Questions from Behind The Scenes

I answered a couple of questions in the Behind The Scenes course today.  Here were some of the Q/A’s:


Q: Do you write up a contract for the supplier? How exactly do you negotiate or work out the details?
A: Almost every time I’ve started a small business, I’ve NEVER STARTED with a contract.  Later down the line if there’s hundreds of
thousands of dollars in revenue at stake, it might be a good idea to get a contract written up.
Getting a contract written up DOES NOT ALWAYS REQUIRE A LAWYER.  In fact, don’t bother “law’ing it up” with legal jargon bullshit.  Simply write a few sentences down on a sheet of paper that both of you agree to and sign it.  It really can be that simple.
An even more powerful method is to hold the contract up on video, then both verbally agree to it on video and state you understand….but a few-sentenced, simple agreement on a sheet of paper with both your signatures will suffice most of the time.
I’ve known people who have official law-binding contracts written on a napkin.  No kidding.
Q: When House of Rave first began, were you stuck with only occasional sales for a long time, or were you able to make a respectable side income from the start?
A: For a short while it was pretty small…I’d just started college when it started making money, and it was maybe $500/month (which honestly is A LOT for a college student).  About a year later it started making $1,000+/month (sometimes 2K or 3K or more depending on the month)….enough money to actually survive on.  However it was quickly a pretty respectable “side-income” for sure.  Relatively little work input to keep it going, and a decent income from it.
Let’s just say I never had money issues in college thanks in part to House Of Rave.
Q: How do you keep track of price and stock changes from the supplier? What if the supplier stops distributing a few of your products? Or if they make a dramatic price change?
A: For the most part they don’t change prices that often.  In the past I’ve had them notify me of major price changes, so that solves the problem.  But even if they don’t, I’ll see the price change in the first person that orders that product.  I’ll notice I sold something for $50,  but the supplier is charging $59 for it.  I’ll make the correction with only a very minimal loss (and usually it’s not a loss, it’s just “less profit”).
It’s usually not that big of a deal when something changes in price, as the price difference is often pretty small (or often in my favor because it’s LESS)!
And yes, sometimes best-selling products are discontinued.  Generally this is because the manufacturer stops making them, so even if my supplier WANTS to keep selling them, they can’t….simply because no one makes them anymore.  It’s just part of the business that you deal with.  Sometimes they can get the product from another source, sometimes they can’t.
New products always come along.
Q: Hi Neville, Could you give a short explanation/suggestion about the product returns? I’m curious as to
what customers do if things don’t work or they don’t want the product. I’m considering selling internet
radios, which I imagine some customers might complain it’s too complicated, doesn’t work, damaged in
shipping, etc. Thanks, Michael
A: Product returns are handled this way:
If something is damaged upon arrival: I notify the supplier and they immediately send out a new one to the customer.  It’s their responsibility to send out working stuff.  Generally we don’t even request the broken stuff back unless it’s REALLY expensive.
If it’s my fault: Let’s say the customer ordered BLUE and I sent GREEN….I will pay for another shipment to go out.
If someone simply wants to return something for any reason: They send it back to the supplier, and they issue me a refund, I then issue my customer a refund.
It’s usually a very SMALL percentage of people that refund stuff, and it’s also a normal “cost of doing business.”
Imagine if you bought something from a company, you didn’t like it for whatever reason, and you wanted to return it….but they didn’t let you.  You’d be SUPER pissed and probably take it up with your credit card company.
I used to be pissed everytime someone wanted a refund.  Now I simply issue the damn thing and get it over with. It actually:
1.) Makes the customer happy
2.) Is easier for you than endlessly debating WHY the customer is returning something
3.) Doesn’t actually cost that much per month to return something.
Q: Hi Neville, I really like the videos but I have a two questions for you about building an e commerce
site. 1) If I am putting a paypal sales button and people start to buy stuff- is it completely legal?
Should I have some sort of company for the receipts or whatever.. and what about taxes ? 2) Lets say
you were not in US, does that model of selling stuff could be managed outside of US? I mean do you
think I can sell stuff with a Us dropshipper to Us customers, although I am not in America-american?
Apparently I asked more than 2 questions sorry about that:) Thanks Arda
A: Hey Arda, you don’t really need to get too worried until you actually start making A LOT of money. As for being outside of America, it shouldn’t be a big problem.
Here’s basically what I’d suggest:  Just DO something to get started…who knows, it might not work at all.  However if it DOES start making a lot of money, then go properly research tax issues in your area.  If you’re making enough money to be worried, then you can probably afford to hire a CPA or lawyer to help you with this.   I started HouseOfRave with no incorporated company or anything, then LATER handled all of it when the money started coming in.
If you don’t start quick, it’s likely you’ll never start at all!
To see the videos everyone was asking questions about, you’ll need access to: