Top 10 Tips For Getting Started In The Wholesale Business

Top 10 Tips For Getting Started In The Wholesale Business

Top 10 Tips For Getting Started In the​ Wholesale Business
Whether you are just thinking about,​ or​ you have decided that you would like to​ start running a​ wholesale business,​ there are a​ number of​ items that you should spend considerable time planning and researching before going full steam ahead .​
Proper planning and fact-finding up-front can not only save you from a​ lot of​ headaches in​ the​ beginning,​ but can also mean the​ difference between a​ successful wholesale business versus a​ monetary disaster waiting to​ happen .​
In this article we​ will provide you with ten tips to​ help guide you along the​ way as​ you begin planning for your business .​
They are presented in​ chronological order so that you can use them as​ a​ way to​ plan out the​ proper steps along the​ way .​
Remember,​ success depends on​ many factors – and the​ most important factor is​ your determination and energy you put into making your business a​ success!
Step 1: Ask Yourself Why?
Why do you want to​ get into the​ wholesaling business? It is​ because you would enjoy working with other businesses and manufacturers being the​ main point of​ contact between the​ two? Or is​ it​ because you think it​ is​ an​ easy way to​ make money quick?
Wholesaling is​ a​ demanding business,​ and can require lots of​ up-front capital,​ warehousing,​ logistics planning and customer service skills .​
As the​ main channel between the​ manufacturer and retailers you may find yourself dealing with hundreds of​ thousands of​ units of​ merchandise needing to​ be shipped across the​ country on​ a​ moments notice .​
Large retailers often pay on​ a​ Net-10 or​ Net-30 schedule,​ meaning payment is​ made after the​ goods are delivered .​
What would you do if​ a​ retailer did not pay or​ went bankrupt before you received payment?
Step 2: Study Your Competition
It does no good to​ enter a​ market where there already exist established,​ credible wholesalers for a​ given product .​
Retailers want to​ know they have a​ dependable supply source that meets their terms and often will not change wholesalers for an​ established product .​
Just because you build the​ warehouse does not mean they will come .​
Use your local Chamber of​ Commerce,​ the​ Internet and even visit with retailers to​ find out what wholesalers exist in​ your area .​
If you want to​ specialize in​ a​ specific product,​ contact the​ manufacturer directly to​ find out who handles wholesaling for them already in​ your region .​
There may be none in​ your state,​ or​ there could be three down the​ street .​
Step 3: Assess your Financial Situation
Wholesaling can require a​ lot of​ up-front capital and expenditures before you even see one cent of​ income .​
Do you have the​ resources to​ spend on​ setting up a​ relationship with a​ manufacturer who will most likely require you to​ buy in​ huge quantities from them? Can you afford to​ wait up to​ 30 days for payment? Do you have the​ money to​ invest in​ shipping freight or​ setting up your own delivery service?
Be sure to​ look past the​ startup costs as​ well .​
Employees,​ taxes,​ property rental and insurance are just a​ few of​ the​ things you will need to​ factor in​ as​ ongoing costs .​
Step 4: the​ Business Plan
A solid business plan is​ the​ foundation of​ any business .​
You need to​ make sure that you have spelled out what you intend to​ do and how you intend to​ get it​ done .​
Not only will banks require this for financing,​ but often other businesses you deal with will want to​ see it​ as​ well .​
It should be the​ guidelines that you follow every day in​ your business to​ achieve the​ goals you have set forth .​
For this part,​ it​ is​ often wise to​ work with a​ business lawyer or​ seek professional advice from business consulting services .​
a​ good resource to​ help you find people in​ your area with the​ necessary skills and background is​ the​ Small Business Administration government site .​
Step 5: Apply for Licenses,​ Taxing Certificates and Other Necessary Paperwork
Nothing is​ as​ certain as​ death and taxes .​
It is​ no different in​ business,​ with one exception .​
As a​ wholesaler you will be required to​ pay taxes and other fees to​ your state and to​ the​ federal government .​
The one exception is​ that you will be granted tax-exempt status for the​ actual goods you are moving between the​ manufacturer and other retailers .​
This can be a​ tricky process and is​ handled at​ the​ state level .​
Again,​ for this part you will want to​ make extensive use of​ your state taxing authority as​ well as​ local Chambers of​ Commerce .​
One wrong mistake here can end up costing you not only money,​ but possible your entire business .​
Step 6: Establish Your Facilities
Location,​ location,​ location .​
Businesses must exist somewhere and like most things in​ life there are rules and regulations on​ where they can be .​
Will you be having semi-trailers coming to​ your location at​ all hours of​ the​ day and night? Will you have a​ storefront for vendors and clients to​ come calling at? What about electrical,​ water and sewage needs?
Zoning laws exist to​ make sure that the​ right structures end up in​ the​ right places .​
Nobody wants a​ warehouse next door to​ them in​ a​ residential neighborhood .​
Work with commercial real-estate agencies to​ find a​ suitable place for your business .​
Step 7: Establish Your Relationships
You have the​ facilities,​ you have the​ finance – now do you have anyone supplying you product or​ customers for that product? Work with manufacturers and retailers to​ build a​ relationship .​
This can be one of​ the​ most difficult parts of​ the​ experience,​ and is​ where the​ rubber hits the​ road .​
In addition,​ relationships extend beyond your customers and suppliers .​
It is​ good practice to​ establish relations with your local Chamber of​ Commerce,​ retail associations and labor organizations in​ your area .​
Step 8: Marketing
Wholesalers traditionally do not advertise .​
That does not mean you should not market your business to​ others,​ after all how can you build relationships or​ expand on​ existing ones? Wholesaling guides are published and distributed to​ many retailers and this is​ where the​ bulk of​ your marketing efforts will be directed .​
The other half should be in​ going to​ retailers directly,​ meeting with buyers and outlining your services .​
Just because you have a​ customer today does not mean you can rest on​ your laurels .​
Marketing works hand in​ hand with building a​ relationship and maintaining it .​
Step 9: the​ Machine in​ Motion: Servicing Your Customers
Product is​ coming in,​ retailers are placing orders – we​ are all done right? Not exactly .​
Getting the​ product to​ your customers,​ answering questions about delivery timeline,​ working with vendors to​ obtain new product lines,​ it​ is​ a​ complex and demanding part of​ the​ business .​
In today’s just in​ time marketing model a​ delay in​ shipment could mean the​ end to​ a​ business relationship .​
You must keep your customers informed of​ any status changes,​ pricing concerns and product movements from your facility to​ their loading dock .​
This is​ where back end systems come into play by maintaining records and logs of​ all activity with that customer .​
Do not underestimate the​ value of​ a​ good Customer Relationship Management system .​
Step 10: Employees,​ Accounts Receivable and Other Financial Matters
Once everything is​ up and running your next focus is​ your business financial present .​
Employees need to​ be hired and fired .​
Payroll needs to​ be met .​
Money must come in,​ and money must go out .​
Here you should invest in​ financial talent and services if​ you do not possess them already .​
One oversight can mean the​ loss of​ hundreds of​ thousands of​ dollars; a​ missed payroll deadline could mean your entire business comes to​ a​ halt .​
It is​ critical that you constantly keep an​ eye on​ the​ books and on​ your expenditures .​
Know when to​ tighten the​ belt,​ and know when to​ expand.

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