It’s easy to neglect the area of purchasing in your business. If you fail to devote enough attention to it, your cost of doing business could rise to an unnecessarily high level. As operating expenses increase, profit margins shrink, you would either have to live with lower profits or raise your prices, and neither of these choices is appealing.

By keeping your costs under control, you’ll be able to keep your prices at competitive levels and maintain a desirable profit.

Purchasing Policies

To purchase wisely, you need to buy the right quality and quantity of materials or products at the best possible price and at the appropriate time from the best vendor.

The purchasing process is much more streamlined in small companies than in larger businesses, especially when the businesses are still fairly new. The owner usually decides what to buy, when to buy, where to buy, and how much to buy. As the business grows, however, the owner may no longer be able to handle this task and will have to delegate it to others.

While a small business probably won’t need to create an entire purchasing department, it will need to have a purchasing manager. By selecting one person to manage all of the business’s purchasing activities, you will decrease the risk of duplicating orders for the same materials.

Purchasing need not be the purchasing manager’s sole duty; in fact, your business may not do enough purchasing to require a full-time purchasing manager. You should select an employee who can handle purchasing, as well as the other duties he or she my already have. This individual should be able to communicate clearly with your business’s suppliers.

Although purchasing duties probably won’t occupy all of this individual’s time, there is more to purchasing than placing orders. The purchasing manager will have to gather orders, make sure they are complete, and stay within any limits the company may have set on spending, select an appropriate vendor, order the goods, check their condition upon receipt, make sure the invoice is correct, and speed payment of the invoice by forwarding it to the accounting department.

Before you delegate the purchasing function to another employee, you should write out a purchasing policy for your business. You may even want to create such a policy while you are still responsible for purchasing, as a guide for yourself.

The purchasing policy, according to the SBA, should answer the following questions:

• Who has the authority to purchase items for the company? What items can that person purchase? Are there any spending limitations?
• What are the business’s requirements for adequate supplier competition and what criteria will be used to select possible vendors?
• What is the company’s position on the acceptance of gifts?
• Which types of contracts can the business enter into with successful bidders or vendors?
• What is the company’s position on conflict of interest and personal loans from suppliers?
• What kinds of information does the company consider confidential?
• What is the procedure for dealing with legal questions?

The Ordering System

The steps your employees and purchasing manager will follow to request, order, receive and pay for goods and materials make up your ordering system. A good ordering system will help maintain satisfactory supplier relations, improve cash management, aid in inventory control, and increase the overall profitability of your company.

The Purchase Order

Once the purchasing manager has received a requisition, her or she will need to select a supplier and check the price of the items ordered. After agreeing on a price, the purchasing manager will send a purchase order to the supplier.

This order is a formal request to the supplier to deliver materials or supplies according to the terms and prices agreed upon. Purchase orders, like requisition forms, can help small businesses keep track of their purchasing activities.

Firms can refer to their purchase orders to see if suppliers have shipped the correct goods in the correct quantity. They can also see if suppliers are delivering goods on time. Purchase orders can also serve as support in any legal disputes if they arise between you and the supplier.

Although you can write out purchase orders by hand, you would give a better impression if you used standard multi-part forms that you can purchase at any stationery store. They should include information such as the type of product or service you are ordering, the quantity desired, price and delivery terms.

The orders should also have an area for any additional information. Purchase orders should also include your company name, address, telephone and fax numbers, and logo. You can simply write in this information, stamp this information on your purchase orders with a rubber stamp, or design and print your own purchase order forms. Purchase orders should have at least three parts: a vendor copy, an internal file copy, and an accounting copy.

In addition to the standard purchase order, you might choose to use two other types: blanket purchase orders and annual contracts. If you routinely order fairly inexpensive items from a single vendor, you might want to place a blanket order for those items with the vendor. The blanket order covers specific items to be delivered over a specific period of time, such as six months or one year.

This type of purchase order lets you take advantage of quantity discounts and saves you the time and trouble of reordering small items you need often. You will also receive a monthly invoice covering your purchases for a given month, instead of several small invoices covering each individual purchase.

Annual contracts cover the purchase of a specific product from a vendor over a period of 12 months. An annual contract will usually let you fix the price for buying a specific quantity of a given item over a year. You can also arrange to have goods delivered as needed, either monthly, weekly, or on another specific schedule.

Receiving Records

A packing list will accompany orders you receive. Make sure that the items shipped match the items indicated on the packing list. Inspect all of the items shipped carefully, paying special attention to items that appear damaged. Initial the packing list to verify receipt and file it in a folder until you receive the invoice for the shipment.

In many cases, you won’t have to send payment with your order; your suppliers will either include an invoice with the shipment or send the invoice to you separately soon after sending your order. When the invoice arrives, check it against the packing list and the purchase order. Write a check for the appropriate amount, note the check number on a copy of the invoice, and file the invoice and packing list.

If you receive any damaged items, or if a vendor sends you items you did not order, let the vendor know as soon as possible. The vendor will tell you the best way to return the items and to receive the ones you actually ordered.

Fill out an internal receiving report and distribute it to those who need to know when shipments come in, such as the person in charge of inventory control, the buyer, the employee requisitioning the items, and the person in charge of accounts payable in accounting.

Although purchasing is certainly an important task and deserved careful attention, you will not be able to spend the same amount of time on all of your purchases, nor should you. More expensive items, for instance, deserve more careful attention and consideration than less expensive ones. The following four considerations will help you decide what items deserve the most attention, according to the SBA:

1. Unit cost. The SBA recommends that you give more attention to costly items than to less expensive ones. The more money you have tied up in a given type of inventory product, the more attention you need to give to that product in your purchasing, even if you sell few of these expensive items.
2. Extended cost. The SBA points out that some items may have a low cost, but you may buy and sell them in high volume. In this case, you may need to give a higher priority to these items, although their unit cost is fairly low.
3. Lead time. You need to consider the time to allow between ordering an item and receiving it. If a low-cost item has a long lead time, for instance, you would need to make regular checks on its delivery status. In that case, the SBA says, you may need priority.
4. Shipment rejection. If there is a high possibility you will reject an item because of technical problems or deficiencies in quality, the SBA suggests assigning it a high priority.

The Costs of Buying

In addition to the cost of goods you buy, you also have to pay and account for the costs of acquiring and carrying inventory.

Inventory acquisition costs are costs associated with generating and processing orders, and include the following:

• Portions of employee salaries and operating expenses directly pertaining to purchasing, inventory control, receiving, inspection and accounts payable.
• Costs of supplies such as forms, envelopes and stationery.
• Costs of placing orders (telephone, fax, postage, etc.)

Inventory carrying costs usually consist of the following elements:

• Interest charged on your financial investment into inventory.
• Cost of insurance covering your inventory.
• Property taxes paid on inventory.
• Cost of storing inventory.
• Obsolescence and deterioration of items in inventory.

Buy Wisely

Prices for the goods and materials you buy may fluctuate. If you find that the price for a given item is rising, do not buy large quantities of this item thinking that the price will rise even higher if you wait. Instead, the SBA advises that you buy smaller quantities of this item, but buy them more often.

You can quickly sell off the items you bought at high prices, instead of tying up money in overpriced inventory. Keep buying small quantities as prices return to their normal level. You will save money on your purchases, as well as reduce demand for the item, “encouraging” prices to drop. Once prices have stabilized at their normal level, you can resume buying in larger quantities.

Comparison Shopping

While you might purchase many items from catalogs that list specific prices on specific quantities, you may need to contact suppliers for price quotes on other items. Before you buy an item, you should contact a number of suppliers and compare prices, delivery options and expenses, and so on. You can do this by visiting suppliers’ websites or requesting quotes in writing.

Discounts

Suppliers extend a variety of different discounts to their customers. Many vendors offer quantity discounts: the more units you buy, the less you pay per unity. These discounts can apply to individual purchases or to a specific group of purchases made over time, as you would make under a blanket order.

Suppliers also offer seasonal discounts that apply to merchandise being sold out of season. The danger with buying off-season goods is that they may go out of style or become obsolete, and never go back “in-season.” Vendors also offer cash discounts that you earn by paying the entire invoice within a specified time period. If you received an invoice with the notation “1/10, Net 30,” it would mean that you could take a one-percent discount from the net amount of the invoice if you paid within ten days. You would otherwise have to pay for the entire amount of the invoice within 30 days.

Dealing With Vendors

Once you have compared prices from a group of suppliers, you can then select your vendors. Before you place an order with a vendor, you not only need to compare prices, but you also need to compare credit terms, emphasis on customer service, standing in the industry, and other related factors.

If you buy a number of different kinds of products, you may have to use a variety of vendors. If, on the other hand, a single vendor can meet all of your needs at reasonable prices, you may want to give that vendor the bulk of your business. Do not, however, rely solely on this vendor.

You should keep in contact with other vendors, and watch for new ones. It’s a good idea to be on good terms with more than one supplier. If your primary supplier ever fails to ship goods on time, suspends operations because of some natural disaster, or starts offering poor service, you will have other sources to use as back-up.

By using a few different sources of supply, furthermore, you will build more credit than you would if you used only one. Your primary supplier may also offer you better discounts or otherwise try to win all of your business.

Evaluating Suppliers

You not only need to evaluate suppliers before you place an order, but you also need to evaluate their performance constantly. Consider the following points when you evaluate a supplier’s performance:

• Timeliness of deliveries
• Completeness of orders shipped
• Quality of items shipped
• Quality of customer service
• Competitiveness of price
• Previous performance with similar orders
• Strength of financial condition
• Ability to meet design specifications
• Expertise of sales representatives and technical staff

Locating Suppliers

Before you can approach a supplier, you need to know where to find them. You need to be aware of where you can find suppliers both before you begin business and after you have started. Keep looking for new suppliers.

To look for suppliers in your area, search online and consult the Business-to-Business Yellow Pages and your local Chamber of Commerce. To broaden your search, consult websites, publications and associations pertaining to your industry; these sources should be able to give you a number of leads.

Many trade associations and publications publish directories listing suppliers to their industries. If you require industrial or mechanical equipment, consult manufacturers’ directories such as the Thomas Register of American Manufacturers. Finally, talk to your employees. They may know of excellent suppliers you might use.

It’s a mistake to think logos are more of a luxury than a necessity. Businesses once attracted customers because they were the only game in town, so to speak. But that’s no longer the case.

Today’s highly competitive industries, global markets and visually oriented consumers have catapulted the logo to prominence. Now your logo is one of the most critical components of your brand. So how can something so little make such a big difference to the success of your business?

1. Your branding efforts not only start with your logo but are dictated by it. Your logo appears on all your sales tools, from your business cards and stationary to your website. As a result, your logo design influences the design of all your sales tools–for better or worse. A professional-looking logo can be leveraged to create professional-looking materials. A poorly designed logo can’t. In other words, you need a “brandable” logo–one you can make use of when designing other materials to brand your company.
2. Your logo is a quick visual cue that conveys the essence of your brand in an age when image is everything and time is short. Perhaps you’ve heard the writer’s lament that “nobody reads anymore.” In today’s markets, not only do you face ever-increasing competition, you also face an audience accustomed to visually stimulating media, convenience and instant gratification. Sure, a few people may read your entire ad, more may read some of it–but everyone will SEE it. The overwhelming amount of choices faced by time-crunched consumers forces them to identify shortcuts. Your logo is such a shortcut: it instantly conveys your brand message and emotional appeal.
3. Awareness and familiarity are keys to growing your business, and your logo is instrumental in both areas. Your logo is your brand’s most basic graphic element. It ties together all your sales materials–in fact, your logo may be the only visual element your materials have in common. The right logo helps solidify customer loyalty while differentiating you from the competition.
4. Your logo may be the only thing by which a potential customer can judge your business. Think of small newspaper or Yellow Pages ads. Often all that fits in these small spaces is your contact information and your logo. If your logo projects the right image, it may be the sole reason someone decides to try your company. Conversely, if it looks unprofessional or unclear, it alone may be the reason they choose to look somewhere else.
5. Your logo affords a unique opportunity for you to look like a bigger (that is, more established) business than what you are. With the right logo, you can look like a larger company that’s been around for awhile even if you have only one employee and just opened your doors last month. People who see it will associate the positive attributes of big companies–like security and financial stability–with your company. And you can still deliver the entrepreneurial qualities–like personal attention and superior customer service–that you’re known for.

Building a solid brand identity is pivotal to success in business today. Lay the right foundation with a professional, brandable logo.

Somewhere between scribbling your idea on a cocktail napkin and actually starting a business, there’s a process you need to carry out that essentially determines either your success or failure in business. Oftentimes, would-be entrepreneurs get so excited about their “epiphanies,” the moments when they imagine the possibilities of a given idea, that they forget to find out whether that idea is viable.

Of course, sometimes the idea works anyway, in spite of a lack of market research. Unfortunately, other times, the idea crashes and burns, halting a business in its tracks. We’d like to help you avoid the latter. This how to on researching your business idea is just what you need to keep your business goals on track.
The Idea Stage

For some entrepreneurs, getting the idea-and imagining the possibilities-is the easy part. It’s the market research that doesn’t come so naturally. “It’s a big red flag when someone outlines the size of the market-multibillion dollars-but doesn’t clearly articulate a plan for how the idea will meet an unmet need in the marketplace,” says Aaron Keller, an adjunct professor of marketing at the University of St. Thomas in neighboring St. Paul and a managing principal of Capsule, a Minneapolis-based brand development firm.

That kind of full-throttle approach can cost you. “Entrepreneurs are often so passionate about their ideas, they can lose objectivity,” adds Nancy A. Shenker, president of the ONswitch LLC, a full-service marketing firm in Westchester, New York. “Rather than taking the time to thoroughly plan and research, they sometimes plow ahead with execution, only to spend valuable dollars on unfocused or untargeted activities.”

Market research, then, can prove invaluable in determining your idea’s potential. You can gather information from industry associations, Web searches, periodicals, federal and state agencies, and so forth. A trip to the library or a few hours online can set you on your way to really understanding your market.

Your aim is to gain a general sense of the type of customer your product or service will serve-or at least to being willing to find out through the research process. “For example,” says Shenker, “if you don’t know if your product will appeal to the youth market, make sure you include a sample of that population in your research efforts.”

Your research plan should spell out the objectives of the research and give you the information you need to either go ahead with your idea, fine-tune it or take it back to the drawing board. Create a list of questions you need to answer in your research, and create a plan for answering them.

“Utilize experts in planning and conducting research sessions,” Shenker advises.

“They can recommend what type of research is most appropriate, help you develop statistically valid samples and write questionnaires, and provide you with an objective and neutral source of information.”

The type of information you’ll be gathering depends on the type of product or service you want to sell as well as your overall research goals. You can use your research to determine a potential market, to size up the competition, or to test the usefulness and positioning of your product or service.

“If, for example, the product is a tangible item, letting the target audience see and touch a prototype could be extremely valuable,” notes Shenker. “For intangible products, exposing prospective customers to descriptive copy or a draft Web site could aid in developing clear communications.”
Analysis

When working with firms on brand development, Keller first looks at a business idea from four perspectives: company, customer, competitor and collaborator. This approach allows Keller to scrutinize a business idea before even approaching the topic of brand development. Here’s what he looks at for each of the four issues:

1. Company. Think of your idea in terms of its product/service features, the benefits to customers, the personality of your company, what key messages you’ll be relaying and the core promises you’ll be making to customers.
2. Customer. There are three different customers you’ll need to think about in relation to your idea: purchasers (those who make the decision or write the check), influencers (the individual, organization or group of people who influence the purchasing decision), and the end users (the person or group of people who will directly interact with your product or service).
3. Competitor. Again, there are three different groups you’ll need to keep in mind: primary, secondary and tertiary. Their placement within each level is based on how often your business would compete with them and how you would tailor your messages when competing with each of these groups.
4. Collaborators. Think of organizations and people who may have an interest in your success but aren’t directly paid or rewarded for any success your business might realize, such as associations, the media and other organizations that sell to your customers.

Another approach is to research is SWOT analysis, meaning analysis of the strengths of your industry, your product or service; the weaknesses of your product (such as design flaws) or service (such as high prices); and potential threats (such as the economy).

“[SWOT] enables you to understand the strengths and flaws, [everything] from internal information such as bureaucracy, product development and cost to external factors such as foreign exchange rates, politics, culture, etc.,” says Drew Stevens, a St. Louis professional speaker and consultant who works with entrepreneurs in researching and marketing their ideas.

“SWOT enables an entrepreneur to quickly understand whether their product or service will make it in the current environment.”

Whatever your approach to evaluating your idea, just be sure you’re meeting the research objectives you’ve outlined for your product or service. With those goals always top-of-mind, your analysis will help you discover whether your idea has any holes that need patching.
Checking Out the Competition

Assuming your research process has helped you uncover your competition, you now need to find out what they’re up to. Shenker advises becoming a customer of the competition, whether by shopping them yourself or by enlisting the help of a friend. “Visit their Web site and put yourself on their list,” she says.

“Talk to your competitor’s customers, too-ask them what they like or don’t like about your competitor’s product or service. If you conduct formal research, include a question like ‘Where do you currently go for that product or service? Why?’”

Your aim is to understand what your competition is doing so you can do it better. Maybe their service is poor. Maybe their product has some flaws-something you’ll only know if you try it out yourself. Or maybe you’ve figured out a way to do things better, smarter, more cost-effectively.

Find your selling point. It’s going to be the core of your marketing program, if and when you’re ready for that step. It’s also going to be what sets you apart and lures customers your way.

After all this-the idea stage, analysis of the idea, competitive analysis-you might find that your idea (and not your competitor’s, as you’d hoped) is the one with the holes. Does that mean you need to scrap the whole thing and resign yourself to life as an employee? “Not always,” says Keller. “Sometimes it just needs to be reworked or retooled.”

That can be disheartening if you’ve already spent X amount of hours in the idea stage, plus X amount of hours on market research-only to find that you’re not quite ready to get started after all. But taking the time to refocus your energies and determine why your idea needs some tightening is the best predictor of future success.

“No entrepreneur wants to hear that his ‘baby’ is flawed, but only by listening and reacting to feedback can he give his idea a chance for success,” notes Shenker. “Ask yourself, ‘Is this a weakness that can be overcome?’ If you can’t create true value for your customer and your business, then it’s time to pick another idea to pursue.”

Remember, though, that many ideas simply need some fine-tuning. Before you panic and start flipping through your idea books again, closely consider whether you can make this idea work. After all, there was a reason you thought of that idea in the first place. Some ideas that seem like they’ll be total duds after doing a little research end up being great successes.

“Ideas that seem like a flop are always interesting to me,” says Keller. “Sometimes you look into an idea and find it was just luck-but many times, you find the original founder had some clear insight into the potential. That insight was his or her focus, and it seemed to lead them to success.

“I’ve seen many people launch ideas that I thought were beyond foolish,” Keller adds, “but then I learned more about the idea, the customer and the vision-and realized the true risk being taken.”

When Your Idea Is Ready to Go

The market research you’ve conducted thus far ought to be a good indicator of where you need to go next with your idea. One key factor to consider is pricing. You want to do it competitively while also considering what the market will bear. For products or services that have a close competitor, Keller advises pricing with respect to the competitive position.

“Higher-priced positioning requires an idea with enough relevance and importance to customers to overcome the gap between your idea and the nearest competitor,” Keller says.

The beauty of being in business for yourself is that you have the option to make changes at will-so if a pricing structure isn’t working, you can alter it. “Price high to start-you can always drop the price down,” says Keller. “You can never go up.”

Shenker adds that you need to be sure your product or service is delivering enough value to command the price you set. If possible, test different pricing offers as you go, and determine what works best.

When you’re ready to get started, be sure you’re selling where your target market is likely to buy. “Your marketing plan and budget should include a well-crafted distribution strategy,” notes Shenker. If you’ll sell over the Internet, budget for media to drive new customers to your site. If you’ll sell via retail distribution, you might need workers with industry experience to help you reach your target market.

Remember, too, that you can always seek help in this long, arduous process of bringing an idea to fruition. The Internet, your local library, the U.S. Census Bureau, business schools, industry associations, trade and consumer publications, industry trade shows and conferences, and new-product development firms can be invaluable sources of information and contacts.

“It’s just a matter of seeking knowledge from as many sources as possible,” notes Keller.

It’s also a matter of putting your ego aside and being willing to create a business that will not only survive, but thrive. “If you have an idea, don’t be afraid to refine it, retool it, rethink it,” adds Keller. “The more you do before you launch, the less you’ll have to do [afterwards], and the less painful the lessons tend to be.”

Get Started

Use the following online and offline resources to help you determine if your idea is a good one.

• Entrepreneur Assist offers a collection of free business planning and productivity tools, letting you access free business books, bookmark your favorite articles, schedule events and reminders and share documents to assist you in your idea evaluation and market research process.
• How to Create a Marketing Plan, will help you strategize your marketing efforts.
• The U.S. Census Bureau has the stats and demographics you need to know.
• FirstGov.gov is a well-designed, easy-to-navigate portal to the government online. Click on the tab that says “Businesses and Nonprofits.”
  Your local Chamber of Commerce can be an indispensable resource for local information for your new business.
• The Encyclopedia of Associations by Gale Group can be found in libraries, and is an essential tool for locating your industry’s associations. Also search on Google, and be sure to check whether the association has a trade publication.
• At TSNN.com, you can access a searchable database of trade shows worldwide.
  Entrepreneur’s Top Colleges listing can help you find a local school that offers entrepreneurship studies.
• Two of the greatest resources known to entrepreneurs are the Small Business Development Centers (SBDCs) and SCORE (Service Corp of Retired Executives). Each SBA service offers free and low-cost help to small-business owners and entrepreneurial wanna-bes, and should have a local office near you.

It’s a great idea: You found the perfect niche market, lots of customers, profit potential galore, the ultimate location and a stellar e-commerce site.

The only problem — where to find all the products you need to stock your shelves.

This happens all the time with entrepreneurs. Even if you come up with a brilliant idea of a product you want to sell, there’s still the tiny detail of finding the actual product. You want to sell AAA but “Where exactly can I get a supply of AAA to sell and get it for a fair price?”

The good news is, finding what you need isn’t quite the needle-in-a-haystack task it’s envisioned to be.

“My experience is, there are a lot of existing channels used to match up manufacturers and distributors of products. Trade shows and trade magazines are two of the best,” says Roger Green, co-founder of Cullinane & Green Inc.

Trade shows alone offer multiple opportunities for you to not only spot upcoming trends, but also to network with potential suppliers and hopefully find just the right product source. The New York International Gift Fair, for instance, attracts thousands of exhibitors, organized by type of product. Attending a trade show also gives you the opportunity to demonstrate you mean business. “By being there, you establish yourself as someone being in business as opposed to being a consumer.

The overwhelming majority [of attendees] are serious buyers,” says Green, who, along with partner Joe Cullinane, has a diverse background in sales, marketing and senior management that’s familiarized him with the ins and outs of product sourcing. “You also get to compare prices across a range, and you get a good sense of the business without having to put a lot of air miles into it.”

Trade magazines, meanwhile, can be an inexpensive way to find companies with which you want to correspond. Scour them frequently for mentions of any companies that might offer the products you need, then try to find out whether they’ll be exhibiting at any upcoming trade shows you can attend.

Trade organizations or industry associations related to the products you’re interested in are yet another potential source of valuable contacts, including international companies. “[These organizations] have trade missions, and they have access to manufacturers from other countries,” says Green. He notes that one of their main goals is to match up buyers and sellers.

So how do you go about finding the right industry association? Check out these resources for help in locating the proper channels:

• Directory of Associations from Concept Marketing Group Inc.
• Gale’s Encyclopedia of Associations. And if you’re not interested in purchasing your own set, most large public libraries carry a copy in their reference department
• National Trade and Professional Associations of the United States

“You should also look at companies that are regional,” adds Cullinane, author of “21st Century Selling” and adjunct professor of marketing at DeVry University’s Keller Graduate School of Management. “[Look at] retail stores that are very successful in one [geographic] area and not selling anywhere else.”

Start by contacting someone at the company or store and asking them whether they might want to sell their product in your hometown. “If something’s been successful in one area, you’ll find the company will want to expand but just don’t have the resources to do it,” says Cullinane.

Image Counts

Finding the suppliers you want is just the first step toward stocking your shelves with the proper inventory. Next, you’ve got some impressing to do. “You have to be perceived as a company and not a consumer,” stresses Cullinane.

“You have to present yourself as someone who is seriously interested in building a business,” adds Green, who advises establishing yourself as a business entity as opposed to a sole proprietorship. ” ‘Inc.’ makes all the difference in the world in [the company extending you] credit in the future.”

Keep in mind, also, that some firms, especially international ones, often prefer working with registered wholesalers of their products as opposed to retailers, says Green, so be prepared to inquire with a particular company about how you might become one. Companies that offer this option to buyers will likely ask you to fill out a few forms and provide some details on your banking history and so forth.

You may need letters of credit and references in order to prove your ability to make good on your word. The advantage of becoming a wholesaler? Wholesale rates, which are often well below the retail prices of a given company.

When making that initial contact with a potential vendor, be prepared to talk about what you do and why they would want to do business with you. Letters of credit from your bank, and letters of reference from people who know you and can vouch for your credibility, are also key-those can help you get an appointment with the vendor in the first place. Green advises starting small:

“Find an easy one, and then build from there. If you start dealing with someone local who knows you and can see you, in a few months, you’ll have a track record and can use the first one as a reference. It’s like starting a fire: use kindling first, not the log.”

Look to your social network to determine whether you might know anyone who can help you. Make sure you tell friends and family what you’re doing-you never know who they might know. “It’s amazing the results you’ll get [when you spread the word],” says Cullinane.

One caveat: If you do business with someone you know, make sure you clearly establish the terms of the relationship from the start. As Green cautions, “It’s still a business relationship at the end of the day,” cautions Green.

“There’s a saying among lawyers: The best contracts are drawn between people who don’t trust each other.”

So enlist the help of an attorney who knows the ins and outs of drawing up the kind of contract you need-the money will be well-spent in the long run.

So You’ve Got a Supplier

Once you’ve found the companies that manufacture the products you want to sell, you need to get samples and be sure they’re exactly what you want. “Be prepared to invest in that,” says Green. “Sometimes companies will supply samples at no charge, but not always. And don’t go looking for freebies-that can ruin your credibility.”

How many vendors do you need? “Just enough,” says Cullinane. In B2B situations, you’ll likely want at least two suppliers, maybe three. It’s a good idea to have backup suppliers in case something ever falls through with one of your regulars. “A lot of times you build your business around one supplier,” explains Cullinane, “and if something [happens to them], you could be out of business.”

Above all, remember the most important element of a successful retail business: the customer. Even if you’ve got a handle on where to get your product, you’ll want to make sure you haven’t forgotten the crucial step of determining whether that product will be met with a warm reception. “An entrepreneur needs to look at ‘What do my customers need that they can’t get?’ ” says Cullinane. “Satisfy that niche. Be the person who provides that.”

Click Away

• Use the Web in your search for suppliers. “With powerful search engines like Google, you can locate suppliers all over the world,” says product-sourcing guru Roger Green. “It’s a low-cost way to go exploring.”
• TheThomas Register online will help you locate companies and products manufactured in North America. You can also place orders online and view thousands of online company catalogs and Web sites.
• Don’t overlook the U.S. Department of Commerce in your search for suppliers. “Let them know you want to do business, and they’ll do some match-ups,” says Green.

Firms that are successful in marketing invariably start with a marketing plan. Large companies have plans with hundreds of pages; small companies can get by with a half-dozen sheets. Put your marketing plan in a three-ring binder. Refer to it at least quarterly, but better yet monthly. Leave a tab for putting in monthly reports on sales/manufacturing; this will allow you to track performance as you follow the plan.

The plan should cover one year. For small companies, this is often the best way to think about marketing. Things change, people leave, markets evolve, customers come and go. Later on we suggest creating a section of your plan that addresses the medium-term future–two to four years down the road. But the bulk of your plan should focus on the coming year.

You should allow yourself a couple of months to write the plan, even if it’s only a few pages long. Developing the plan is the “heavy lifting” of marketing. While executing the plan has its challenges, deciding what to do and how to do it is marketing’s greatest challenge. Most marketing plans kick off with the first of the year or with the opening of your fiscal year if it’s different.

Who should see your plan? All the players in the company. Firms typically keep their marketing plans very, very private for one of two very different reasons: Either they’re too skimpy and management would be embarrassed to have them see the light of day, or they’re solid and packed with information . . . which would make them extremely valuable to the competition.

You can’t do a marketing plan without getting many people involved. No matter what your size, get feedback from all parts of your company: finance, manufacturing, personnel, supply and so on–in addition to marketing itself. This is especially important because it will take all aspects of your company to make your marketing plan work.

Your key people can provide realistic input on what’s achievable and how your goals can be reached, and they can share any insights they have on any potential, as-yet-unrealized marketing opportunities, adding another dimension to your plan. If you’re essentially a one-person management operation, you’ll have to wear all your hats at one time–but at least the meetings will be short!

What’s the relationship between your marketing plan and your business plan or vision statement? Your business plan spells out what your business is about–what you do and don’t do, and what your ultimate goals are. It encompasses more than marketing; it can include discussions of locations, staffing, financing, strategic alliances and so on. It includes “the vision thing,” the resounding words that spell out the glorious purpose of your company in stirring language.

Your business plan is the U.S. Constitution of your business: If you want to do something that’s outside the business plan, you need to either change your mind or change the plan. Your company’s business plan provides the environment in which your marketing plan must flourish. The two documents must be consistent.

A marketing plan, on the other hand, is plump with meaning. It provides you with several major benefits. Let’s review them.

• Rallying point: Your marketing plan gives your troops something to rally behind. You want them to feel confident that the captain of the vessel has the charts in order, knows how to run the ship, and has a port of destination in mind. Companies often undervalue the impact of a “marketing plan” on their own people, who want to feel part of a team engaged in an exciting and complicated joint endeavor. If you want your employees to feel committed to your company, it’s important to share with them your vision of where the company is headed in the years to come.
• Chart to success: We all know that plans are imperfect things. How can you possibly know what’s going to happen 12 months or five years from now? Isn’t putting together a marketing plan an exercise in futility . . . a waste of time better spent meeting with customers or fine-tuning production? Yes, possibly but only in the narrowest sense. If you don’t plan, you’re doomed, and an inaccurate plan is far better than no plan at all.
• Company operational instructions: Your child’s first bike and your new VCR came with a set of instructions, and your company is far more complicated to put together and run than either of them. Your marketing plan is a step-by-step guide for your company’s success. It’s more important than a vision statement.
• Captured thinking: You don’t allow your financial people to keep their numbers in their heads. Financial reports are the lifeblood of the numbers side of any business, no matter what size. It should be no different with marketing. Your written document lays out your game plan.
• Top-level reflection: In the daily hurly-burly of competitive business, it’s hard to turn your attention to the big picture, especially those parts that aren’t directly related to the daily operations. You need to take time periodically to really think about your business–whether it’s providing you and your employees with what you want, whether there aren’t some innovative wrinkles you can add, whether you’re getting all you can out of your products, your sales staff and your markets.

Ideally, after writing marketing plans for a few years, you can sit back and review a series of them, year after year, and check the progress of your company.

Of course, sometimes this is hard to make time for (there is that annoying real world to deal with), but it can provide an unparalleled objective view of what you’ve been doing with your business life over a number of years.