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1992-01-11
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CHAPTER 3
YOUR PERSONAL TREASURE MAP
Before you start out on a trip of any size you should
have a map. Marked on the map should be a clear route from
the spot from which you are starting and the destination.
In between should be the pauses, the diversions and the
hazards.
When starting any business venture you need such a map.
Many people form the map in their mind, but no matter how
experienced you are with regard to business, you are better
off with a clearly defined, detailed, down-on-paper route
map.
If you ever approach a bank for a business loan, they
will want to take a look at that map. They will want to see
your destination, usually in the form of projected dollars
profit, they will require information on how you intend to
get there, and they will want to know what supplies or
assets you will have when you start out.
Make yourself such a map. On a piece of paper write
down your assets, your goals and the methods you intend to
use to attain them. Put it somewhere that you can reach for
it easily over the next few days so that you can make
changes and alterations as they come to mind. When you are
satisfied that what you see is what you want to achieve,
file the map away where you can find it because I want you
to take a look at it now and then. It will give you encour-
agement when you need it and quite a few surprises.
I said for you to write down your assets, Too many
people start out with that underestimation of their worth.
"I don't have any assets," they say. You do have assets,
everyone has assets, they start building the day you are
born. They are the things you know, your skills, your
experiences, your "street smarts".
If you have material assets, money in the bank, stocks
and shares, properties dotted all over the United States, so
much the better. But it is what you know that is even more
valuable, and when you are running your own business, that
knowledge is like gold bars hidden under the mattress.
Other than just a mention in passing, I will leave you
to make your own decisions with regard to a business name
and registration. The main thing to bear in mind is that in
Mail Order, your new customers know nothing about you other
than your letter heading.
You rarely meet with your customers face to face so
they must judge your honesty, your efficiency, the quality
of your products and the size of your business simply on the
material you send them. If your letter heading looks ama-
teurish or just plain sloppy, that is the opinion they must
form about your business, so spend some time polishing your
shop window.
* The Basis Of Business
In a nutshell, business is simply buying and selling.
You buy at the lowest price possible and you sell at the
highest. The cash between is your profit. It is PROFIT, not
gross income, that feeds and houses you, allows you to buy
still more product and eventually allows you to expand your
business.
You cannot run a business without making a profit - not
for long, anyway, although some people seem determined to
try.
Let's examine those two major aspects of business, the
buying and the selling, in detail. The entire book deals
with those two aspects in one form or another, but for now
we'll break them down to their basic parts and take a closer
look at them as they apply to this specific business.
For now I will ignore the service aspect of Mail Order
business, services such as Tuition or Schooling by Mail, but
as they are an important part of Mail Order, we must appre-
ciate their importance and I'll get to them later.
* What, Where & How to Buy Mail Order Products
This is the meat of the Mail Order business. You will
find some suggestions for the 'What' to buy and 'Where' to
find it throughout the book, but for now consider the fol-
lowing.
Your choice of product will be governed by the 6 Golden
Rules, rules that I'm sure you will break on occasion, and
every time you break them you will expose yourself to risk.
By that, I mean your ability to grow will be slowed and even
at times, grind to a standstill.
If, or should I say, when you meet one of those periods
of slow-down, never lose confidence. Just determine that
for every step back that you take, you will positively take
two steps forward. Take another look at your map and remem-
ber the determination that filled you when you drew it.
The 4 Golden Rules:
1. Your product should, if possible, be exclusive.
2. You must be able to buy that product at a very
competitive price.
3. Before you buy, you should have a specific market
in mind.
4. You MUST have a guaranteed supply.
Rule #1. Exclusivity.
This is a tough one at first, but when you get the
knack, and I think it is a knack, you will find that finding
exclusive products is much easier than you would presently
think. We will cover this a little more thoroughly in the
section dealing with where to buy.
Rule #2. Low Price Purchasing.
This is usually a matter of bargaining. Huge stores
such as Sears Roebuck and Montgomery Ward are able to buy in
enormous quantities and with this power are able to push the
manufacturer down to his lowest price.
It is here that your small size can be turned to advan-
tage. Think of yourself as a lone guerrilla fighter facing a
well nourished army. You will use the weapons available to
you and be able to strike where and when it is to your
advantage.
Your biggest weapon is cash. The big guys inevitably
buy on credit and this tends to cripple the smaller manufac-
turer. Small firms, - and these are usually entrepreneurial
people, the type who develop unusual products, - need a
steady flow of ready cash. They live hand to mouth. Be-
cause of this, many of these smaller firms can be tempted to
sell you a product at unbelievably low prices when you offer
them cash on the barrel head.
Your second weapon is in that other huge asset, exclu-
siveness. The big people are hoist on their own petard when
it comes to new products. They find it difficult, or un-
wise, to order a 'strange' new product in the quantities they
are required to buy. The buyer for a major store chain who
loads his company's warehouse with half a million 'Wizzi-
gits' that they discover no one wants to buy, will soon be
looking for another job. To say that he is cautious is an
understatement.
You, on the other hand, with your smaller list of
customers, (and a much more intimate knowledge of the type
of product they are buying), are in a much better and safer
position. You can complete a short test run while the big
companies are still contemplating buying. Very frequently
the larger stores will wait until a product has appeared on
the market and will then join in with a cheaper or similar
item. This gives you a fair number of weeks or months with
an open market.
Rule #3. Know your market.
Three of the most important steps in selling are:
A. Know your product.
B. Like your product.
C. Know your market.
A surprisingly large number of people who enter the
Mail Order business, start with products with which they are
familiar. Hobby products or personal interest products - car
accessories, fishing and camping equipment, children's toys,
collectibles, books, classical music, computers.
Because they are familiar with these products on a
personal basis, they are also aware of other people or clubs
with similar interests. They have an accurate and pre-
formed idea of the type of people who would be interested.
In other words, they have a working knowledge of their
markets.
When you buy and when you sell, your first customers
are going to come from a market familiar to you.
I mentioned a few minutes ago that some Mail Order
houses specialize, and although diversification gives you a
much wider choice of products, specialization brings a line
of customers to you that might otherwise go to a competitor.
Typical areas of specialization could be:
1. Children: - Toys, Books, Computer Educational
Programs, School Materials.
2. Sports: - Fishing, Hunting, Skiing, Boating, Hang
Gliding.
3. Hobbies: - Books, Embroidery/Needlepoint Materials,
Collecting, Computing, Photography, Gardening, Genealogy.
4. Women/Men Products: - Clothing, Toiletry, Maga-
zines.
5. Pets - Specialized Foods, Toys, Accessories.
The above selections merely scratch the surface. I
include them to start you thinking.
Rule 4. Guaranteed supply.
This is of vital importance. Never spend money to
advertise a product that has no guaranteed continuance of
supply. You would be very unhappy to spend a considerable
amount of money on advertising and receive cash and orders
for 5000 items, only to discover when you went to buy
further supplies, that the manufacture of that product had
been discontinued.
Where possible, put yourself in the position of being
able to control supplies. This sometimes means buying in
sufficient quantity to have stock on hand. This has obvious
pitfalls. Never load yourself with a warehouse filled with
'chancey' products. Before you buy in quantity, test mar-
ket, - and even then, buy back-up stock with extreme cau-
tion.
NOTE: Some items such as books and magazines can be
purchased with a return-if-not-sold option.
Some Mail Order specialists will go into the business
of manufacturing a product themselves so as to be sure of
regular supplies, but this comes only after a product has
been successfully marketed over a long period of time and
assuming there would be no copyright or patent infringe-
ments.
There are exceptions to Rule 4. You may have the
opportunity to buy a quantity of an item that has been
discontinued or is about to be discontinued. If you possess
this knowledge beforehand, you can direct your advertising
and sales accordingly.
"Limited Supply"
"First Fifty Customers Only."
"Buy One - Get One Free. While Supplies Last."
"Limited Time Offer Only. Will Not Be Repeated."