Sometimes You Just Have to Touch to Learn

Buy low. Sell high.

Buy in volume and bring down cost.

Middle men get a cut, increasing consumer cost. Middle men are necessary when dealing with volume and transportation.

Margins, mark-ups, volume, deals, everybody likes something for nothing.

Even though I might have learned these things back in high school and college economics, outside of running household finances, I never had opportunity to deal with the concepts on a grand scale. Some things you can learn in theory,

“Hot! Don’t touch!”

but you’ve got to touch to clarify and make it real.

Here is what I have learned from manufacturing and selling a natural snack product:

• Buying in significantly large quantities reduces manufacturers cost. By manufacturer, I mean me. You have to be bold to buy large quantities when you don’t know if your product will sell.
• The cost of raw materials fluctuates — -sometimes greatly between orders.
• When selling wholesale you must factor in distributor and retailer margins. What is a reasonable MSRP? What is the consumer willing to pay? Start with that and work backwards to your net profit.
• On a low margin item like food, you’ve got to sell A LOT to make any money. In my case, my net profit works out to about 50 cents per package right now. I have to sell 40,000 packages to make $20,000. If I were to sell that many packages, I would need a co-packer or manufacturing facility. I cannot even visualize how to make that work.
• Starting a financially successful food production business takes industry knowledge, persistence, investment and just a pinch of luck.(Luck is preparation meeting opportunity.)
• Any attempt at growing beyond what you know, going out on a limb and trying something new is an automatic life success. Lessons learned cannot be taken away.