Sunday, January 21, 2018

The Simplicity of Business and Its Complexity-Buy Low and Sell High

Business is about buying low and selling high. That seems straight forward enough but it really isn't when you start a business. Many small businesses go out of business relatively quickly because they are not able to master this problem. Actually, a lot of large businesses also close their doors when this issue arises.

What is the problem?

There are suppliers who give the best deals to those who purchase a lot. Unless you are a major company you are going to suffer from a lack of economies of scale. You will be buying from someone else who has purchased a large amount and then broke it apart. The price typically moves up as each supplier adds their profit margin.

Can this be solved?

It is important for businesses to continually think about their suppliers. Sometimes they negotiate other prices, they may need to look for cheaper alternatives overseas, and a few others get really unique and find whole new ways of doing business.

Is it always wise to sell what others are selling?

Yes and no. There are times when hot products are a great option because people purchase them at a premium rate. However, if you are a small store competing against a large chain you are going to need to do something else. Consider going niche, finding new types of products, or improving your service to add value.

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