The Buying Game

5. Target Buyers

When looking for a buyer, your first step is to find the right buyer for your particular product. If you're selling gifts, try visiting gift shops in your area. If you're a software developer, locating a potential buyer might be as simple as walking through a computer software store. "With a CD-ROM game, you need to know whom the publishers are, so you go to software stores and look at the backs of the game boxes," says Gottlieb.

When approaching a buyer yourself, the key is understanding the buyer's needs. "Specialty stores [such as family-owned gift stores] are most concerned with quality and fashion. Department stores look mostly for fashionable items, but price is important as well. Mass merchants look primarily at price," says David Richardson, president of DHR & Co., a manufacturer's representative company in Atlanta.

If you're not succeeding using the direct approach, or even if you've made a few sales this way, you might want to go where buyers are looking for products. That's where trade shows come in. For example, Lillian Vernon attends almost 25 trade shows worldwide each year, including the Chicago Housewares Show, the New York Gift Show and the San Francisco Gourmet Products Show. And The Chandlery's Johnson visits five to 10 per year. "If a manufacturer is going to get to me, it will be at a trade show," says Johnson. "That's where you can find the most buyers in the shortest span of time."

If you need a bigger sales effort, you can also turn to manufacturer's representatives for sales assistance. Representatives act as a contract sales force-they agree to sell your product to buyers in return for a commission on sales. In addition to having their own showrooms, they also take products to buyers. You can probably find a rep by visiting a trade show, where most representatives have booths. According to Richardson, you should look for a reputable firm with many repeat customers and an account base in your region.

6. Pitch Your Product the Right Way

"The key to approaching a buyer is to know whom you're pitching," says David Hochberg of Lillian Vernon. "Everyone's requirements are different. We're immediately turned off if we see the product in every major catalog in America. Suppliers sometimes come to us and say `We're in 80 catalogs!' thinking that's great. But for us, that's a negative thing. Why should we sell it if everyone else has it? If we do, we lose our exclusive edge."

After you know whom you're pitching, the biggest hurdle to overcome is the fear of cold-calling. "You think `Good grief, why would they talk to me?' " says Bruce Irvine, executive vice president of Irvine Flexible Packaging Inc., a Rock Hill, South Carolina, packaging company. "But if you have something to offer, you can get to the right people."

Keep in mind, though, that the initial phone call should only be used to determine if the company is accepting samples and to get a contact name. In most industries, it's standard to send a sample with a catalog sheet. "Some wholesalers with catalogs send us just the catalog tear sheet. But that's just one more piece of paper in a massive pile of mail that arrives every day. It's easy to ignore or misplace," says Hochberg. "[If you] actually send a sample, we see a tangible product that's hard to forget."

Never try to charge buyers for or be stingy with samples. "That's a real turnoff," says Bob Beaubien, COO of Merchant Direct, the Chicago parent company of five mail order "gourmet of the month clubs" that sell coffee, beer, wine, cigars and spa products. "Some people send us one bottle of beer instead of a six-pack or a case. We're not being wasteful when we ask for a lot of product-we have many tasters, and the more product we have, the better we can get a taste of the product."

A follow-up phone call is appropriate after sending a sample, says Hochberg; just don't badger the buyer.

7. Prove Your Production Capabilities

Across industries, buyers look for manufacturers who follow through. To that end, name recognition and industry references go a very long way. "With beer, we find out if they've won medals. With cigars, we look for rankings in Cigar Aficionado magazine," says Beaubien. "But even a start-up can have name recognition and references. For example, we'd buy beer from a start-up brewery if the master brewer had a track record at another brewery."

But small businesses often don't have the track record to obtain name recognition. If that's the case, many buyers look at production capacity.

"We only buy half the quantity of projected sales before the catalog is mailed. It's the obligation of the supplier to fill reorders quickly," says Hochberg. "To find out if they can, we pull the Dun & Bradstreet [report] to make sure they have financial resources and manufacturing capability."

If you're a small company without a proven history and without financial resources, one way to break into the market is to take advantage of what you can do that bigger, more established companies can't. "What small companies can offer are short lead times, quick responses to modifications in design, and smaller quantities," says Suarez. "They should capitalize on those abilities."

This technique has worked for more than one small business. "We knew one larger packaging company that had a backlog of 12 weeks," says Irvine. "They needed a partner that could quickly turn products around. So we said to them, `Let us do the stuff you don't want to do.' "

8. Handle Negotiations Like a Professional

Many buyers, regardless of the industry, say one of the biggest turnoffs occurs when manufacturers have almost sealed the deal. Manufacturers act like they've sold the product when they enter negotiations, but negotiations are still part of the selling process.

"Manufacturers often enter into negotiations with a higher price than is realistic in the industry," says Beaubien. "They need to be cognizant of how much the buyer knows about the industry. If manufacturers start with an unrealistic price, we know what they're doing and we immediately cut them down, but we also feel like they've wasted our time."

Beaubien also dislikes when a company with which he's negotiating tries to substitute a different product during negotiations.

"It happens all the time," he says. "For example, we may have been looking at a brewery featuring beer X, but a couple of weeks into negotiations, the brewery says `Hey, why not use beer Y?' and puts a positive spin on it. That indicates that the brewery is incapable of production or not organized enough to handle production within our time frame."

We Think You Can, We Think You Can

Goose Island succeeded, in part, because its owners knew something that all good manufacturers know: Selling your product to retailers can be just as significant as developing a good product and marketing it to customers.

But perhaps the best advice for manufacturers approaching buyers is to try, try again. Even the phenomenally successful Goose Island didn't succeed the first time. "We've had some challenges," says Hall. "For instance, in Chicago, we did well because we had name recognition there; our brewpub had been operating in the city for years. As we've branched out into other states, it wasn't as easy. But we kept trying. When a buyer said no, we went back again. And we succeeded. So if you don't [make it] the first time, it doesn't mean you won't be able to succeed at all."

Julie Schaeffer is a freelance writer in Chicago.

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This article was originally published in the June 1998 print edition of Entrepreneur with the headline: The Buying Game.

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