on Being Agile Startup
We have department leaders meeting today, led by our CEO.
He explained how at the early days of starting up, he use the "Buy In, Sell Out" strategy. I would refer to it as BISO, for simplicity.
In Chinese, it is termed as: 組合型產品 or 買進賣出 or 買空賣空
During 10 years of establishment, in fact, most of this period was built upon successful implementation of BISO.
How BISO differs from traditional Trading Company (TC)?
BISO company, usually has one or a handful of original products.
In our company case (later referred to as @), it was GPS antenna.
Starting from designing GPS antenna, @ get channels to international customers.
Then inquiry come in, looking for related products, like Bluetooth GPS logger, GPS module, GSM antenna, GSM module, etc.
@ original product is GPS antenna. But later, @ also sold other related products, acquired from other vendors. The profit then was what make @ grow to larger enterprise.
BISO needs to have excellence level of professionalism (at least as perceived by customer).
Like in the case of BT GPS. @ was in trade show, with booth beside the original manufacturer. When customer came, @ sales force can professionally elaborate the product to customer, while the original manufacturer's sales had no idea of the product. Customer said to @: " You must be the manufacturer", and "that company beside you is your reseller."
That's the level which must be achieved by BISO marketing team.
While TC, they usually do not have any original products. They are pure reseller.
TC advantage is in the art of finding the right sources/suppliers.
Consequently, TC is easily replaceable by competitor, once they found the same sources.
Why BISO is good for your health?
One risk of being manufacturer is frozen assets. Let's say a company has 3M USD revenue. the next question to ask are:
How much of this 3M is in the form of raw materials, ready stocks?
What is the real liquidity (liquid cash) that can be use in the business cycle?
BISO offers:
1. low risk --> due to large pool of vendor options to choose from
2. no need to freeze liquid money into stocks
3. no need to prepare big sum of money for initial investment
4. High profit
5. High liquidity
Successful BISO needs:
1. Elegant Vendor Management
Vendor-BISO relationship should not be a win-lose relation.
What is important is to have a responsible vendor.
Means although the product is not super perfect, at least vendor needs to be responsive to complain/input, and willing to make improvement.
Vendor-BISO relation is to be a comrade relation. Rub shoulder; means both should be supporting each another to grow business together.
If Vendor somehow make mistake, BISO should be able to use this opportunity, not to kick-out vendor, but to forgive vendor who are willing to improve. This way, vendor will follow BISO, and stay loyal in the long term. Killing Vendor is no use, thus should only be done when BISO wants no more long term relationship with lousy vendor.
2. Excellence Quality Control
any product sold by a company, will affect the company brand and image.
If the product is good, it will add to the good image of BISO.
If the product is lousy, even the original product from BISO will suffers the effect.
Always to thorough and comprehensive analysis when selecting products/vendors.
Avoid Bias.
Example: You want to get profit from stocks. Then you blindly only see the factors why that particular stocks value will go up. Somehow, you cannot see reason why it can go down. This Bias can affect your decision making process.
It is critical to stay NEUTRAL while you are making the study and analysis, to avoid bias.
3. Cost Sense
the Ultimate goal for going into BISO business model is to increase profit, with moderate risk.
That's why cost is important. If a product margin is small, thus not beneficial to put all effort of studying, packaging, and marketing, then no need to acquire it at first place.
How to Select the right product?
Start with Market --> Products --> timing
Define the segment of market you are targeting.
Understand the needs.
Source for right product, within a right timing.
Timing is critical.
Product which requires more than 1 month of feasibility study, is not a good sign for a good BISO product.
We need to put the right product at right place in right time.
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