Selling Wholesale: Being Prepared

I began thinking about selling wholesale in early last summer. How I made that decision was based upon my desire, not only to get more product into stores, but to increase my revenue. Yet, for as much as I write about being prepared and making sound business decisions, once I entered the wholesale market, I found I was not as prepared for selling wholesale as I thought I was.

Here's how it started: I knew I needed more revenue. I know it's just as easy and no less time consuming to pour five candles as it is to pour one. So my logic at the time told me that if I could sell more candles, I could make more money! And working full time, I did not have the time to market my product, so why not find someone to do that for me?

But here are some issues I was struggling with:

• Branding - I wasn't happy with my branding. Like most entrepreneurs, I did not have a lot of revenue to invest in graphic design. But in my for me, much of my product line needs to be sold with graphic design. Until you can smell through your computer, I needed something else to help me sell my product.
• Inventory or financial management - I didn't have an inventory or financial management system. Yes, I promote the fact that I create my product at the time of order. And yes, I was keeping track of my revenue and expenses. But I did have a small inventory that I kept for craft shows and farmer's markets.
• Promotional materials - If you followed my newsletter series, you know how much I enjoy marketing. I didn't think developing promotional materials would be too big of a task.
• Policies - I had a vague thought in my head of $100 minimum orders and payment upon order, but that was it. I hadn't thought about policies for samples, shipping, order processing, returns....the list goes on and on.

I had approached some local stores before about selling my products. I had even sent sample tea lights and basic information. But I wasn't getting anywhere. When I found a site to place a free listing for representation, I decided, why not? 

So, imagine my surprise when two days later, a representative did in fact contact me about repping my line!

My wisdom to you today is to be prepared.  If you're struggling with an aspect or two of your business as it exists now, the problem will only magnify when your sales become larger. Take time out of your busy schedule now to identify a problem. Maybe you know you have an issue but can't identify exactly its cause. Or identify where you have an opportunity to do better. Then take time to think through how to resolve it. Reach out to other business owners if you need to. Ask for help from friends. But don't think that by waiting "until you get that large order" means you should avoid dealing with it now.

With Thanksgiving and the holiday shopping weekend ahead of us, I know many of you won't have as much time for my weekly business lessons. The next few weeks, we'll address each of the issues I listed and how they were resolved. If you have struggles with any of these problems or other issues and concerns, please let me know.  Let's work on them together over the next few weeks and start 2013 with a bang!

Treasury Sunday - November 18th

Every other Sunday I give thanks to those curators who have featured me in their gorgeous treasuries, shopping collections on Etsy. I hope you enjoy these wonderful collections, visit the curators, and shop the stores!

Wholesale vs. Craft Shows

Last week I introduced the next topic in my business series as Selling Wholesale.  I had been debating about how to move forward and which topic to broach first, when, lo and behold! Yesterday I received an email from Arts Business Institute with their thoughts on this very subject!

The theory of their blog post compared the risk and potential of craft sales to the risk and potential of selling wholesale.  At a craft show, it can be difficult to predict what your sales will be.  If you have products remaining, you know what your sales potential of that product is.  But if you sell out, you have no basis upon which to calculate your potential future sales. Using an 80/20 rule (80% of your sales come from 20% of your products),  knowing your potential can help you plan how much product to make with a level of accuracy an unknown cannot.  Because you may never know if you could have sold more, you will never know how much money you could have made.

Also, you have no potential of unsold product as well as the cost of additional inventory.

Selling wholesale, particularly at wholesale trade shows in their example, you only have to make one item to showcase as sample inventory, from which you will sell.  If you get orders, great! Your return on investment (ROI) is great.  For example, your sample costs $10 to make. You receive an order for 100 units. Your ROI is as follows:

1 (sample) x $10 (cost) = $10
100 (units) x $10 = $1,000
ROI = Sales divided by cost
ROI = $1,000/$10
ROI = 100

In other words, for every unit made, you receive 100 in return.

If you make no sales from an item, you're only out the cost of one item, compared to the cost of all unsold items you would have from a craft show.

In essence, it's much easier and less expensive to change your product line when selling wholesale. Because you can gauge if something doesn't sell, you only need to product one item to replace it in your inventory.  And you don't have excess inventory left to sell.

Another point that I like is: every product is sold before it is made. Every dollar spent on supply inventory for an order will become a return on that investment.

The last point made in the article refers to repeat sellers.  Happy customers will return again and again. And what better customers than those that make purchases in bulk!!!

Many of us hope to make money while producing art. But if we're serious about making money in addition to making art, we need to spend a proportional amount of time running our business. Why not run the numbers and give wholesale a try?

Until next time,

Dorene