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But your work isn’t done yet. Prepare to woo your wholesalers. It was months before Steve Weinberg, a 43-year-old El Dorado Hills, CA, eBay entrepreneur, lined up wholesalers for his consumer electronics business.

“You can go to Kodak and say you want to buy direct, and they say, ‘How many million do you want?’” he says. Distributors, meanwhile, saw him as a small-time unknown entity. Finally, after hundreds of cold calls to wholesalers, Weinberg found a few willing to sell digital cameras to him as long as he paid up front. Now, with his monthly revenues exceeding $25,000, distributors are calling him, eager for his business.

As you grow larger, your per unit costs decrease. Suppliers will start to offer you volume discounts and other arrangements that lower your cost per unit. As you build scale, your per unit costs for any repeatable activity will almost surely decline over time for a second important reason: With increased experience, you will inevitably find more ways to perform repeatable tasks with fewer steps and increased efficiency.

An important value of scale also occurs in marketing. As a firm becomes more substantial, it is far more likely to generate positive publicity (assuming it seeks this publicity). Both Gourmet Gatherings and 1-800-MYLOGO have been profiled or recommended in numerous national magazines. To achieve this kind of invaluable publicity, the firms had to offer a terrific service and reach a certain critical mass. Magazines and newspapers are unlikely to cover a new business, no matter how innovative, that has not demonstrated its value to a significant number of buyers.

As you grow, new and often unexpected revenue opportunities start to appear. After Speed Anywhere served over 15,000 customers, I could develop revenues related to sponsorship of a monthly e-mail newsletter. To attract sponsorship interest, the newsletter had to reach an audience of a

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Terms of Use GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.