“A wise human would have an understanding of the supply chain and how the pieces fit together. But it’s against our nature to think about it.” – Paolo Bacigalupi
Finding the right supplier and getting exact costs was the focus of Day 9. This led to us once again visiting and chatting with suppliers. We fear running a single supplier sourced company because if that supplier or supplier relationship breaks, our business dies.
Day 9 Video Summary
Finding the Right Supplier Is as Much Art as Science
Business is about relationships. Money matters. Product matters. Branding matters. But all of those things are moot if you try to build a business on an island. This fact makes things incredibly interesting, but also very difficult because it’s more than a math problem.
We have talked with four suppliers so far and visited three of them in person (we will be visiting the fourth tomorrow). I think I can speak for Max when I say that we’ve been happy with the interactions and have found that coffee roasters – at least in our area – are a fun bunch of interesting people that take their coffee roasting seriously.
Questions for Suppliers
Here are some questions that we asked the suppliers and ones that you may want to use as a guideline when chatting with suppliers for your business, should you need to do so:
- What is the best way to get in touch with you?
- If you’re going to be working with someone, make sure you know the communication method they prefer. It seems simple enough, but don’t leave anything to chance that you can control.
- What is the turnaround time on an order and how far in advance do you like to have orders submitted?
- Have respect for your suppliers process. If all of their other customers are giving them last minute orders, get yours in earlier. The easier you make their job, the easier they will make yours.
- What do your customers do that you love? What do your customers do that you hate?
- Again, this is all about building a strong relationship with your supplier. Strong relationships lead to strong companies.
- What is the product cost for us?
- This one is pretty straightforward.
- What does that cost include?
- This questions is sometimes missed in the first pass. You and your suppliers must be very clear about what exactly you are getting for the price you’re paying. In our case, we need to be concerned with packaging, labeling, and shipping. Make sure you clarify in writing what you are getting for the promised price.
- How often do your prices fluctuate?
- Because we are a middle man, we need to know if our costs are going to be changing often and account for that when it comes to our customer cost and profits.
- What are the quantity discounts?
- Most suppliers will give you a better price if you promise to buy more product. Even large companies are often willing to do this, so don’t hesitate to ask them for a discount if buying in bulk.
- What is your production capacity?
- You need to know what they are capable of handling because their ability to produce the product will drive your ability to provide the product to your customers.
- How close to capacity are you right now?
- Maximum capacity is just one piece of the puzzle. You also need to know how close to capacity they are running right now. It’s great if they can product 1000 pounds of coffee a week. But if they are already producing 900 pounds per week it doesn’t leave you much room to grow.
Still Working on Clarity
We are still working on clarifying our business and figuring out what makes us noteworthy. We’ve found that the majority of coffee subscription companies are branding themselves as the people that will “deliver the best coffee in the world, fresh to your door.”
That’s great, but if everyone has the best coffee in the world, it doesn’t mean much.
The idea of flavored coffee is something that came up very early in this process and we keep coming back to it. Doing a quick Twitter search, we found that flavored coffee is very polarizing – people either love it, or hate it. That’s often a good business to get into because it will get people talking. You can have rabid fans that will defend you to the haters.
As of today, we are shifting our business idea slightly to flavored coffee. That may change again, but we are running out of time to decide before we need to start selling.
One concern about shifting to flavored coffee is that we didn’t validate that exact idea. Should we go back and validate? Maybe, but we think the markets are close enough that we can move forward. Maybe we’re right. Maybe we’re wrong. Time will tell!
Income and Expense Summary
- TOTAL INCOME TO DATE: $88.00
- TOTAL EXPENSES TO DATE: $1.17