While many people dream of running their own retail business, others want to be another step up the ladder. They want to be the ones helping those retail businesses get what they need for their customers. They want to run a wholesale business that supplies those things.
When many people think of wholesale businesses, they think of large amounts of money changing hands for large amounts of product. Hundreds or thousands of dollars in profit can be made on each sale. While this is true, they are not thinking about the other side of the coin. In order to make hundreds or thousands of dollars on a sale there likely has to be tens or hundreds of thousands of dollars in inventory supported by the wholesaler.
While there is nothing wrong with starting a wholesale business, if this it a path you are thinking of taking make sure you are doing it for the right reasons and have the resources to make it work.
Product
What is it you want to sell at the wholesale level? Apparel? Computers? Jewelry? How much do you know about the items you are considering selling. If you don’t know a lot about clothing, how are you going to sell it to others? You need to know the items you are selling, and know there is a need for these items at the retail level, so you can be confident you will get the sales you need to keep the business running.
Where are you going to put these products until they sell? Starting a wholesale business means having a lot of inventory on hand to deliver to customers, as they need it. That means you must keep these items accessible. If you are dealing with jewelry or other small items, you may be able to use a smaller storage area to handle the products. However, if you are selling clothing, computers or other larger items you will need warehouse space.
Customers
Who are you selling to? Before you put out a small fortune on inventory for your wholesale business make sure you have buyers for those items. Study the businesses in your area and find out what types of wholesalers they need. The more you are able to fill a ‘need’ of retailers, the more quickly you will be able to rack up sales.
Capital
Starting a wholesale business is very costly. By it’s nature, wholesale businesses are large volume selling ventures. That means you need to have even larger volumes of inventory in stock at all times, to be able to meet the needs of your customers. Also, keep in mind that you are not going to be paid for those items right away. Most businesses work on a net 30, 60 or 90 day plan, meaning you don’t get paid for the items you sent to them for 30, 60, or 90 days. Do you have the capital on hand to handle all the bills until those payments start arriving?
Proper Planning
Once you decide to start your wholesale business, you need to hit the ground running. The only way to do this well is to have a plan in place.
Do your research to see what types of licensing and permits you may need from your city, county or state to run a wholesale business. You don’t want to be bogged down with red tape when you are ready to sell.
Hammer out your business location and business operation plans. This is also a good time to start your marketing. Talk to local businesses about the products you will have to sell, see what they are interested in, and follow up as soon as the items are available.
The more you prepare up front, the more success you can see once you jump into the wholesale business