The Perfect Supplier amazonaws com
Locating & Contacting Suppliers
The Perfect Supplier
What is the perfect supplier? The perfect supplier is someone who’s going to do all of these manufacturing headaches for you, give the best quality product at a price you can still make money, and they’re going to handle all these headaches without putting more headaches on your plate. For example, the perfect supplier for us does between two and twenty million dollars a year in volume. They’re the right size for us. We don’t want someone who’s to large because the level of business that we can give them is not meaningful in the way that they want to grow their business. We want to make sure that we have a rep who can speak English fluently, who can email us when we have questions, who can just fire back quickly, someone who handles problems, we call it the figure it out and get it done gene. Those two things are a big deal. In fact, we’ve never fired a supplier because of cost, the only reason why we’ve changed suppliers, every single time, has been because they couldn’t figure it out on their own and it took too much of our time and resources to fix their issues, or they just couldn’t get it done, they were to many delays, they made promises that weren’t fulfilled on time or accurately. Those two things are what you’re looking for more then anything else. You do need to make money so the pricing needs to be right, but it also needs to be a person that can take care of these headaches for you. Hopefully they have insights in this market, they’re making that same type of product, they’ve been in this industry long enough. We like people who have been in business for at least three years, that means they’ve probably paid off a significant portion of their debt, they’ve got good machines, they’ve worked out their bugs. We try not to use suppliers that are brand spanking new. If they’ve been around for at least a few years, preferably decades, that’s better because their overhead is going to be less. We like people who give us options of payment; if we can send them certified funds, if we can wire transfer, if we can do credit cards. We love the credit cards because we can get points and we use those to travel around and do trade shows. Be aware that if you are paying with a credit card they are going to ding you for about three percent, they’re going to add to add that to the cost of the product because that’s what the credit card companies charge them more or less. It’s nice to have that broken out versus if Rich Dad’s
Amazon Cashflow Machine
they’re padding that into the price and hiding it, that’s the wrong relationship. We want a relationship where we can be very honest with each other. When you’re having these conversations with the manufacturers you want to make sure that you represent yourself very clearly. Hey, I have experience in this industry, or maybe a relevant industry, and this is a new product, we don’t know how well this is going to sell, we’ve done the research, we see the opportunity, we believe in the product, we believe in the market, we believe in you, and we need to keep our minimums low so that we can work out the bugs in the manufacturing process and prove our market. Be real with these manufacturers and expect them to be real with you. If they say one thing on the phone and then they send the proposal and there’s a discrepancy that’s a big deal. Be aware of that, be very crystal clear on these details, especially the numbers. Before you send the first dollar make sure you understand the fees. Sometimes there are fees for molds, sometimes setup fees, there’s fees for just about anything. you have this conversation with them and they need to know what your expectations are for your market, how you feel your sales will be at the end of thirty days, sixty days, ninety days, at the end of a year. Have that conversation with them because you’re beginning your relationship. They’re going to give you price points that are now that are just getting started, but if you give them an expectation that you’ll grow they can start having those conversations with their suppliers so that they’re prepared for you. Giving them as much lead time as possible helps. This way they can get multiple bids for their materials and for their suppliers and give enough lead time so that things are in the right place at the right time because shipping always causes delays. Having everything in the right place is key. We were looking at manufacturing a silicone product, no moving parts and pieces, just one simple piece. We called around, and called around, sometimes the molds were ten grand, sometimes fifty grand, sometimes twenty, the mold were just ridiculously high. Finally we found someone who would make these custom molds for us for free as long as we ordered six thousand pieces for our initial order. Now six thousand pieces is a ton, I wouldn’t recommend that for most people’s initial order, but when we averaged the cost down that was a dollar per unit and that covered the mold and the packaging and everything. In this example we were able to get either free molds or free product, however you want to look at it, and that was just because we were willing to say no so many times until we found
Rich Dad’s
Amazon Cashflow Machine
the right deal. When you use Reference USA the right way you’re going to have a ton of options. You can tell people, “No, this isn’t going to fit because this is the perfect deal for me.” Keep exploring until you get to the right people. Also let them know that they are going to be one of three suppliers. Let them know that they don’t have the exclusive with you because if your product takes off and does really well and they’re your only supplier, and maybe they run out of inventory, maybe they run out of materials, you’re in a very tough position. We go through this process of tree manufacturers so that we make sure that we always have options. Another red flag is communication. You want to make sure that the communication is crystal clear. That if they say they’re going to call you back, they’re actually going to call you back. If they say they’re going to send you an email with a rate card, that they actually do it. If you have to chase them down for the thing that they promised you that’s the wrong relationship, that’s not going to work out because it doesn’t get any better. Make sure that you have someone that you’re very comfortable with when you set an expectation it’s met. It’s a two way street, if you tell them that you’re going to call them you have to actually call them because you’re building this relationship too. When you’re having those initial conversations with the suppliers this is like dating, you’re trying to figure out is this a match, is it not a match, do I like you, do you like me, and are we going to get committed. From the moment that money is exchanged that changes from dating to marriage. Now you’re committed, now you’re doing business with these folks, you’re married. Picking the right manufacturer is so important and that’s why we’re going through this step by step by step, so you get this right, because it’s as important as picking the right market, picking the right product. They represent you basically, they’re making the product that’s going to arrive in a box with your name on it so you have to make sure that you have people that you want to business with and they’re going to represent you well with a final product. That product represents labor and time and cost and consciousness, and if they’re short on any of those things we need to know it early. Another key red flag is credit. When you use Reference USA you’re able to get insights about how credit worthy these manufacturers are. This is information you’re not going to find on Google, this information you’re not going
Rich Dad’s
Amazon Cashflow Machine
to find on Alibaba, but by using Reference USA you can see their credit rating. I’m okay with A’s and B’s, B pluses preferably, but as their credit sinks below a B this means they’ve had some issues paying their suppliers. If their going to have issues paying their suppliers for raw materials then it may cause you delays when you can’t afford delays. Be aware of their credit rating rating as well. Now let’s get into some specifics on what you need to say in that first conversation with the suppliers.
Rich Dad’s
Amazon Cashflow Machine
The Perfect Supplier
What is the perfect supplier? The perfect supplier is someone who’s going to do all of these manufacturing headaches for you, give the best quality product at a price you can still make money, and they’re going to handle all these headaches without putting more headaches on your plate. For example, the perfect supplier for us does between two and twenty million dollars a year in volume. They’re the right size for us. We don’t want someone who’s to large because the level of business that we can give them is not meaningful in the way that they want to grow their business. We want to make sure that we have a rep who can speak English fluently, who can email us when we have questions, who can just fire back quickly, someone who handles problems, we call it the figure it out and get it done gene. Those two things are a big deal. In fact, we’ve never fired a supplier because of cost, the only reason why we’ve changed suppliers, every single time, has been because they couldn’t figure it out on their own and it took too much of our time and resources to fix their issues, or they just couldn’t get it done, they were to many delays, they made promises that weren’t fulfilled on time or accurately. Those two things are what you’re looking for more then anything else. You do need to make money so the pricing needs to be right, but it also needs to be a person that can take care of these headaches for you. Hopefully they have insights in this market, they’re making that same type of product, they’ve been in this industry long enough. We like people who have been in business for at least three years, that means they’ve probably paid off a significant portion of their debt, they’ve got good machines, they’ve worked out their bugs. We try not to use suppliers that are brand spanking new. If they’ve been around for at least a few years, preferably decades, that’s better because their overhead is going to be less. We like people who give us options of payment; if we can send them certified funds, if we can wire transfer, if we can do credit cards. We love the credit cards because we can get points and we use those to travel around and do trade shows. Be aware that if you are paying with a credit card they are going to ding you for about three percent, they’re going to add to add that to the cost of the product because that’s what the credit card companies charge them more or less. It’s nice to have that broken out versus if Rich Dad’s
Amazon Cashflow Machine
they’re padding that into the price and hiding it, that’s the wrong relationship. We want a relationship where we can be very honest with each other. When you’re having these conversations with the manufacturers you want to make sure that you represent yourself very clearly. Hey, I have experience in this industry, or maybe a relevant industry, and this is a new product, we don’t know how well this is going to sell, we’ve done the research, we see the opportunity, we believe in the product, we believe in the market, we believe in you, and we need to keep our minimums low so that we can work out the bugs in the manufacturing process and prove our market. Be real with these manufacturers and expect them to be real with you. If they say one thing on the phone and then they send the proposal and there’s a discrepancy that’s a big deal. Be aware of that, be very crystal clear on these details, especially the numbers. Before you send the first dollar make sure you understand the fees. Sometimes there are fees for molds, sometimes setup fees, there’s fees for just about anything. you have this conversation with them and they need to know what your expectations are for your market, how you feel your sales will be at the end of thirty days, sixty days, ninety days, at the end of a year. Have that conversation with them because you’re beginning your relationship. They’re going to give you price points that are now that are just getting started, but if you give them an expectation that you’ll grow they can start having those conversations with their suppliers so that they’re prepared for you. Giving them as much lead time as possible helps. This way they can get multiple bids for their materials and for their suppliers and give enough lead time so that things are in the right place at the right time because shipping always causes delays. Having everything in the right place is key. We were looking at manufacturing a silicone product, no moving parts and pieces, just one simple piece. We called around, and called around, sometimes the molds were ten grand, sometimes fifty grand, sometimes twenty, the mold were just ridiculously high. Finally we found someone who would make these custom molds for us for free as long as we ordered six thousand pieces for our initial order. Now six thousand pieces is a ton, I wouldn’t recommend that for most people’s initial order, but when we averaged the cost down that was a dollar per unit and that covered the mold and the packaging and everything. In this example we were able to get either free molds or free product, however you want to look at it, and that was just because we were willing to say no so many times until we found
Rich Dad’s
Amazon Cashflow Machine
the right deal. When you use Reference USA the right way you’re going to have a ton of options. You can tell people, “No, this isn’t going to fit because this is the perfect deal for me.” Keep exploring until you get to the right people. Also let them know that they are going to be one of three suppliers. Let them know that they don’t have the exclusive with you because if your product takes off and does really well and they’re your only supplier, and maybe they run out of inventory, maybe they run out of materials, you’re in a very tough position. We go through this process of tree manufacturers so that we make sure that we always have options. Another red flag is communication. You want to make sure that the communication is crystal clear. That if they say they’re going to call you back, they’re actually going to call you back. If they say they’re going to send you an email with a rate card, that they actually do it. If you have to chase them down for the thing that they promised you that’s the wrong relationship, that’s not going to work out because it doesn’t get any better. Make sure that you have someone that you’re very comfortable with when you set an expectation it’s met. It’s a two way street, if you tell them that you’re going to call them you have to actually call them because you’re building this relationship too. When you’re having those initial conversations with the suppliers this is like dating, you’re trying to figure out is this a match, is it not a match, do I like you, do you like me, and are we going to get committed. From the moment that money is exchanged that changes from dating to marriage. Now you’re committed, now you’re doing business with these folks, you’re married. Picking the right manufacturer is so important and that’s why we’re going through this step by step by step, so you get this right, because it’s as important as picking the right market, picking the right product. They represent you basically, they’re making the product that’s going to arrive in a box with your name on it so you have to make sure that you have people that you want to business with and they’re going to represent you well with a final product. That product represents labor and time and cost and consciousness, and if they’re short on any of those things we need to know it early. Another key red flag is credit. When you use Reference USA you’re able to get insights about how credit worthy these manufacturers are. This is information you’re not going to find on Google, this information you’re not going
Rich Dad’s
Amazon Cashflow Machine
to find on Alibaba, but by using Reference USA you can see their credit rating. I’m okay with A’s and B’s, B pluses preferably, but as their credit sinks below a B this means they’ve had some issues paying their suppliers. If their going to have issues paying their suppliers for raw materials then it may cause you delays when you can’t afford delays. Be aware of their credit rating rating as well. Now let’s get into some specifics on what you need to say in that first conversation with the suppliers.
Rich Dad’s
Amazon Cashflow Machine
