Buying and Selling Products: Part TwoNovember 11th, 2014 by Jason Hartman | Comments Off on Buying and Selling Products: Part Two
Last week we talked a little bit about buying and selling products–how to get started and taking the necessary steps to choose the product you want. While those decisions are among the most important you’ll make, they’re only the beginning. This week, we bring you another installment in a short series on buying and selling products–a job you can do from just about anywhere!
Once you’ve selected a product and sorted out the wholesalers, you’ve got some real work to do. Luckily, it isn’t difficult–and it is well worth your while.
Dealing with returns
When you’re looking for a product, make sure you’re looking for something that typically doesn’t have a high rate of return. When a product is returned, you eat the cost. While a produce will be returned every once in awhile, making a habit of it starts to add up. Look for a product that typically boosts a one or two percent refund rate–it will keep your evaluation scores higher too.
Even if a customer has a return, it’s important to manage it well. You want good customer feedback and that can be hard to develop, especially initially.
Growing your business
Once you’ve determined what product you are going to sell and who you’re going to purchase it from initially, it will be time to grow your business. Your next step will probably be to determine whether or not your business is going to be a side project or constitute just a bit more of your income. You can sell a few items on eBay or brand your merchandise (of course, this is extra work) to sell more on Amazon. You might sell a few items per month or a hundred a day–it’s up to you to determine the scope of your project.
If you choose to grow your business, consider expanding to a number of sales channels that fit your product. There are a ton of them out there–be creative. Start thinking about sales and marketing. You may even think about adding products to your repertoire as your business grows and you learn to be successful.
Another thing you may want to consider is branding yourself. You essentially become your brand–if people trust you, they’re going to want to buy your product. Part of this process might be to establish a good marketing and promotion plan–coupons included with shipments, newsletters, databases, etc.
Should your business become larger, you’ll also be able to get better prices from your supplier. Higher volume sales mean cheaper prices for you–more money in the long run. Run a social media campaign, consider paying for Google advertisements, and think of other spaces you might advertise your product. And, if you’ve got more work than is possible for one person to achieve, you can always pick up an employee to ship items, do your accounting, or take care of customer service needs.
If you’re hoping to operate a business but all of this business about online wholesalers is a little off putting, there may be other options for you. If you live in a place with factories, you may be able to work directly with someone local to you. If you don’t ask, the answer is always no–so give more unconventional options a chance. Work with your local Chamber of Commerce to identify possible local solutions.
If you’d prefer to go local, remember that it can present a different set of challenges. These companies may not be acquainted with working on such a small level, so there may be a little bit of a learning curve. Work to establish and clarify your relationships–it make take time, but it can be a great way to keep business in your community.
A few logistics
Remember that you’re going to have to obey the law if you’re considering going into business for yourself. You will need a federal tax identification number, which you can apply for by visiting the IRS website. This tax identification number will make it possible to establish a bank account in the name of the business, separating personal and business accounts and balances when it is time to file taxes.
Depending upon where you hope to sell, you may need to look into obtaining a vendor’s license. For more information on where you might need a license in order to sell, see the official website of your state, which should provide you with the appropriate details.
You’ll need to think about sales tax as well–and who is responsible for paying it. In some cases, the wholesaler may pay. In others, you (the retailer) will pay, and in others, the customer will carry the burden. Make sure you’re seeking guidance and (as Jason Hartman always recommends) educating yourself on the specific rules of your business and location. Consult an accountant and an attorney early on in your process to make sure that nothing is overlooked.
Advantages for the buy/sell lifestyle
While it may sound like a lot of work (and it is) this type of business can be great for the right kind of person. People living abroad can be very successful running this type of business. You can essentially do it anywhere, which makes it a great option for expats and other jetsetters.
It’s a great way to make a little bit of money on the side, but has the potential for growth if that’s the direction you choose.
While it might be a bit risky to put all of your money in this business, its a great way to supplement your income or put together some extra cash for your next investment property. As Jason has talked about a number of times, the key to a great portfolio is diversification. While he’s typically referring to the geographical area in which you own properties, there’s some merit to the idea that all of your money doesn’t have to be tied up in one little bundle. Start a business. Invest in rental properties. Save (and make) money for retirement–and do it from anywhere in the world!