What do I need to know before selling my products to another business?
I have been approached by a business in regards to possibly stocking some of my handmade products. The reception I have received from customers has been very positive (as I had been selling them on a trial basis) and have nearly sold out. I am not sure of what to expect from the other business in regards to questions about costs and pricing, stock or expectations and want to feel prepared for the meeting. What questions should I ask and what should I expect.
Hi Natalie, Since you are basically a startup, it would be good for you to first understand the customer trend based on your trial sales which will give you a clear understanding of your clients. I hope you were also getting feedback from them also as its very vital for a startup like you.
After this you can look at the list given by Carsten Schnier on some questions to keep in mind.
Hi Natalie. Are these retailers approaching you? Distributors? I'm not sure I have answers for you, but providing our community with this detail might help you get an answer. :) Good luck!
Like many already mentioned: a business and financial plan for 5 years. Go to my profile and visit our business site where you can get the software and the assistance to get that done.
Do you have any licensing on your products? I'm not sure where you see this going, so it's hard to help you pinpoint a plan. Will they have someone else produce your goods or will you continue to do so? A business plan is necessary. We'd love to help you with that. Feel free to contact us via our website at timeandeternity.net. We help entrepreneurs like yourself daily sort through what is needed in order to protect your ideas and feel confident in presenting what you have to others.
Looking forward to hearing from you,
Dr. Bobbie Sparks
You need to know the prices of the products comparable to your own. You don't have to be the least expensive but you certainly want to be competitive. Look at the examples set by the spin brush, not the most expensive toothbrush, not the cheapeast, but with the right packaging and price it flies off the shelf. Your cost to produce, versus their cost to carry, figure it will be a matter of trying to start higher and coming down if you need to.
Please fill the following points
(0) Market re-search………………………….why?
(1) Market re-search……………………………what?
(2) Market re-search…………………………..How?
(3) Title or name …with respect to name, with respect to business, with respect to location, with respect to era.
(4) Motto…with respect to business.
(7) Mission Statement.
(8) Vision Statement.
(9) Location……with respect to positive and negative aspects.
(11)Finance……..Fix and Running.
(12)Finance Management……with feasibility report in the form of chart.
(14)Business Flow…with the help of flow chart.
(15)Mathematical Model of Production…with cost estimation method.
(16)Promotion Strategy ……..with Probability or regression model.
(17)Risk factor…with your weak points (S (strengths) W (weaknesses) O (opportunities) T (threats) Analysis).
(18)Role of Technology.
You must have a business plan and know your costs...Then project sales, in worst case, realistic and best and see how many hours you need to stay open to reach your breakeven and then make money after that
Ask them how much product they want and how they'll handle returning the product if it doesn't sell.
Ask them how soon you need to provide them stock, and how soon they'll be able to pay you.
You might also think about what your wholesale prices is versus retail price.
Carsten gave some great advice on the overall process. I'd like to add one point to his excellent comments.
Many of my startup clients commonly make the mistake of pricing as per their current cost structure, not realizing that as they scale up production, this structure might change. You might need a larger space, more materials, different materials, new packaging, new employee assistance, etc to sell B2B.
Use the market to determine your retail price and investigate the typical markup from manufacturer to retailer. Have a suggested retail price in hand that is derived from market pricing for competitive products. You might end up making a huge profit on your first few orders because you don't have all of the extra expenses. But, as you scale and increase your orders (hopefully), you will have the additional costs to consider and you can absorb these without losing your profit margin.
If you follow this strategy, then you will not have to raise prices to cover your increased costs as your company grows and your company will appear more stable to retailers looking to add you as a vendor.
The strategic vision to anticipate growth and its impact on profit is just as important as the process steps to complete the sale.
Best of luck to you -
Carsten covered a lot of it. The financials are extremely important. For small orders under a certain amount (usually $500 but up to1000) get prepayment or credit card.
Most stores don't have a large credit limit on their credit card so the amount and size of business they place is limited, so intelligently extending credit (Net 30 to net 60 days) should help you grow your business.
For larger orders a credit recommendation service works best because credit references are almost always their best clients, best friends and family members.
Make sure you have a new account / credit application and it has certain terms (contact me I will send you two articles) to protect yourself.