Many a businessperson has made this error: buying second-hand (or used) products that later fail to meet expectations.
Indeed, the temptation to go second-hand is high; more so if there is a large difference in price between the first-hand (new) product and the second-hand equivalent.
I've decided to dedicate an entire article to this topic because this is one of the lessons my father impressed upon me at a very young age. He said, "Heather, when I first went into business I bought second-hand machines and I lived to regret it."
I'm not sure what the negative experience he had was but it must have been pretty bad because he seems to be near-allergic to second-hand things now. He thinks it's better to buy cheap but brand new clothing rather than designer labels second-hand.
I'll be the first to admit that I didn't fully take this advice on board: when I bought my first car I got a second-hand Peugeot that had 5,000 miles on board. The result, ndinachimina!
The car looked great on the outside and on the inside but little did I know that it had been involved in an accident only months earlier and after I bought it, the car blew a gasket within a couple of months. I paid to have the problem fixed. A few months later, it happened again!
These problems could have been avoided by buying brand new. I'm not saying that good quality second-hand products are not available, what I'm saying is they're hard to identify. I fell for that car because it was very well priced forgetting the old adage, "if it's too good to be true, it's almost certain that it is." But, how would I have known it was too good to be true? I wasn't a car dealer and I hadn't hired an expert to help me vet the car.
Indeed, if you're starting a new business it's impossible for you to know the type of problems an old machine might present. With a new machine you have a manufacturer's warranty to lean back on including the promise of parts if something breaks within the first twelve months.
If you're working and running the business part-time you'll probably be able to recover from buying poor quality machines but why walk into that problem in the first place?
What if you really can't afford to buy brand new, i.e. what if you definitely don't have the money and no-one will lend it to you? Well, reluctantly, you'll have to go for the second-hand inputs. I recommend that you:
· Tread with caution.
· Don't make the decision alone.
· Do lots of research.
· Get the machine properly inspected by someone in the know. If this is not possible then share the data you're using to drive your decision with an objective and intelligent associate and see if they agree with your purchasing the said machine.
In summary, to start your business on the right footing: buy first hand machinery, period!
“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skilful execution; it represents the wise choice of many alternatives.” William A Foster
For inspirational quotes follow @Getting2Wealthy on twitter.
Once you decide on a business idea to push forward the next question becomes – how do I make this happen? If your idea requires specialized equipment the best place to source it is probably through the commercial merchant site alibaba.com. In this article I will explain how you can get good quality machinery at a good price.
In one of my earlier businesses I sourced a machine very cheaply and got it imported into Malawi without ever speaking to the manufacturer on the telephone or even ever seeing him!!
Are you shocked? Don't be.
I have been chatting with suppliers based in China on and off since 2009 to get quotes for goods that I’d like to produce. The most important thing I’ve learnt when it comes to communication is that email is MUCH less complicated than speaking on the phone. The Chinese supplier can't refer to a phone conversation later whereas emails can be easily reread; this avoids massive communication breakdowns and ultimately mishaps.
I don't remember exactly how I initially found the alibaba.com but it is a treasure trove for someone wanting to source a product or mass produce a new design. There are thousands of suppliers for everything so going through the vendor profiles can take ages.
Once you engage a supplier you will receive an email response to your inquiry from their business email rather than via alibaba.com so you don't have to worry about engaging a supplier and then having them disappear.
These are my top tips on sourcing via alibaba.com:
1. Keep it simple
Send emails in very simple language with a lot of detail so that it's very clear what you are trying to achieve.
2. Do not use SMS/text message shorthand at all.
If someone is using a translation device (which many suppliers on alibaba.com do), a wrongly spelt word won't be found or worse, it will be mistranslated. Even abbreviations like “don’t” should be avoided in favour of “do not”.
3. Ask a lot of questions.
This is necessary to ensure that you and the supplier fully understand what it is you want to buy.
4. Get a sample
If possible, get a sample sent to you before you make a large order. Even if you have to pay a couple of hundred dollars it is worth it. You might think that's too much but think of it as saving yourself thousands rather than losing hundreds. If you make a $5,000 order without seeing a sample, and find out you don't like the product, $200 for a sample will start to look like money well spent!
Getting samples will obviously take time and might lead to a delay in launching your business but it will prevent future headaches or costly mistakes.
Over thirty years ago my dad ordered a candle-making machine only to find that the candles it produced were as small as his finger. The conventional candles at the time were much bigger and he thought he'd thrown his money down the drain. He was in a state of total panic but fortunately for him this incident coincided with a Government ban on the importation of many goods including candles and the business took off.
He was lucky; it could just have easily gone the other way so I totally recommend ordering samples or if you're ordering something big ask the right questions. In my dad's case he could have inquired about the candle size but remember that this was before email. It would have meant an expensive ‘question and answer’ phone call or a letter that took forever to get there.
With these tips you should be well on your way to sourcing quality machinery and products.
"The single biggest problem in communication is the illusion that it has taken place." George Bernard Shaw
For inspirational quotes follow @Getting2Wealthy on twitter.
There is a tendency for people to copy businesses that are doing well. More often than note they try to copy exactly what the other company is doing with no attempt whatsoever to improve upon it. We need to move away from this mentality!
Get Walking or Start Listening
My father's first big business was candles. He started a company called Candlex in the early '80s and it became a roaring success. When he started that business his goal was simple, to afford himself a basic car and to feed his family; he did a lot better than that. Do you know how he settled on the candle? He walked from shop to shop, analysed the products within and thought about whether he could make that product better.
You can do this exercise with ease. Walk into the many Chinese stores that have taken over every town and figure out what you can produce BETTER. Word of mouth is a very viable marketing tool in Malawi and when people get wind that you're doing good work they will come.
Alternatively, listen to your friends' complaints. Behind every complaint is a potential business.
The Government can also help to reduce Malawi's dependence on imports with duties, taxes or limited-time bans.
I am personally against excessive Government controls but if you have a genuinely good business idea you can lobby the Government to limit imports of specific goods using quotas or import duties.
It is critical that any such regime is for a limited time only because a) it makes local producers complacent and b) consumers lose out if they are having to tolerate lower quality produce.
Low Capital Ideas
So you're a youngster with lots of time but very little in the way of money? Turn to the internet. Internet usage is very low in Malawi so what you should be looking to do with any internet business is to either execute projects for companies or do things for Malawians in the diaspora.
For example, there are many Malawians abroad who would like to send friends and family members within Malawi gifts or presents on special occasions (birthdays, Christmas etc.). You can set up a website with images of the products that local companies sell so that people abroad can order via your website.
E.g. go to local flower sellers, take pictures of their flower designs, ask what the price is and showcase these designs with your profit added on top on your website. People pay you for the flowers either via a local relative or if you have connections abroad you can go into a joint venture with them so that payments can be received via a PayPal account that they manage. When the person abroad buys the flowers, they provide a phone number so that the intended local recipient can be called to collect or an address to which the gift needs to be delivered. You can offer to deliver to certain areas or within a given radius.
The same business model can be rolled out for baby clothes and children's toys. This is a business idea anyone with basic IT skills can start; it can also be a good forex earner.
If you decide to do this try wordpress.com or weebly.com for website creation; you can create professional looking sites within a few hours and with very little knowledge of "code".
"You are surrounded by simple, obvious solutions that can dramatically increase your income, power, influence and success. The problem is, you just don’t see them" ~ Jay Abraham
For 2 years until early 2014 I wrote a weekly personal finance and business column for Malawi's leading media house, The Times Group. The target is middle-class, working African women.
This is a reproduction of the articles that appeared in the weekend edition of Malawi News.
|Heather Katsonga-Woodward: On Business, Life & Everything In-Between||
On Managing Money