We spoke to Brenden Hayes, CEO of The Guild Brands to further understand his experience with managing inventory and distribution. The company obtains in demand merchandise and offers it for the best value to customers in price and service. Before becoming CEO of his own company, Hayes worked for an entrepreneur, who had a worldwide business, for eight years. After mastering the art of entrepreneurship, Hayes, along with another entrepreneur, began their own business eight years ago. When asked why he chose this particular business, he simply replied, “It’s never stagnant, it’s always dynamic”. Today, the company’s revenues are at six million, annually, and are expected to grow at least 10% this year.
1) Here’s how to manage inventory to make the most amount of profit and increase revenues.
- What are your best practices for managing inventory?
“Try not to own it. Make sure you have proper planning and systems to track it and to sell it off; sell off your worst performers earlier rather than later. There’s a quote in the industry, ‘the first markdown is always the cheapest’, meaning, if you hold on to something because you think it’s going to regain value, usually it goes one way: you end up losing more money if you hold onto it and then you have to liquidate it much later in the process.”
- Why is this such a crucial part of what you do?
“The only thing we can make money off is buying something and selling it for more, that’s what creates your market, we don’t have any services to offer, its all product based.”
- What inventory management tips can you give that have led to a much bigger revenue?
“Step back and look at what you’re going to buy; not particularly just on price but to sell less for more. Meaning, sometimes it’s better to work with more expensive items. By doing that, you eliminate a lot of problems, just managing one item. To give it a comparison, selling t-shirts versus selling wetsuits; it might take you 10-12 t-shirts to get to the same revenue as one wetsuit.”
- What are your suggestions to rookie business people who want to start a business thats heavily based on having large amounts of inventory?
“Know that you can sell what you’re going to buy.”
- Any other suggestions?
“Insure it.” 2) Here’s how to manage distributors to greatly increase profit and revenues
- What does developing key distributor relationships look like?
“Developing your supply chain is the viability to your business. Therefore, when you’re starting out, sometimes you can’t purchase from brands or distributors; more than anything, it takes persistence to develop relationships and to procure your supply.”
- In your case, would you say it’s easy or difficult to develop distributor relationships?
“It’s difficult, in general, but everyone is different. Geographically, if somebody’s close to you, you can have more touches or you can go to lunch but if somebody’s across the world or country it’s much more difficult.”
- What are some best practices to manage distributors in a way that increases profit and revenues?
“Communication; communicate exactly what you’re looking for and grow to be as specific as you can.”
- What are some distribution strategies that have worked for you?
“Exclusivity is the most important thing; that way you’re separating yourself to buy and sell products that you have less competition against.”
- Any other gems that you can share around distribution, in general, that would be beneficial to another CEO?
“Sell less for more.” 3) The ability to negotiate is the difference between good and great
- Why is negotiating such a big part of being in your position as CEO?
“It creates the profit, everything negotiated increases the gross profit.”
- What tips can you share regarding negotiating?
“Be able to walk away. A lot of people get caught up in putting a deal together and negotiating that they lose any kind of leverage by holding themselves to it. There are many more deals and opportunities out there.”
- What have you noticed is the difference between negotiating with large companies and smaller companies? How do you handle them differently?
“Large companies take a long time to make a decision; they trip over themselves. You have to enter into negotiating with large companies with patience and understanding that you might have to go through several people to get a deal done.”
- Any other gems you can share regarding negotiating tactics?
“Just try not to lend yourself to one distributor, therefore, you won’t get stuck; you need to leave yourself a backdoor to get out. Furthermore, you need to be diversified to be able to negotiate.” 4) Finding great deals can make the difference when trying to dominate an industry.
- How do you identify great deals?
“It’s really just math; evaluating the value and making sure the supply is reliable.”
- How do you find great deals?
“You have to research your market; also, get out there and meet people.”
- It’s about networking and who you know?
“Absolutely, and the relationships that you develop because if you just pop out there and do it, they have to make sure you’re going to do what you say you’re going to do.”
- What have you learned about how important this is to a business?
“It makes or breaks a year, a quarter, or whatever you want to measure the period by.”
- Any stories you can share that would be insightful for another entrepreneur to hear about regarding finding or creating great deals?
“A lot of times when an important person may leave a distributor or a brand, some people become disappointed rather than looking at it as an opportunity. Usually, that person moves to a different company, therefore, you continue doing business with the company you were doing business with and it creates an opportunity with a new company because that person changed positions.