Getting into the wholesale business has become a very attractive thing to do these days, especially with how easy it is to sell things over the Internet. It’s gotten to the point where you don’t even have to handle product anymore. But before deciding to dive in head first, there are some things that you should know. These tips will come in handy.
The first thing you need to do is ask yourself why you want to get into the wholesale business.
Is it because you want to work with other businesses and help people make money or is it because you think it’s an easy way to make a quick buck? Believe it or not, the wholesale business is very demanding. You need to have a lot of up front capital to buy product and unless you’re going to have someone else store the inventory for you you’re going to need a warehouse as well. You’re going to be dealing with hundreds of thousands of pieces of inventory and shipping things all over the world. Most retailers expect to get 30 days to pay. What happens if they go out of business before they do? Wholesaling is a risky business.
The next thing you have to do is study your competition.
If you plan on entering a market where there are already dependable distributors you’re going to have a tough time of it. You want to get in a market that needs a wholesaler if you want to have a good chance to succeed. After that, you need to take a look at your financial situation. You have to have a lot of up front capital to get into wholesaling. You have to make sure that you have the resources to establish a relationship with a manufacturer. Also, can you afford to wait 30 days to get your money from the retailers? Startup costs, taxes, property rental and insurance can eat you alive before you ever get your feet off the ground. Then, you’re going to need a business plan.
The next step is applying for all the licenses that you’re going to need.
There are certain tax laws that you are going to need to be aware of that apply only to wholesalers, such as tax exempt status for goods moved between manufacturers and other retailers. You’re also going to need a location for your business. You need to get a warehouse, an office and make sure that people know where to find you. If you’re going to build a warehouse you better make sure you are aware of all the zoning laws.
Then comes the marketing.
That’s right. Just because you’re in business doesn’t mean people are going to know it. You’re going to have to place ads at a number of places including newspapers, Internet, magazines, etc. Advertising is expensive so be prepared. Finally, when you are in business you better make sure you take care of your customers. That means getting the product to them, answering their questions and taking care of any problems that arise, and problems WILL arise. Don’t forget one thing. You’re not going to be running this business alone. You’re going to have employees. You’ll need to pay them and possibly fire some if they do a poor job, which means hiring new ones.
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