Your customer sees a marvelous array of products on your website. After thoughtful consideration, she purchases the product she wants. Amazingly, you have never actually seen the product. That is because your supplier shipped the order directly to her.

1. Problems With Stocking Inventory

After deciding what products you will sell, you are immediately faced with many challenges.

First: “To stock my products, will I need to rent store or warehouse space? I was hoping to sell by Internet, mail order, or export, but I don’t have much storage space for inventory at home.”

Second: “Will the supplier even deal with me if I don’t have a retail location? I was counting on keeping my overhead down by operating from home.”

Third: “I know that many manufacturers and distributors have a minimum order, sometimes in the thousands of dollars. I don’t have that kind of money!”

Fourth: “Even if I did have the money, why should I tie it up in inventory? How do I know if the product will even sell?”

Fifth: “I guess I will have to add extra insurance coverage for my inventory. Maybe I better upgrade my security system while I’m at it.”

Sixth: “The shipping charges are going to kill me. First, I have to pay to get the goods here (freight-in). Then, I have to pay to ship the goods out to my customers (freight-out).”

Seventh: “If I expand and hire employees, how will I control the inventory? How will I know if my employees are stealing from me?”

Eighth: “How much time and money am I going to spend packaging and fulfilling orders?”

These problems can be reduced or eliminated by drop shipping.

2. Drop Shipping to the Rescue

Drop shipping is a method of selling products without stocking inventory yourself. You don’t need to stock inventory, because you only order an item when a customer requests it.

With drop shipping, when you make a sale you contact the manufacturer or authorized distributor and make arrangements to pay for the order at your wholesale cost. Your distributor then ships the product to the customer with your invoice and shipping label.

For example, let’s assume that you have just sold a product to a customer for $100.00 plus shipping charges of $15.00. Having received the customer’s payment, you now need to fax or otherwise send your order to your drop ship supplier. You will need to pay your supplier, by credit card or other means, your cost of $50.00 plus $15.00 shipping. This leaves you a $50.00 gross profit. Your supplier will now ship the product to your customer.

With this arrangement of not having to stock inventory yourself, there are many advantages.

You eliminate the high costs of holding inventory. There is no need for you to rent expensive storage space, finance high minimum orders, get stuck with goods that don’t sell, or pay other expenses associated with maintaining inventory.

Indirectly, you do pay inventory costs. Your drop ship supplier must maintain his inventory and pay all associated costs, including freight-in, storage space, insurance, accounting, shrinkage, and so on. To make a profit, he must pass these costs on to you.

The real advantage to this drop shipping arrangement lies in keeping your costs variable. Instead of being stuck with these expenses up front, whether you sell or not, you pay only when you make a sale.

3. Profit From Drop Shipping

Many legitimate drop ship suppliers may not require you to have a retail location, but they will want to see evidence that you are in business. They may require you to produce a resale license or retail sales tax permit.

To be sure, there are pitfalls to watch out for in drop shipping. For example, some suppliers claim to sell at wholesale prices but are actually selling closer to retail. Also, margins are very slim in some competitive areas, such as electronics. However, with proper research and information, you should be able to avoid these problems.

Whether from your home, retail store, directly from your website or through an online auction, you can arrange to sell an item before you purchase it. That way you have nothing invested in inventory and won’t get stuck with stock that won’t sell.

Rather than financing and stocking inventory yourself, consider drop shipping your way to wealth.

J. Stephen Pope, President of Pope Consulting Inc., has been helping clients to earn maximum business profits for over thirty years.

If you operate a small business, you may feel that your income potential is quite limited. However, you can increase and diversify your income through international trade.

1. Importing

Retail store owners can find additional products to sell from foreign manufacturers, distributors, and other suppliers.

Advantages of importing include increased product selection, lower costs, and increased income.

You may even decide to go exclusively into the import business and become a wholesale distributor.

2. Exporting

Manufacturers can find new customers for their products in foreign countries.

Perhaps consumers in your country have lost interest in your product. It may have become obsolete because of technological advances. A foreign market, however, may be desirous of that very product.

Maybe there is an economic slump in your country. Another country may be experiencing a boom. Sales from customers in that country may help stabilize your income.

Exporting can also help smooth the peaks and valleys of your income. For instance, if you sold winter sporting goods, you could sell to both northern and southern hemispheres to help offset the seasonal nature of your business.

Of course, you might also consider selling sporting goods for all the seasons and still export to other countries to increase and diversify your income.

You could also become an Export Management Agent. Arrange for other domestic companies to sell their products to foreign corporations and earn a ten percent commission.

You would think that selling to foreign customers would be quite risky. However, use of letters of credit can protect all parties. An Export Management Agent might actually arrange for ninety percent of the sale to be paid directly to the domestic supplier and ten percent to be paid directly to himself.

3. Licensing

Consider becoming a licensing agent. Earn royalties by arranging for foreign corporations to manufacture and sell the products of domestic companies.

4. Finder’s Fees

Imagine the possibilities for earning finder’s fees in international trade!

You can earn fees from domestic companies for finding foreign buyers (or for finding suitable imports from foreign suppliers). You can also earn fees from foreign companies for finding domestic corporations that will buy their products (or for finding suitable suppliers and products from domestic corporations).

5. Drop Shipping

Visualize receiving an order from a customer based in a foreign country and not having to be bothered with shipping and handling the product. No customs declarations or brokers are required by you. This is because your drop ship supplier is handling those details.

You might collect $100.00 plus shipping of $15.00 from your foreign customer. You then simply send your customer’s order to your drop ship supplier with your payment of $65.00 (consisting of $50.00 wholesale cost plus $15.00 shipping). Your drop shipper will now fulfill the order. Congratulations! You just made fifty dollars.

6. Mail Order

Add a mail order service to your existing business operation. Manufacturers, retail stores, and other businesses can increase their sales by using this additional method of selling that is very conducive to international trade.

7. Internet Marketing

You can also extend your reach to worldwide customers by means of the Internet. Methods of obtaining foreign business include affiliate marketing, online auctions, online stores, and websites.

Yes, to increase and diversify your income, consider international trade.

J. Stephen Pope, President of Pope Consulting Inc., has been helping clients to earn maximum business profits for over thirty years.

You would like to increase your income by selling other peoples’ products but you just don’t have the money to stock inventory.

On the other hand, perhaps you have lots of your own product and would like to increase your sales, but you don’t have a lot of money for advertising.

The solution to both problems may lie in drop shipping.

1. Sell Products You Don’t Own

You would like to sell a variety of products but you don’t have very much money. Don’t worry! Your customers will supply you with the necessary capital. You don’t have to stock inventory. You can drop ship orders.

For example, you receive a credit card order for a product retailing for one hundred dollars plus five dollars shipping. You now turn around and fax (or e-mail or phone) your order to your dropship supplier. You pay the fifty dollar wholesale product cost plus five dollars shipping using your own credit card.

Your dropship supplier now ships the order to your customer. With no investment in inventory, your gross profit equals fifty dollars.

2. Sell Products You Do Own

Would you like more sales of your own products? Consider drop shipping your products for other dealers.

As an example, you may have a product that sells for one hundred dollars plus shipping. Every time you sell that product yourself, you will have a sale of one hundred dollars. However, how many one hundred dollar sales can you make personally?

Now consider the situation where you offer your dealers a wholesale price of fifty dollars. You could have hundreds or thousands of persons selling for you.

It is true that each product sale now only brings you only fifty dollars in sales. However, these are sales that you wouldn’t otherwise have. What would it cost you to obtain these sales through traditional advertising channels? Would your advertising even bring you the desired results?

Keep in mind that with this drop shipping arrangement, you pay only for results. When a dealer retails your product for one hundred dollars, he is really receiving a fifty dollar profit for selling your product; you could view it as a sales commission. You receive only fifty dollars per product sale but sell way more than without drop shipping. You ship directly to the customer for your dealer.

So, whether you sell other peoples’ products or your own, drop shipping can increase your sales, preserve capital, and maximize business profits.

J. Stephen Pope, President of Pope Consulting Inc., has been helping clients to earn maximum business profits for over thirty years.

by J. Stephen Pope

Do you need to start or grow your business but have little money? Before you look to banks and similar sources of financing, why not bootstrap your way to business success?

A bootstrap is a small loop of leather or other material that is found on the top rear or sides of a boot. The purpose of the bootstrap is to help you pull your boot on.

In business, bootstrapping has come to mean helping oneself without seeking outside help. It means using your own resources to finance, promote, and develop your business.

Here, then, are some ways of financing your own business by using your own initiative and depending less on outside bank financing.

1. Operate a Home-Based Business

Operating your business from home could save you a fortune. First of all, you eliminate the costs of expensive commercial rent, commuting, et cetera.

As well, your business use of home expenses would be deductible for income tax purposes. Since your home is your base of operations, your travel and automotive expenses from your home to clients would be deductible.

2. Accept Credit Cards

Rather than financing receivables and assuming the risk for bad debts, why not accept credit card payments?

3. Drop Ship Products

Rather than financing and stocking inventory yourself, consider drop shipping.

With drop shipping, when you make a sale you contact the manufacturer or authorized distributor who ships the product to the customer with your invoice and shipping label. Advantages include no warehousing, shipping, or inventory costs.

4. Use Your Customer’s Money

Selling memberships, subscriptions, gift certificates, and coupon books are just a few ways of getting your clients to pay upfront. Obtaining advance deposits and retainers from your customers can help finance your business operations and reduce or eliminate the need for bank financing.

5. Licensing

Instead of trying to finance the manufacturing and marketing of your invention, which could cost millions of dollars before you have your first sale, why not license it to a company with the necessary expertise and capital? You will then receive royalties in return for your idea.

6. Other Bootstrap Financing Methods

Aggressively control costs, barter, get extended terms from suppliers, establish strict credit and collection policies and procedures, rent (or lease) instead of buying equipment, buy used equipment instead of new, sell off excess inventory and equipment, obtain free publicity instead of paying for advertising, and do whatever else is necessary to generate cashflow and profits.

In these ways and many others not listed here, you may be able to start and grow your business successfully with very limited capital. Thus, you will avoid having to obtain expensive debt or equity financing.

Many who were unable to obtain financing from any other source have successfully bootstrapped their way to business success.

J. Stephen Pope, President of Pope Consulting Inc., has been helping clients to earn maximum business profits for over thirty years.