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July 03, 2019

Managing Orders


Managing Orders + July Project Winner!

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The 'En-Light-ener' Candle Making Newsletter
July 2019
One of the most important aspects of any business is knowing what type of orders to take and hard as it may be to accept orders not to take. Not every order will be right for your business even the biggest ones that you may be able to fulfill.

If the last number of years have taught us anything it is that a small company you must always be able to adapt to many different situations/conditions and be able to change quickly.

For those that were fortunate to remember the tremendous growth of the candle market from 1995-2002 you will recall almost any type of candle developed could find a market and there were some truly remarkable and unique candles sold during this time period. Many candle companies grow with leaps and bounds and started building a fairly substantial infrastructure to support the organization. In some instances new buildings, new equipment and personnel were added. But then 2001-2002 came and the market started to turn downward and many learned very quickly that it is very difficult to reduce any organization and fixed cost in a very short time period.

If companies or individuals are fortunate to see the next growth of the candle industry in the very near future it is a good time to develop a plan that can not only help support this growth but also not jeopardize the business if things turn bad quickly. And the topic of this issue is if that next "extra large order" comes knocking on your door, is it right to accept it?

There are very few things more exciting to a business owner than getting that call from a large potential customer that would be equal to your entire production for the next 3, 4 or more months. The natural inclination for many would be to look at what their current best price is and then possibly discount a little more off that price. The next step is normally to do whatever else may be necessary to ensure they get the business. This may be the right thing to do if the circumstances are correct but in most instances when it is such a big departure from your normal part of business you need to spend a great deal of time assessing if it right for you. The same logic/calculation applies even if you are making candles in your kitchen/basement and in some instances even more factors need to be considered.

While the following will not guarantee at the end of the transaction it was in your best interest we hope it will help you make an informed decision:

  • Is the new account going to require you to purchase more molds, equipment and add personnel? This action will require additional funds to be expended and needs to be calculated into the cost of how long or reasonably long they can commit to you. The longer the commitment they can give you the more you can amortize the new cost. There are very few companies that will guarantee purchases past a fairly short time period you should try to get as much of a commitment as they are willing to consider. Be sure to get as clear of an understanding as they can give on the arrangement.
  • If you are a home based business is the size order going to require you to produce some place other than your existing location? If so be sure to know all of your cost including your own time in terms of travel, wear and tear on vehicle and if you have to engage child care or other arrangements.
  • What type of payment terms are they asking for? If it is 60 days then you will need to identify what the cost of carrying that type of receivable. Keep in mind the few vendors giving terms these days rarely are more then 30 days so what ever you sell them in the addition 30 days has to come from somewhere (it is even a great cost if the large customer wants 90 days). Lines of credit, bank loans and other traditional financing all carry cost be sure this is part of the equation. Even if the profit is healthy (which is not always the case if the order is very large) it is still awhile before the amount you make as a profit covers the cost of taking on the new receivable. In addition you are continually going to be building Inventory which requires you to outlay additional funds. The Inventory number can become deceivingly high with labels, glassware, fragrance, wax and then the need to store the items.
  • If the order is an ongoing proposition what if any notice will you receive when they wish to stop purchasing from you? Larger orders will take longer to produce but your customer will want product in a shorter time period so you will constantly be building inventory. If they end the arrangement on very short or no notice you will be "stuck" with a great deal of inventory.
  • What is the financial strength of the customer you will be selling? The worst outcome for any transaction is the company you start to sell to shuts down soon or for that matter anytime you start to sell them. In today's business environment few companies if any can survive a large hit on receivables.
  • If the customer is already purchasing candles try to find out why they are considering changing suppliers. Getting a good answer on this inquiry is going to be the difficult area to access. The information you are able to secure may help you understand if the situation is then going to be right for you. Maybe their current supplier went out of business, or unwilling to make a shape design they desire or they did not like the quality of the product.
  • While larger and new customer transactions are a part of business everywhere preparing yourself and making sure you have considered all cost is necessary to make sure it is the best decision for your particular situation.

Project Contest
Hi my name is Joyce Young. I began making candles and bees wax products when I became disabled a while back. I live with my husband and love my Family church and friends. I create out of the passion I have to see people happy when they receive my creations as it brings Joy to them and myself! It's a win win for all! My favorite saying is always stay happy and Bee Happy! I love candlewic products they have been very good for all my candle making needs! Try this candle for the coffee lover in your life!  
Our fifth winner in the contest is:
Joyce Young
Brewed coffee
Brewed coffee
Brewed coffee
Brewed coffee

Ideally it should go in a glass bowl if you choose to burn it. Enjoy!
One of the most frequently asked questions I get is, Hi. I'm Chandler.
"I attend a number of fairs during the summer and it seems like my wax does not have a high enough melt point to withstand the heat. Is there anything I can do?"
Candle makers have been using stearic acid for well over 150 years as a way to increase the melting point of lower-melt-point waxes. With a melt point of 150° F, stearic acid is a fatty acid that is available in two types. Regular stearic acid is great for use in paraffin candles, while its vegetable counterpart, palm stearic, is great for use with soy waxes. Another popular additive is Micro 180, which is a microcrystalline wax. Used in concentrations of anywhere from 2-10%, Micro 180 can help eliminate saggy candles even in very hot weather. A word of caution: Any additives that you introduce may alter the appearance or burn properties of your candles, so you will need to test the results of these additives to know how your finished candles will appear and/or perform.
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