Massive companies like Amazon dominate today’s retail scene — but clever small business owners have still found ways to survive and thrive. The growing area of retail returns and liquidations resales is a great example. When big companies such as Amazon and Walmart don’t see the point in evaluating and restocking their supplies, or when they need to offload lots of stuff to make room for new products, they let their stock go for a song — and savvy small-business owners buy pallets full of products to resell at a profit.
It’s a brilliant idea for making money, but not every person involved is getting every move right. It’s easy to make mistakes in this business. Here are three to avoid.
Using the wrong suppliers
When you run a returns and liquidations resale business, you aren’t dealing directly with the companies whose stock you’re reselling. Instead, you’re going through one of the various companies and auction websites that offer pallets of goods to businesses like yours. And which one you choose can make a big difference.
Beware of companies with shady reputations, say experts in Bstock solutions. You need to know that the products you’re buying really came from the companies that the website says they did. You need to be confident that your products are genuine, not knockoffs. And you need to know that you’re paying a fair price.
In this business, everything comes down to product quality and pricing — your profit is the difference between what you made on a pallet’s worth of goods and what you paid for that pallet (minus other costs, of course). So focus on quality and price, and find a reliable supplier that you can trust.
Not reinvesting enough of earnings — or reinvesting too much
When your liquidations and returns business turns a profit, you have to decide what to do with your influx of cash. You’ll need to pay bills, of course. But then what — do you spend this cash? Or do you reinvest it in your business?
The only way to expand your business is to take some of your earnings and put them back into your operation. As you get more cash, you can buy more pallets, rent storage space, handle more shipping costs, and perhaps even bring on new employees. That’s how you grow a business.
With that said, reinvesting all of your earnings isn’t necessarily the right move. That would be a bit of a gamble, because all of your eggs would be in one basket. Make sure you’re tucking a bit of cash away for retirement (invest it in reliable, slow-growth funds). And don’t neglect your everyday needs. Keep in mind that neglecting things can end up costing you more. For instance, you may not want to spend big bucks going to the dentist, but preventative oral hygiene services may prove to be a good investment by keeping you from having to spend much more later on to get cavities filled and root canals done.
Not staying organized and disciplined
Running a business is exciting. But you need to take care of a lot of nuts-and-bolts things, even when you’re busy getting fired up watching an auction or pouncing on the perfect deal.
Make sure that you’ve set up your business properly. There can be big differences in how your business operates legally and how much you pay at tax time, depending on whether you consider yourself a sole proprietor, LLC, or corporation.
And don’t go all over the place with your purchases, either. Keep a balance sheet and don’t spend more than you can afford. Try to focus on specific types of products, so that you can become an expert in pricing your inventory. And try to avoid buying pallets blind. Not knowing what you’ll soon be selling is a dangerous gamble. You don’t have to know everything about what’s on the pallet (you likely never will), but having some basic information is key.
If you stay organized, stay smart, and avoid silly mistakes, your business could grow!