Starting a wholesale business

Starting a wholesale business could be a lot easier and cheaper than you think! There are several different types of wholesale business that you could start. Some wholesale businesses do require a physical premise and stock, however some wholesale businesses can be run entirely over the internet without out pre-purchasing stock. This means you could start a wholesale business quickly, easily and with little or no capital investment.

Whether you want to start a wholesale business as a full time business or part time as a secondary source of income you will need to plan your business to be successful! This article will give you a basic overview of some considerations to get you started.

Choose the type of wholesale business you want to start

In simple terms a wholesaler usually purchases stock at very low prices because they order in large volumes. Wholesalers then resell stock at wholesale prices to resellers, retailers, distributors and other wholesalers with their margin added to the cost price to make a healthy profit. There are actually 7 types of wholesale businesses that you could start so first you need to identify which type of wholesale business is right for you.

Indentify the industry you wish to start your wholesale business in

It's generally advantageous to have knowledge of the industry before starting a wholesale business and although not essential it's much easier to get started if you know the products, manufacturers, and retailers that you'll be working with. If you are considering starting a wholesale business in a new industry you should research industries of interest and contact potential suppliers for product information, terms and pricing. Ideally you should look to sell products that you feel passionate about and believe in, within a market that is not over saturated and too competitive.

Indentify the market your wholesale business will supply

Once you've decided which type of wholesale business you want to start, the industry you wish to start up in, you've researched some potential products and suppliers, you now need to consider who you will sell to. Who will be your customers? Where will they be located geographically? Will you need to ship goods to them or will you operate on a drop ship basis with your suppliers? If you have to ship goods how much will it cost you! How will you promote your business to get customers to buy from you? Traditional marketing mediums such as email, magazines, post, trade shows, pay per click etc are costly and much less effective these days!

Check out the wholesalers your new business would compete with

The less competition your new wholesale business has the more profit you will make! Suppliers will not allow too many wholesalers to trade in any given territory as this can start to a price war and ultimately commercial suicide for all businesses concerned when there is no more profit left in the price of the products! How much do your competitors charge? How much will you charge? How much profit margin can you realistically add to the cost of the products while remaining profitable and competitive? Apart from price how will you differentiate your new wholesale business from that of your competitors? Will you add value by offering additional products & services or do you plan to compete solely on price?

Check your new wholesale business is viable

So you know what type of wholesale business you want to start, you've researched and spoken to suppliers, you know how much it will cost to purchase stock, you know who you will sell it too and how much you will sell it for and the cost of shipping the goods so now all you need to do is some basic calculations to check that your business is viable. Keep it fairly simple, use a spreadsheet if possible to show the costs and estimated sales revenue, deduct your total costs from total sales to work out your potential profit. It pays to be conservative but play around and compare best case vs worst case scenarios. If you need capital for stock, premises, staff etc you may need to raise finance which can be tricky especially without a robust business plan but with the added risk you need to sure you are making a the right choice!

Starting up your new wholesale business

If you've done your home work and are confident that you are ready to start a wholesale business you need to incorporate a company. Incorporating a company can be done quickly and easily online and is very cheap. Whether you are going to be an online wholesaler or have a physical premise to trade from, once you've incorporated your new wholesale business you'll also need a domain and a website. Registering a domain can be done online quickly, easily and cheaply. Depending on what you need you can even get a free website able to take payment and process orders online. Next you need to talk your suppliers and if applicable order stock and get your products on your website. As soon as it's all tested and working it's time to start your new wholesale business and start selling!!