PEEEENES

Here are some things that I'd like to point out and I think most other members would agree. Forgive me if some of these points are obvious but I feel they are worth stating.

1) If something seems too good to be true, it probably is. It's an old chestnut, but extremely important. Ignore this at your peril.

2) Research ANY potential supplier carefully before trading with them. This means phone calls to government authorities, web research/press research but above all, attention to detail. A simple Google query wont do in most cases, neither will a domain WHOIS, as these can be faked.

3) If someone refuses your proposed payment method they should have a good reason. We (Accent IT Consulting Ltd.) wont accept Paypal, but this is because we are able to process credit cards in our own right as approved merchants and refuse to absorb the 3.4% charge for no benefit to either the customer or ourselves. That is the kind of reason you should be looking for if someone refuses a particular payment method. If unsure at all, walk away.

4) Beward of anyone unable to provide substantial evidence of a legitimate company. Whilst I know many people here trade (resell) on a part time basis, serious suppliers most often do not and should be available to you at all times during normal business hours.

5) Avoid fast moving items like the plague. I am sure this goes against some peoples opinion, but my advice would be not to touch items like PS3, iPod or Nokia mobiles. Not only is the market saturated with retailers, but it is also rife with fraud when sourcing from the far east. Sourcing the products properly through the channel is normally fine, but margins are a lot lower. Lower margins mean you need to sell more, but you're not placing your capital at such a risk, so it's a balancing act.

6) Be sensible about your margins. If you can only obtain a product at 5% below retail price, dont just mark it up 5%, you wont survive very long. Plan carefully and ensure your margins enable you to be profitable or at least make a living. You don't have to compete with the huge e-tailers to run a successful business. Not all buyers are aware of all e-tailers. Use this to your advantage. Most succesful business operate a margin of at LEAST 20% unless they are able to shift huge volumes. I'd recommend 40% to remain a viable business.

7) Research research research. Find a niche. Plan your entry. Go for it. Don't try to diversify before you've established an initial customer base. Throw all your weight behind one idea. If you dont get it into profit the first time, try again. Persistence is important in business. I have spent a lot of time developing ideas for selling on this forum and honestly, I've yet to break through. Since most people want PS3 or XBOX, and we dont currently offer them, and certainly not from China, we've struggled. However, I am hopeful that through persisting and adapting to the needs of the market, we will succeed in winning business.

8) Protecting yourself from rogue suppliers is important, but what about rogue customers? It is certainly not unreasonable to ask for a copy utility bill or other forms of ID when establishing a trade relationship and any legitimate customer would agree to this. Don't find you've just shipped $10k worth of televisions to some dead address where the owners are away from home. You'll be out of pocket and goods, a double whammy!

9) Market your products in the local media. Don't look at online advertising until your revenues are significant as it is a minefield and could result in a waste of precious funds. People love buying from local businesses, they get the personal touch. Try a church magazine or local journal, they are gold mines.

10) Watch your cash flow. Can you really afford to fund the purchase of 20 televisions even if you have a customer to buy them? Someone has to front (read: risk) the money. What if your customer didn't pay for 60 days, or never paid? Could you handle the loss. Don't put all your eggs in one basket, spread your startup capital over several smaller deals if possible to minimise your exposure. It's worth remembering that, in the UK at least, normal business to business payment terms are 30 days. Im sure it's similar in the US.

I hope all this helps.

chocoguy

Some of the things that you have mention are familiar to me, yet many people seem to forget them whenever they went on a business. There are a few who are new to me.
Thanks for sharing!

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chuckmanley83

Good list. A lot of "avoid" and "beware" is fitting.

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