Every business wants to make money. More of it. And reduce cost. This is one of the basic fundamental principles of starting and growing a business. Cut costs and maximise revenue. Most entrepreneurs are trying everything they can to stay in business. But sometimes the cost of staying in business is higher than they can bear.
The same principle applies to business purchases. How does your small business’ purchasing measure up? How do you plan your capital expenditures and buying supplies and materials?
Don’t ignore the details of purchasing for your business..ever
No matter how purchasing tasks are decentralised in your business or even how small your purchases are, you should be taking advantage of every opportunity to cut costs. A well-executed bulk purchase of goods or supplies can save you a lot of money.
A poorly executed one, though, will cost you money that could have been saved. And don’t waste your time bulk buying an item on your list of supplies unless you’ve personally used it, tried it or know for sure that it works for your business needs.
Go beyond price. Establish a good basis for choosing vendors. Dig deeper before you place an order. Consider their credit and payment terms. What about their reputation. Ask for customer references. Get options. Supplier options can put pressure on your primary vendor to add discounts or better terms to win your business.
Focus on cutting cost per unit.
The simple goal of any bulk purchase is to make sure that the cost per unit is as low as you can possibly get it, then buying more when that cost per unit is low. This should be in your purchasing policy. Vendor selection, inventory, quality control, and payment processing should not be taken lightly. In the end, your business should be spending less than it should.
Don’t fear the large upfront cost. It saves money in the long run.
Bulking purchases comes at a cost. But it’s worth it. The upfront cost is not pretty. No business wants to part away with a huge amount within a short time. It helps in the end. But it’s still not easy spending money when you should be making it. Even though it might be a large cost it saves you money in the long run. Better still, you can stack coupons on top of bulk purchases. The goal is always to minimize the cost per unit, and using a coupon on top of a sale achieves that quite effectively.
My guess it that you plan on being around for a while. Your business is not folding up anytime soon. It makes sense to plan to save money by buying in bulk if you are currently focused on growing your small business. You won’t have to worry about price inflation when invest in bulk purchase of non-perishable goods or materials.
You can pass on the savings to your clients
According to Gibbs & Ball, one of the biggest advantages of buying in bulk for your business is that you can pass on the savings to your clients.
“Customers always look for the cheapest place to purchase goods from, so if your prices are lower than all of your competitors your sales should increase. By passing on the savings you have made from your bulk buy, you can attract more customers, meaning you have more sales. You don’t need to pass on all of your savings – just enough to be cheaper than your competitors to have that slight edge.”
You will increase customer satisfaction and retention
Your business should be building amazing customer experience to increase customer satisfaction. Improving customer satisfaction means they usually return and buy more or they tell other people about their experience.
Long-lasting supplies are ideal for bulk purchasing and you can be safe in the knowledge that you have a backlog of stock, should your customers increase or demand more at any time. Bulk buying works best for popular goods because the risk is minimal. Plus customer satisfaction is guaranteed at all times.
The last thing you want is stock that you can’t move. If you sell perishable goods, wholesaling may not be the best option for you, unless you can turnover the products rapidly.