higher payments, so it is best approached with the help of professionals. Communication with the wholesaler and the maintenance of delivery dates and quality standards is paramount.

The sort of wholesale supply that would be suitable for you would depend on the type of products you wish to source, what the size of your business is and the target market you have in mind. Wholesale sourcing is never simple; but once established, it can yield benefits for the long term.

Tags: advice, distributors, Doing Business Internationally, export, import, liquidators, manufacturers, outsourcing, Product Sourcing, small business, source, tips, wholesale, wholesale product outsourcing
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How To Find Manufacturers That Drop Ship

Friday, November 2nd, 2007

Starting a retail business of your own is a proven way of making cash in today’s easy access market. The Internet and other world-shrinking processes have made it possible for anyone to turn a tidy profit by finding goods and selling them directly to customers or even to larger retailers, through EBay, other sites, or simple legwork.

The trick in making some good money at this business is to ensure that the goods you are purchasing come at the lowest possible price, so that when you sell them, you are assured of the highest potential profit. You want to eliminate as many “middle men” as possible so that your original price stays nice and low. This means that you want to buy directly from the manufacturer; additionally, you want to reduce or eliminate the cost of shipping, which can really cut into your profit margin.

In order to do this, you need to find manufacturers that drop ship.

Manufacturers vs. Drop Ship Companies

It’s important to note that we are not talking about drop ship companies here. Drop ship companies are middle men who purchase goods from manufacturers and then sell them to retailers at a profit. If you use a drop ship company, you’ll have to either raise the prices of the goods you are selling or give the company a cut of your profit.

Either way, your competitors will be making more because they are probably buying their products directly from a manufacturer who also drop ships.

Where to Look

The most obvious place to look for manufacturers who also drop ship is on the Internet. Start out with a basic search engine query - type in “manufacturers who drop ship” or some related phrase in the search box, and begin looking at the pages that come up.

The key here will be patience, and also an ability to follow information trails. A lot of the pages that you find will link to other pages, and you may have to go through a couple before you find some really solid information. Some of the best sites will include discussion boards or message boards where forum members discuss who they use when it comes to drop shipping manufacturers.

The other thing to keep in mind when you are looking around on the Internet is that there is a lot of misleading information out there. Even usually reliable sources such as message boards can be populated by “people” who are actually working for certain companies, trying to trick you into using their services by offering rave reviews. That’s why your search needs to include some discernment as well as patience. Look for recommendations of a single manufacturer on several different sites; you should also do a search on that company’s name in a search engine to see if you can find both good and bad.

Other things you can use to determine if the site or manufacturer is the best deal for you are offers such as money back guarantees - and do a bit of research into the developer of the site as well. Solid leads will usually have real-life credentials, so don’t be afraid to phone around to make sure they are who they say they are.

Finding a manufacturer who also drop ships to you is actually pretty easy, although narrowing the list down to a final decision will take some time, patience, and work. You need to make sure and take all the steps, though, so you will be sure that you are making as much money from your sales as possible.

Tags: advice, drop ship, Leeia Ladipoh, manufacturers, Product Sourcing, source, sourcing products, tips
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Sourcing Products From Manufacturers vs. Distributors

Wednesday, October 17th, 2007

Once you’ve crossed the hurdle of figuring out what you’re going to sell online, you have to figure out how to source your products. You have two choices - purchase straight from the manufacturer or get the products you need through a wholesale distributor. There are advantages and disadvantages to both strategies, so it pays to understand how each method works.

Buying directly from the manufacturer may or may not involve drop shipping; however, it’s always the most direct way to get your products. When you go straight to the manufacturer, you bypass all the middlemen and distributors along the way that try to make a profit and leave you with only a little to skim off the top.

One of the main advantages of buying from the manufacturer is that you don’t have to deal with anyone but the company producing the product you are interested in. It’s better to build business relationships with product suppliers who have a real vested interest in the sale of their products and the satisfaction of their customers.

Another advantage is that you save a lot of money buying from the manufacturer. Again, you have the opportunity for great savings when you go straight to the source and sell your products in a partnership with the manufacturer. It’s a win-win situation for both parties because you market the product and find paying customers - the manufacturer concentrates on producing and shipping the product out.

The only disadvantage is that some people are intimidated by dealing with manufacturers and don’t know where to start. Making contacts, approaching manufacturers, and trying to find someone to work with may be a daunting task for some people.

Sourcing products through a distributor is another valid option. Although it may cost a little more, it may be easier to get things started this way. If you’re trying to source products from overseas or want to get your hands on something unique, searching for a reputable distributor may actually be the easier and more affordable option. Also, distributors are more likely to offer drop shipping as an option and work in tandem with your online business.

The main disadvantage - the distributor has to make money as well, so your bulk discounts won’t be as high. The distributor will be working with multiple clients in more than one location, and you may have trouble communicating sometimes, whereas with a good manufacturer business is conducted on a more personal basis.

The option you decide to choose really depends on your circumstances. What type of product are you trying to sell? Where is it coming from? Do the manufacturers make it easy to sell large or small quantities, or is it easier to source products through a distributor?

Once you decide what works best for your business, sourcing products will become easy for you to manage. At first it may pose a bit of a challenge and take a lot of your time (research is always important) but it will be well worth it in the end. When you locate trustworthy and reliable suppliers with amazing products, your business will be set up to thrive.

Tags: advice, distributors, E-Commerce and E-Business, manufacturers, Product Sourcing, source, sourcing products, tips
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Working With Manufacturers

Thursday, October 4th, 2007

Tags: advice, factory-authorized dealers, jennifer ratliff, manufacturers, Product Sourcing, source, tips, working with manufacturers
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Thinking About Sourcing Products From Overseas

Tuesday, May 22nd, 2007

Such a tremendous growth in manufacturing and production in China has been heavily influenced by the rapid development of major industrial centres and cities, such as Beijing and Shanghai. Many traders believe that to make a quick dollar all you have to do is go to China and find the manufacturers of a well-known designer brands, asking them to produce an extra run for you. While this may be a good approach, you have to be very careful of which suppliers you are dealing with. There is also a so-called ‘dark side of the moon’. You may find it extremely difficult to find a genuine manufacturer of some of the highly respected designer brands, such as Lacoste, Ralph Lauren, Louis Vuitton, Prada, etc… There are more than thousands of ‘underground’ manufacturers throughout China and South East Asia that make illegal, counterfeited and fake versions of these products. While these products may be of a very good quality, in fact they are far away from the stringiest standards and procedures the original brands have in place.

If you happen to have bought a small or large lot of these goods - it is more than likely they will be stopped at customs border with full investigation being launched against you and the manufacturer. The fashion designer brands are now treating the matters of non-genuine articles very seriously. Because counterfeited products costs a lot of money, jobs and resources to the original manufacturer. You may even end up standing in court or pay a hefty fine. Surely, you don’ want to get yourself into legal trouble…

Research your market. If you do not do a proper research you are likely to loose the money and time you have invested getting the products imported into your own country. You need to do a thorough research both online and offline to identify which products have higher saleability and which ones are not. Sometimes you don’t have to invest a fortune! What counts is finding highly convertible products that are now in demand.

So, where do you find good, wholesale Chinese suppliers? Usually reliable Chinese suppliers advertise in online directories and monthly catalogues. One of the largest, global online directories that I have come across has genuine, proven Chinese suppliers that can offer excellent products at reduced prices. These products have been proven to be selling well on online auctions as well as through stores.

The database of the Global Directory is updated every single day. Spend some time and see how the following directory can make your sales go further.

John Kovanski.

Maximizing on Internet Home-Based Small Business Solutions:
http://www.profit-k.com
Article Source: EzineArticles.com

Tags: advice, china, Doing Business Internationally, ezinearticles.com, john kovanski, manufacturers, overseas product sourcing, Product Sourcing, profit-k.com, small business, source, suppliers, tips
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