Pointers and Tips Before Starting a Wholesale Business

By: Jefferson John Babasa
Submitted: 2008-11-26 17:30:57
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Managing a business that rakes in huge amounts of cash without lifting a single finger is what every business-minded person had been dreaming about. Though this might sound a bit of an overstatement, this kind of lifestyle can come true. With a huge amount of capital that could even start a 5 star restaurant or hotel and managing skills of that of a professional businessman or woman, a life like that is just an arm’s reach away. But what about those that can’t afford to start a 5 star restaurant or hotel, or those that doesn’t have the wits of a professional businessman or women, but only just the basics?

Other than starting a 5 star restaurant or hotel or any other kinds of business that falls under the category as a “Big Business”, there are other business that would let anyone experience that kind of life. But not that kind of life per-se, but a life that doesn’t put anyone on too much effort to run a business, and that kind of business is through wholesaling.

Wholesaling is a process in which products from the manufacturer are distributed to all sorts of dealers which in-turn sells the products to the end consumers. The wholesaler’s job is to overlook the transition of products being successfully transferred to carefully selected retailers and dealers in which handles the task of selling it to the buying public.

Wholesaling is a very profitable business, provided that the one that handles it has ample experience and skills in handling a business. So before starting a wholesale business, here are some simple pointers about the business and tips on how to handle it.

Type of Business

Before anything else, try and figure out what kind of business this wholesale business would be. Would it run as a partnership business, or would it run as a sole proprietorship? Clearing these things beforehand could save a lot of time and money, especially when shifting the business from partnership to sole proprietorship.

Product Selection

After planning out the type of business it would be, planning about the product is the next step. Wholesaling involves selling different kinds of products such as food products, electronics and appliances, clothes, and many more. Though the process of handling those kinds of products falls under the same business process, the only difference would be the capital and sometimes the location of business.

Starting a wholesale business of wine or electronics differs from starting a wholesale clothing business by terms of capital. Starting a wholesale business that involves wine or electronics or appliances would require a much larger capital not only because of the product itself but also because of the storage on where to put it whereas a wholesale clothing business may only require a small amount of capital (still depends on the brand of clothing line to sell) not only because of the product but also because a wholesale clothing business doesn’t require a storage such as that of a wholesale business involving electronics or appliances.

Rather than buy or rent a storage space or a warehouse, some small wholesale clothing businesses run their business on their own homes and store their stock on their own basement. So if the allotted capital isn’t too much for starting a wholesale business of appliances or wines, then a wholesale clothing business would suffice.

Business Documents and Papers

Business running documents and other paperwork such as taxation documents and business permits should also be properly arranged after planning out the type of business it would be. This is to assure that the business would run smoothly not only among the retailers but also with the law.

Storage

In a wholesale business, storage spaces are very important. Either buy a space or rent one. Choose a warehouse that is easily accessible and one that has labor saving approaches to material handling. But other than that, it should also provide security on the products stored within it.

Choosing a storage depends greatly on the type and the size of wholesale business it would be. Much like the statement above, storage may depend on the type of product a wholesale business would sell and the size of the business itself, such as in a wholesale clothing business. If running a larger wholesale business, then it would require more space and security. But if the business is small enough to operated inside the owner’s own home, then the basement would suffice for its storage.

Customers and Clients

In all businesses, customers and clients are the most important element in its success, in this case, dealers and retailers. Wholesalers deal with a wide variety of clients such as retail businesses, retail distributors, exporters, and other wholesale distributors.

• Retail businesses include establishments like grocery stores, independent retail stores, large department stores and power retailers.

• Retail distributors include the distributors who sell to those retailers that you may find impenetrable by a wholesaler itself. For example, if the wholesaler can’t get in” at a power retailer, the wholesaler may be able to sell to one of its distributors.

• Exporters are companies that collect United States-manufactured goods and ship them overseas.

• But aside from retailers and exporters, wholesalers also deal with other wholesalers. This is useful especially when buying from the manufacturer itself proves to be impossible due to exclusive contracts and issues like one-time needs.

Another thing in looking for clients, when looking for a dealer or distributor, make sure that they have legal documents that permit them to resell your products. This can ensure your business’s security.

Pointers before Opening a Wholesale Business

Establish a competitive credit policy. In a wholesale business, there will come a time that the retailers cannot pay instantly upon receiving their stock. Providing retailers a credit based policy can give them the advantage of getting their stock now, and pay for them the next day. But be careful about giving this kind of advantage. Before giving such benefits to retailers or other clients, make sure that the client had already proven its credibility in handling their bills. Ask for references from its former wholesaler and learn of their history if they can pay up on time or not.

Getting business advices and pointers from those that have experiences in handling this kind of business is also important. Learning from their mistakes, risks taken, and their decisions can greatly help in managing a wholesale business.

Always keep an open line for clients. Listening on their inputs, their thoughts, and their concerns about the business can greatly help in building a stable relationship with clients. This strategy will keep clients attached to the business and to avoid abandoning the business and shift to other wholesalers.

Keeping a list of unattained clients other than the list of own clients is also as important. Though they may not be interested today, asking them the other day may produce some good results.

Article source: Expert Articles