Have you ever wondered what makes an entrepreneur?
Many people seem to be born for business but, in my experience, the entrepreneurial mindset is something everyone is capable of learning.
Over 39 years as an entrepreneurship educator and a teacher in some of the countries most troubled schools, I’ve learned that one of the most important lessons in entrepreneurship is also the most simple: the difference between retail and wholesale prices on goods.
In fact, in my experience, many students do not know the difference between retail and wholesale, and understanding this difference unlocks a world of entrepreneurship possibilities for them. I saw firsthand teaching many of New York’s most impoverished young people in the 1980s, that often the most economically disadvantaged among us are not taught about this difference. In fact, getting to know the supply-chain and the way pricing works can be life-changing for many.
The majority of businesses take part in the exchange from wholesale to retail. That’s because the majority of businesses buy a product directly from a wholesale distributor before selling it onto their customer. For example, shoe store owners buy shoes at wholesale before increasing the price and selling them in store. Shoe distributors buy shoes at manufacturers before selling them wholesale.
- Determine the right middleman for you. There are different people between a retailer and a manufacturer. These include distributors at a city, state or territory level, and very local distributors who tend to deliver goods on a more regular basis. You’ll need to map out who does what for your specific product, and then get in touch with the right wholesaler for you. A quick internet search can help you find the phone numbers and email addresses of those you need to contact. And once you have some knowledge of who the players are, join in on their meetings. Nearly all wholesalers meet regularly at different venues around the world, where they share business problems and ideas and get to know new products in their line of business. For example, toy sellers gather annually at a convention in New York, as do book sellers and nearly every other segment.
- Find and negotiate the best price. When you approach the wholesaler, share your business vision with them. Tell them how much business you want and expect to do, and explain what that means for their business, too. Make sure you talk to multiple wholesalers before settling on one that not only meets your budget, but also helps you in terms of how much you have to pay in advance or the delivery of the product.
- Redistribute your goods. The easiest and simplest way to redistribute products is to do so locally, either through your own website, your Facebook page or a brick-and-mortar store. It is critical that you do the math first: depending on how much it costs you to buy, repackage, and deliver the goods to your customer, you may not have much to spend on rent and getting the word out about your offering. It pays to plan ahead!
- Nurture your relationships. Once you get started redistributing goods and working out the best prices, try to invest time in getting to know the manufacturers and/or distributors you work with. Building friendships there pays not only by opening communication and simplifying business. It will also open you to opportunities to sell slightly flawed and lower priced goods, for example; or to purchase your goods at lower prices.
– Steve Mariotti is a prominent advocate for entrepreneurs and entrepreneurship education worldwide. He is the founder of the global nonprofit NFTE the author of hundreds on the transformative power of entrepreneurship, including his recent memoir, Goodbye Homeboy.