Lesson 6

USS Biz Trek

Lesson 6: Finding Supplies

Jeff: Wow! These bug zappers are cool!

Wendy: Could you please stop playing with that thing? You got them all. Besides, we have to think of how we’re going to get another thrust manifold. Even I can’t fix this one.

Jeff: Don’t worry about it. There’s an alliance planet nearby. Once we coast there, I’m sure we won’t have any problem finding a supplier to trade with.

Wendy: It’s good that we sent the space flyer ahead of us. The Gornya are definitely going to make it to Mirania first.

Jeff: Yep, but slow and steady wins the race, right? Anyway, if we hurry, we’ll only lose a couple of days. I’ll even start gathering up some stuff to trade now.

Wendy: Jeff, wait! The crew talked and we think that there’s something a little more important we need your help on.

Jeff: My bug zappin’ skills impressed you guys that much, huh?

Wendy: Yeah Jeff, that’s exactly it.

Buy Low, Sell High

Searching for suppliers won’t be as easy as the USS Biz Trek crew made it look. Sometimes suppliers can seem like the most elusive creatures in the galaxy. However, once you do find a supplier, there is one major rule that all business owners must understand. To make the highest profit possible in your business, you need to buy supplies at the lowest price.

Sometimes, it's easy to buy inexpensive supplies. (If you are washing cars, for example, you can go to the grocery store and buy the largest bottle of liquid soap on the shelf. It'll only cost you pennies to wash each car.) However, for some businesses, finding good suppliers takes days or weeks of patient research.

Searching for Suppliers and Wholesalers

Why are suppliers so important? The ability to buy supplies at the lowest cost directly affects the profit you will earn in your business. At the same time, quality control is important also. It won’t help your business to sell shoddy merchandise for the sake of saving a buck. Look for suppliers that offer high quality for the best price.

Why is it hard to find them? Most suppliers are wholesalers. They make more money when they sell large quantities of supplies to one location. Even when you find out who the major supplier is, they often have strict rules and requirements about minimum orders. You may also have to show proof you are a business owner with good credit. It’s not always easy to find a supplier that will sell to a new business — and let you buy in small quantities.

Where do I start looking?

The first place to look is the yellow pages of your phone directory. Look for manufacturers, wholesalers, distributors, or wholesale outlets that carry the supplies you need.
You can also get clues from the packaging of products sold by competitors. Visit other retailers and read the small print on boxes and packages. Sometimes you will find the manufacturer's name, address, and phone number.
Look at the ads in magazines relating to your business. Suppliers often advertise in these publications.
Call your local office of S.C.O.R.E. (Service Corp of Retired Executives). These are retired businesspeople who give free advice to anyone starting a business. Ask them to match you up with someone who would know about your suppliers.

How do I get suppliers to sell to me?

Show the supplier that you are a legitimate business enterprise. First, call or write the supplier a letter on your business stationery. Include your business card and samples of your brochures and flyers. Ask for a catalog, order forms, and procedures for placing orders.

Be prepared to send any information the supplier requests to verify that you are a real business. They usually want to see a copy of your DBA form and your sales tax certificate. (These legal forms are explained further in Lesson 9.)

Be persistent about your desire to do business with the company. Try to establish a friendly connection. Ask what you can do to show you are a legitimate paying customer. If the supplier won't sell to you directly, perhaps a family member who is in business can help by placing the order. To see how another ‘trep has solved the supplier problem, read the story of Mallory Gollick’s Jungle Beans.

Once you find a supplier, always pay your bills on time and conduct your affairs in a responsible manner. Suppliers are valuable resources for making your business a success. Treat them well!

Bungee Jumping

Starting a business is almost like bungee jumping. It’s a calculated leap of faith. If you plan well, you’ll be okay. If you don’t, you (or in the bungee jumping scenario, someone else) will be picking up the pieces for a very long time.

The smart thing to do before you start a business is to estimate your start-up costs. You will find a form in Activity #20 to help you determine what your start-up cost will be. Then you can make plans to get the money (capital) to start your business.

These are some of the terms you will need to know:

Capital: Capital is the money used to start or operate a business.
Start-up cost: Start-up cost is the amount of capital necessary to start and run a business until there is enough income from sales to cover all of the expenses. There are two kinds of expenses to consider: fixed and variable.
Fixed costs: These are the operating expenses to run your business every month. They include rent, office supplies, and utilities such as phone, water, and electricity.
Variable costs: These are the expenses for manufacturing, purchasing, or producing the goods and services you sell. These are also called cost of goods. (See Lesson 3: Setting the Right Price, and Lesson 4: Pricing Your Goods.)

Saving Money on Start-up

Borrow things from home. After you get paid for a couple of jobs, buy your own.
Buy small amounts of inventory until you can afford to buy more. (Example: Buy one bag of candy bars, sell them, and use that money to buy two next time. This is called reinvesting in your business.)
Recognize the difference between wants and needs. Hold off on buying anything you don’t need until you make more money.