Whether you are just thinking about starting a wholesale business or have already done so, there are a number of things you should spend a lot of time planning and researching before going full speed ahead. Planning and gathering information before you start your wholesale business can not only save you a lot of trouble in the beginning, but it can also make the difference between a successful business and a money disaster waiting to happen.
This article will give you ten tips to help you plan your business. They are listed in order of when they happened, so you can use them to plan out the right steps to take along the way. Remember that success depends on a lot of things, but the most important thing is how hard you work to make your business a success.
Step 1: Ask yourself, "Why am I doing this?"
Why do you want to go into the business of wholesaling? Because you'd like to work with other companies and manufacturers and be their main point of contact? Or do you think it's a quick and easy way to make money?
Wholesale is a tough business that can require a lot of money up front, a lot of storage space, good planning skills, and good customer service skills. As the main link between the manufacturer and retailers, you may find yourself in charge of shipping hundreds of thousands of items across the country in a hurry. Large stores often pay 10 or 30 days after the goods are delivered. This is called "Net 10" or "Net 30." What would you do if a store didn't pay you or went out of business before you got paid?
Step 2: Look at what else is out there.
It doesn't help to get into a market where there are already well-known wholesalers for a certain product. Retailers want to know that they have a reliable source of supplies that will meet their needs, and they often won't switch wholesalers for a product that is already well-known. Even if you build a warehouse, that doesn't mean people will come.
Find out who the wholesalers are in your area by going to your local Chamber of Commerce, looking on the Internet, or even talking to retailers. If you want to focus on a certain product, you should talk to the company that makes it to find out who does wholesale for them in your area. There might not be any in your state, but there might be three just around the corner.
Step 3: Figure out how much money you have.
Before you even make your first dollar from wholesaling, you may need to spend a lot of money and put up a lot of capital. Do you have the money to build a relationship with a manufacturer who will probably want you to buy from them in large quantities? Can you wait for payment for up to 30 days? Do you have enough money to pay for freight shipping or to start your own delivery service?
Be sure to look at more than just the start-up costs. Some of the ongoing costs you need to think about are employees, taxes, property rental, and insurance.
Step 4: The plan for the business
Any business needs to start with a good business plan. You should make sure you have written down what you want to do and how you want to do it. Not only will banks need this to give you money, but other businesses you do business with will often also want to see it. It should be the rules you follow every day in your business to help you reach the goals you set.
For this part, it is often a good idea to work with a business lawyer or ask a business consulting service for professional advice. The Small Business Administration, which can be found online can help you find people in your area who have the right skills and background.
Step 5: Get licenses, tax certificates, and any other paperwork you need.
Only death and taxes are certain. Except for one thing, it's the same in business. As a wholesaler, you will have to pay your state and federal government taxes and other fees.
The only thing that is different is that you won't have to pay tax on the goods you move between the manufacturer and other retailers. This can be hard to do, and each state is in charge of it.
Again, you will want to use your state's taxing authority and local Chambers of Commerce a lot for this part. If you make a mistake here, it could cost you not only money but also your business.
Step 6: Set up your buildings
The place, the place, the place. There must be a place for businesses to be, and like most things in life, there are rules about where they can be. Will semi-trailers come to your place of business at all times of the day and night? Will you have a storefront where customers and vendors can visit? What about the need for electricity, water, and sewage?
There are zoning laws so that the right buildings go up in the right places. In a neighborhood of homes, no one wants a warehouse next door. Use commercial real estate agencies to help you find a good place for your business.
Step 7: Set up your connections
You have the space and the money, but do you have anyone to supply you with goods or customers for those goods? Build relationships with both manufacturers and retailers. This is where the rubber meets the road, and it can be one of the hardest parts of the experience.
Also, you have relationships with more people than just your customers and suppliers. Building relationships with the local Chamber of Commerce, retail associations, and labor groups is a good idea.
Step 8: Marketing
Wholesalers usually don't do any advertising. That doesn't mean you shouldn't tell other people about your business. How else can you make new connections or grow old ones? Wholesale guides are printed and sent to a lot of stores, and this is where most of your marketing efforts will go. Half of your time should be spent going directly to retailers, meeting with buyers, and telling them about your services. Even if you have a customer today, that doesn't mean you can rest easy. Marketing is all about building relationships and keeping them going.
Step 9: Get the machine going by taking care of your customers
The goods are coming in, and stores are placing orders, so we're all set, right? No, not really. Getting the product to your customers, answering questions about delivery times, and working with vendors to get new product lines is a complicated and time-consuming parts of running a business.
In today's "just in time" marketing model, a delay in shipment could mean the end of a business relationship. You must let your customers know if the status of their order changes, if there are questions about pricing, or if products move from your facility to their loading dock. This is where back-end systems come in. They keep records and logs of everything that has happened with each customer. Don't forget how important a good Customer Relationship Management system is (CRM).
Step 10: Employees, Receivables, and Other Financial Matters
Once everything is up and running, you should turn your attention to the money side of your business. People have to be hired and let go. People need to be paid. There must be money coming in and money going out. Here, you should spend money on getting financial skills and services if you don't already have them.
If you make a mistake, you could lose hundreds of thousands of dollars. If you don't pay your employees on time, your whole business could stop. It is very important to always keep an eye on your spending and your books. Know when to pull in your belt and when to let it out.
