Does Buying in Bulk Help Your Home Based Business? by Scott Lindsay
Buying in bulk enables big business to save money because overall costs are less when buying larger quantities of a particular item. The retail giants have massive buying power. They are able to buy sufficient stock on popular items to meet their needs nationwide. They then store the items in their own storage and distribution depots for later shipment to stores.
Home-based businesses rarely have the finances to buy in sufficient quantities to see the same prices as the retail giants do, nor do they have the ability to store that volume of stock. However, that doesn’t mean business owners can never take advantage of bulk buys. You can see savings from buying in bulk as long as it’s sensible to take advantage of a larger buy.
Almost anything we buy gets cheaper per unit when more units are purchased. This can help you save money and either reduce costs or see a larger profit margin. Buying cloth by the bolt instead of yard, or buying larger boxes of the papers and card used in scrapbooking will make your completed units less expensive, but there’s more to the story.
Can you store a large amount of the item without it getting lost, or damaged over time? Cloth and colored paper items for instance, even if protected from becoming dog-eared and dirty, may fade and become discolored because of exposure to the sun or another bright light source making it unusable.
A large, dark storage space is often available in the attic, but unless it is temperature controlled and you can be sure that no rodents or insects can reach your goods the attic isn’t likely to be useful. Similar issues may be faced with using the basement for storage.
Another issue is knowing whether you will be able to sell all of the items produced in order to recoup your financial investment. A thousand ‘Happy New Year 2010!’ die cut may seem a good idea, but once 2011 comes around they will be obsolete. Clothing patterns can also go out of style. If you are left with these items then you will lose out any money spent creating and marketing them.
Some items may be essential for your business, but not wear out fast enough to justify a bulk buy. Needles or bobbins for your sewing machine may need occasional replacement, but do they wear out often enough to merit buying two dozen at a time? Will you be in business long enough to use them all?
If you can be reasonably sure it will be a good buy there are ways to benefit from bulk buying. Buying large amounts of something you need when it goes on sale is a good way to save money so being fiscally observant at appropriate times of the year can help your bottom line. Buying Christmas stock in January and storing for half of the year can provide good savings.
You may also wish to approach wholesalers in an attempt to cut out the middleman. This eliminates the price increases the middleman needs to put in place so they can make a profit. However, some wholesalers may not wish to sell at quantities the small business needs.
The successful balancing of bulk buying with your needs and storage abilities can bring significant savings. This can increase your profit margin or the price reductions you can then pass on to your customers.
About the Author
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