One key to success as a reseller is correctly assessing the risks of your business and operating on the right side of the risk versus rewards line. The key is to try to balance experimentation with new products and sales channels with proven results. Try out things you’re not sure will work, but don’t spend too much money on these experiments.
It can be hard to anticipate where you’ll find the greatest economic opportunity, so regularly test new ideas.
Here are three best practices for finding success in a reselling business:
1. Sell Goods You’re Familiar With
When considering starting a wholesale business, it’s a good idea to select a product with a large market that you know well. Expertise in your chosen field enables you to purchase wholesale goods of high quality at reasonable rates, price appropriately for the customer, and understand your customer’s needs.
12 Essential Steps in Choosing and Building a Side Hustle
For example, many people have started mobile phone reselling businesses in the past decade because the market for used phones is constantly growing, and business owners understand the types of phones that sell well. In general, in the secondary market in North America and Europe, iPhones and flagship Android devices are best-sellers, while in South America, Asia, and Africa, used mid-tier devices tend to be the most popular.
For a reselling business to succeed, you must have a healthy profit margin, which is the difference between the final price to the end user and the wholesale price.
For example, used clothing stores often price their clothing at 30% to 50% of what a new garment would cost. They can do this and sustain a business because they buy their goods at around 10% to 15% of cost. A reselling business lives or dies by maintaining profit margin and sales volume. You need a steady stream of profitable transactions to have a sustainable business.
2. Track Your Income and Expenses
When researching how to start a reselling business, accounting may not be the first thing you think of. Yet, solid accounting practices are absolutely essential to having a viable business. Tracking your sales and expenses is a core skill for business owners in the reselling business. Meticulous records will also help you when it’s time to file your taxes.
If you’re not comfortable with numbers (or even if you are!), consider hiring an accountant who knows your industry. An experienced accountant can advise you on how your financial performance compares to the industry at large and make recommendations for improvements.
As the previous section explained, profit margin is a critical business metric. You can calculate your profit margin percentage as the difference between your final sale price and the initial purchase price divided by the final sale price. That gives you a percentage value expressing the amount of profit you made on the item. Having a reasonable profit margin enables you to reinvest in the business through sales and marketing activities and increased wholesale purchase orders.
Verizon Digital Ready: Providing Entrepreneurs the Skills and Knowledge They Need
3. Invest in Technology
You will need several software products to power your modern reselling business. First, it’s critical to have a website for your company. Even if you’re selling through a brick-and-mortar location, customers will often want to check your website to see if you have the item they want in stock. And many potential customers don’t live nearby. For them, your website is the only way to buy.
One of the biggest online wholesale opportunities is selling used phones. While this industry used to require time-consuming data entry and manual inventory management, today, software is available to automate these tasks.
Finally, track your company sales and finances in accounting software. Good accounting software will make it easier for you to work with your accountant and give you visibility into the health of your finances. Consult with your accountant when considering big moves in the business, such as expanding to sell through new channels, renting a warehouse, or leasing a new location.
Zoho
Online accounting software, built for your business.
Zoho Books is online accounting software that manages your finances, automates business workflows, and helps you work collectively across departments.
We earn a commission if you make a purchase, at no additional cost to you.
Balance Risk With Reward
In business, you earn risk-adjusted returns. In competitive markets like online reselling, the more risk you take on, the higher your potential earnings. That doesn’t mean you should intentionally make risky moves. Rather, try to balance experimentation with new products and sales channels with proven results.
Try out things you’re not sure will work, but don’t spend too much money on these experiments.
If you have an online reseller business that sells cell phones, try selling into new geographies, such as the Latin American market. That’s a lesson we learned at WeSellCellular. Another approach is to add devices to your inventory from a new manufacturer.
As we have said, anticipating where you’ll find the greatest economic opportunity can be a challenge. So regularly test new ideas.
Most Read: What is the Average Income of a Subway Restaurant Franchise Owner?
The post originally appeared on following source : Source link
