Generating Extraordinary Profits Through A Buy-Low/Sell-High Strategy

Generating Extraordinary Profits Through A Buy-Low/Sell-High Strategy

In the 1983 film Trading Places, brothers Randolph and Mortimer Duke own a successful commodities brokerage firm, and are looking to score big on orange juice futures. Thinking that the recent winter would create a shortage of orange crops, they plan to purchase as much of the commodity at a low price, to ultimately sell for profit as the shortage affects the market. Their plan, though failed, was to buy-low and to sell-high.

“Buy-Low/Sell-High,” is a concept that has been around forever, where business owners are looking to buy products for a low price, and sell for higher prices. Whether it be the cattle, wheat, or limestone blocks for the pyramids a thousand years ago, or the hormonally changed livestock and genetically modified crops of today, maximizing profit through a buy-low/sell-high strategy requires art, skill, and a significant amount of discipline, which most business owners seem to lack.

If you’re an owner, looking to gain mastery over your Buy-Low/Sell-High strategy, consider the following:

  • Stop focusing on political correctness with your vendors: Trying to be everyone’s friend is going to kill your profits and destroy your business. Stop worrying about how your vendors will feel at the end of a negotiation, and start focusing on getting the absolute lowest price you can squeeze out of them to gain maximum profit on your resale.
  • Minimize labor costs: While paying employees fairly, it is critical to get the bang for your buck. Are you getting 8 hours of productivity/revenue for a paid 8 hour day?
  • Maximize margins: It’s alarming that over two-thirds of the clients we work with do not raise their prices every year, and lack any sort of pricing strategy. Every 1-2% increase in price drops right to the bottom line. Don’t be afraid to be the highest priced in your industry or field of expertise. You will be respected for it, and your margins and pocket book will thank you!

In my experience, buy-low/sell-high is like basic Business 101 and it works.