How to Start a Wholesale Business

Becoming a wholesaler is a great way to make money from home. Whether you're wanting to supplement your current income by making a little extra cash or are considering becoming a wholesaler as your full-time job, there are a variety of business types you can get involved in. You will need salesmanship and business skills to secure the best deals from suppliers and optimal prices from buyers. Wondering how to start a wholesale business? Find out the other skills you need, important considerations to keep in mind and how to legally establish your business.

What Is a Wholesale Business?

People thinking about starting a wholesale business may be in for a lucrative opportunity if they do it right. Wholesale businesses purchase products in huge quantities straight from manufacturers. They then sell these items to distributors or retailers, and they are able to make a profit because purchasing in bulk can be cheaper. The items are then sold to retailers or distributors at competitive prices, as some of these retailers or distributors do not purchase huge quantities or are not able to purchase directly from the manufacturer.

What Skills Do You Need to Start a Wholesale Business?

If you are planning on starting a wholesale business, you may need several skills to get it started and running. One of the top skills you need would be people skills since you would have to transact and deal with manufacturers, retailers, potential clients and suppliers. You may have to haggle in a friendly manner to get the cheapest deal without getting on the bad side of the other parties. Operational and organisational skills are also highly important, as tight logistics are the key to making sure that the whole operation runs smoothly.

How to Decide What Products to Sell

Being a wholesaler is a popular business option. Over 100,000 wholesale businesses are operating in the UK , so you’ll need passion and drive to set yourself apart from the competition, and choosing what products to sell will be the key part of this. A number of factors will influence the range of products your business will offer:

• The size of your premises.
• The nature of your target market. Will your customers want cheaper, own-label ranges, or will they want exclusive product ranges? Maybe they would be interested in buying fairly traded or organic products.
• The need to provide specialist storage for some ranges. For example, tight security for cigarettes and alcohol, screening for all tobacco products or temperature-controlled conditions for pharmaceuticals.
• The product ranges stocked by your competitors.

You will be buying in bulk from manufacturers and breaking pack sizes down for retailers, hospitality businesses and so on. Consider whether you will also repackage some lines, either with your own labels or with your customers' branding.

Because the wholesaling sector is so competitive, you must identify what will attract customers to your business. Be wary of competing only on price — you may not make enough profit to remain viable.

How to Start a Wholesale Business

There are three ways you can start a wholesale business. You can either take over an existing wholesale business, start one on your own from scratch or buy into a business opportunity.

Take over an Existing Business

You might decide to buy an existing wholesaling business rather than start your own venture from scratch. Buying an established business can mean that:

• The premises, fixtures and fittings, vehicles and equipment are already in place.
• There are established customers.
• The business can generate income immediately.
• Suppliers have been identified and relationships established with them.
• The business has a track record, which can help if you are looking for finance.
• Staff are already in place.
• A business website has already been set up, possibly with eCommerce enabled.

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale — for example, is the owner keen to retire, or is there another personal reason for selling up?

Your market research into the sector as a whole and the locality, in particular, will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you, as many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Start Your Own Wholesale Business

It is important for those that wish to start a wholesale business to choose the best one for their particular skills and circumstances. To do this, you should have an understanding of your strengths and what products and markets you know quite well. Research should help you to do this. It is also important to take into consideration just what industry you could have a competitive edge in. Keep in mind that retailers and distributors may not easily trust a new business, so as a newcomer in the business, you may want to take advantage of your contacts and network.

Your market research will help you to identify whether there is a gap in the market for the goods and services you will be providing. Bear in mind when doing your market research that online ordering is seen as a great convenience by many B2B customers. Many B2C customers welcome having their order delivered too.

Buy into a Business Opportunity

This last option is perhaps the riskiest, as all business opportunities must be thoroughly explored before any money or precious time is invested. However, the right opportunity can mean support, training and quick success if the original company has already proven itself to be profitable, reputable and durable.

Ready to Form Your Wholesale Company?

If you are ready to start a wholesale business, it’s time to form your company. You can form a limited company or go the sole-trader route. Deciding and completing your company formation can be the most challenging part of starting a business, but it’s crucial to your success.

Are you ready to start a wholesale business? Let us help! At Mint Formations, we help you form your limited company or self-employed business and take away all the stress that comes with starting a business. We’ll secure your brand name and get your company registered fast so that you can start doing what you love.

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