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Buy Low, Sell High. That’s Business

Buy Low And Sell HighBusiness is simply buying and selling. That’s all it is. Whether it’s retail, manufacturing or servicing, everything to do with conducting business can be categorized as either buying or selling. Expenses or revenue.

From this perspective, there are three things that you can focus on to build a successful business:

  1. Create value
  2. Adjust the ratio of buyers and sellers in your company
  3. Creat a buy / sell strategy

Creating Value Between The Buy And The Sell

This is the passion you bring that’s unique to your business. It’s where you leverage your strengths over the competition.

The key to selling a good or service at a higher price than it cost you is to add value. Manufacturers create products from raw materials. Retailers purchase in large discounted quantities and resell the items individually. Services provide uncommon knowledge.

The more value you can add between the buy and the sell, the more in demand you’re going to be. Some of the most successful businesses do all of the above things. They create (or source) great products and sell them with an emphasis on exceptional service.

More Sellers, Less Buyers

There are numerous expenses in starting and running a business that all conspire to eat away at the revenue. A modest amount of revenue can be gained by keeping significant quantities of reserve cash invested, but other than that, all the revenue comes from making sales.

Your salespeople have the task of paying for everything that every other person in the company does. They pay for the roof over everyone’s head. They pay for the cost of goods that they sell. The insurance. The lights. The bucket, the mop, the floor cleaner, and the guy who who cleans the floors. Everything.

Most companies have a high ratio of people generating expenses compared to the number of people generating revenue. Successful companies have a higher ratio of sellers focusing on bringing in revenue than failing companies do.

Having more sellers and less buyers inherently lowers expenses and increases revenue.

Create A Buy / Sell Strategy

Most companies operate on autopilot when it comes to buying and selling. Successful companies have a strategy for buying and selling embedded in their business plan.

An example of widgets:

A good buy / sell strategy takes into account how many widgets you can sell and what price the market will pay for widgets. With this information in hand, you know how many widgets you need to build, how much equipment you need to make them, and the price you need to get when you buy widget-making materials.

If you build widgets and then try and sell them, the chances are excellent that you may build more than the market will buy, or that they’ll cost more than the market will pay.

This is why successful companies sell before they buy.

Denouement
 

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3 Comments

  1. [...] Sell. Bang on doors. Find new income streams. Bootstrapping alone is rarely enough to turn around a bad situation. It helps. It’s just not the final answer because business is about buying AND selling. [...]

  2. [...] start with the understanding that business is simply buying and selling. In order to successfully buy low and sell high to generate a profit, you need to be a good [...]

  3. [...] purchasing has to reflect your real sales potential. It’s better to have the problem of having to move later, once the business has solid cash flow, [...]


 

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