I absolutely love to shop. Unfortunately, shopping for your business is nothing like visiting Justice to check out the newest fashions.
Shopping for business supplies is serious business, even if all you need to buy is lemons for your corner lemonade stand. Why? Even if you're selling lemonade only to donate the profits to your favorite charity (we love Alex's Lemonade Stand) you cannot donate any money unless you make money.
LEARN THE MAGIC EQUATION
Every time we shop for supplies, we have this magic equation in mind:
(SALES PRICE) - (COSTS) = PROFIT
The "Sales Prices" is the price that you charge for your lemonade. The first time I ran a lemonade sale with my sisters, we charged 50 cents a cup. (We'll talk about how to set a sales price in a future blog post.)
"Costs" include everything you must buy to run your business. There are 'costs' that do not cost money, like the time you must spend squeezing lemons. But those costs aren't part of the math.
"Profit" is the money that is left after you have sold your lemonade, and paid for your costs. (In my world, it is money for the mall!)
So, how does one shop like a true businesswoman?
MAKE A LIST
First, write down everything you need. I mean everything. If you leave something off of your list (such as cups), you will underestimate your costs, and your profits will go down by the same amount. It is very disappointing to realize at the end of a long day that, even though you sold all your lemonade, you have earned only $20 instead of $25.
For a lemonade stand, your list should look like this:
9. Cash box and change
Once you have your list, you must find out how much each item will cost you. Your goal is to find the lowest possible prices for each item, because the less money you spend on supplies, the higher your profit will be.
The lemonade list was pretty simple. Our mom gifted us sugar, a pitcher, cups and napkins. Tap water (we decided not to buy bottled water) was free. We had art supplies for signs, a cash box, and piggy bank money for change. That left us with lemons.
In our Washington, D.C. neighborhood, Rodman's almost always sells three lemons for one dollar. Everywhere else sells them for anywhere from .79 cents to $1/each. You can't make much money selling lemonade if you have to spend $1 on each lemon. We bought our lemons from Rodman's.
Despite the title of this post, a lemon is basically a lemon, even if some lemons cost $1, and some cost .33 cents. But not all lists are so simple. When we began Balloon Zoom, we did only one thing. We twisted balloons. We had not yet laid eyes on a glitter tattoo, could not afford a spin art machine, and were still dreaming of owning a cotton candy machine. Balloon Zoom's first shopping list had two items:
BALLOON ZOOM LIST
1. Twisting balloons
2. Balloon pumps
RESEARCH AND REWRITE YOUR LIST
But before we could buy our balloons, we needed to know which companies made the best twisting balloons, and what kind of pump to buy. Depending on what kind of business you are starting, you may need to research some of the items on your shopping list as well.
Our first stop: The Internet. We read everything we could on twisting balloons to decide what we needed to buy. We decided that we wanted a variety of Qualatex 260 and 160 balloons, plus a few other specialty balloons, like heart-shaped balloons. We also decided to buy three basic hand pumps.
Our revised list looked like this:
BALLOON ZOOM REVISED LIST
1. 250 Assorted 260Q Balloons
2. 100 Assorted 160Q Balloons
3. 100 Assorted 321Q Balloons
4. 100 Assorted 5" hearts
5. Three Qualatex single-action hand pumps
Once we had a specific list, we started shopping for the best prices. This is called comparison shopping, and it can take a lot of time. Our mom knew that Rodman's had the best lemon prices, but we had to do our own comparison shopping for balloons and pumps.
You can do this research in person (visiting stores or talking to local business owners), on the Internet, or on the telephone (by calling businesses and asking how much things cost).
When shopping for the best prices, we looked online first. We learned that it is important to write down the exact address of every Internet site you visit, because it can be hard to find a site once you have left it. There is nothing more frustrating than finding a great item at a great price, and not being able to find it again.
Remember to include shipping costs and taxes in your costs. A $6 bag of balloons with a $5 shipping charge is really an $11 bag of balloons. It would be better to buy a ‘more expensive’ $8 bag of balloons with free shipping. Spending $8, instead of $11, puts three more dollars in your pocket.
We also checked eBay. This did not help for balloons and pumps. But, later, we bought some equipment and supplies on eBay, and saved hundreds of dollars. In fact, without eBay, we would not own our spin art machine.
Finally, we looked at local businesses. When you shop locally, you not only give to your community (someone in your community has a job because you bought something from that store), you never have to pay for shipping!
When looking for animal balloons, we were lucky to find a balloon dealer close to our home that allowed customers to pick balloons and pumps up in person. We have never had to order balloons online, or pay shipping and handling for our balloons.
THE BALLOON ZOOM SHOPPING STRATEGY SUMMARIZED
List Everything. Remember to include everything
Learn More. If you have never used an item (like a balloon pump), research the types of pumps you can buy. You can research items on the internet. Amazon.com reviews are great sources of information. You can also talk to people who do the kind of work you are interested in. People are usually happy to help. Do not be afraid to ask questions! Before we purchased our first glitter tattoo supplies, for example, we spoke with a glitter tattoo artist. She told us what body glue she preferred, and where to buy the best body glitter. She even gave us her card, in case we had questions later.
Revise Your List. Write a more specific shopping list when you are done with your research. Our new list said Qualatex single-action hand pump, which is a lot more specific than "balloon pump."
Comparison Shop. Compare prices (1) in person at local stores, (2) on the Internet, and (3) on the phone. Do not forget to write down shipping costs, and figure out taxes, so you know your final cost! Remember that a "more expensive" item with free or cheap shipping may be much cheaper than a cheap item with expensive shipping.
Write Down Details. Write down the address of every Internet site you visit. Trust us. After days of shopping online, you will not remember where you went.
Buy Local! Save yourself shipping costs and give back to your community.
A Final Tip: When you are first starting out, never buy more than you need. It may be a bargain to buy 100 lemons, but those 100 lemons will become very expensive if they rot before you can make and sell all that lemonade.
PHOTO: © Ryan Pike | Dreamstime Stock Photos