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Starting a wholesale business may seem like a daunting task. There’s lots of planning that goes into figuring out the logistics of being a wholesaler, connecting with manufacturers, and finally, putting your company out there as the place for buyers to turn to. But, wholesalers are a crucial part of the supply chain line, and launching your own wholesale business is a great way to succeed in the business world.
Thinking of starting a new wholesale business? Here’s 5 steps on how to get started:
A key component of any wholesale business is having a steady supply of products available for buyers to purchase. After all, you will be who buyers & businesses turn to when they need to replenish their stock. So how do you start in becoming the go-to place for buyers to turn to when they need more products?
It’s simple: decide what products your business will sell. Your business can specialize in a certain type of product, or you can provide various types of products, which will increase your reach to many different markets.
For example, you might decide to provide parts to electronics businesses, so you’ll want to connect with electronics manufacturers to get a steady supply. Or, you might want to provide parts for electronics, along with office supplies such as paper, filing cabinets, staplers, and other office items. It’s up to you and what you believe your business can steadily provide.
Now that you’ve decided what products you want to sell, it’s time to conceptualize your business plan.
This can be as simple as putting pen to paper and writing down everything you need to begin. There are also several business plan templates available online or special software programs you can use to organize your plan. You’ll begin with a summary of your business and what your company will sell. You’ll also want to include an overview of your company structure and possibly a short mission statement.
One key aspect of your business plan is market analysis. You’ll want to conduct in-depth research on the markets you want to target and whether there is enough of a demand for wholesale items. The final part of your business plan will include potential starting budgets, a list of manufacturers you might be working with, and a cost analysis where you can provide estimates on how much it will take to start turning a profit.
Now that you’ve got a solid business plan, the next step is to apply for a wholesale license and an employer identification number (EIN) so you can legally conduct your wholesale business.
An EIN is a nine-digit number that the IRS uses to identify tax accounts for taxpayers who have to file business tax returns. EINs are used by various types of businesses, including corporations, non-profit organizations, trusts, government agencies, sole proprietors, and other business entities. You can apply for an EIN online. Simply visit the IRS website to determine your eligibility and get your application started. You’ll receive your new EIN as soon as your application is completed.
A wholesale license, also referred to as a seller’s permit, is a special type of permit that allows you to legally sell various wholesale goods in wholesale without paying sales tax on the items. Applying for a wholesale license can vary depending on your business location. In California, you’ll start with the California Department of Tax and Fee Administration (CDTFA) where you’ll register for a free account and begin an application for a seller’s permit.
You’ll want to have plenty of information about your business handy, such as your social security number, information on business partners, the products you’ll be selling, bank account information, and projected monthly sales. The state may also require additional details. After you complete your application, all you have to do is wait to get it approved and receive your permit, which can take anywhere from 24 hours to 14 days.
With your wholesale permit in hand, you’re now ready to get your wholesale business up and running! Now it’s time to turn back to your business plan and start connecting with some of the manufacturers mentioned in the plan.
Manufacturers produce finished goods from raw materials, which are then sold to consumers, wholesalers, distributors, retailers, and other manufacturers wanting to create more complex items. They typically specialize in one type of product, such as ceramic items or glassware.
Finding manufacturers can be a daunting task, but it is crucial to develop those relationships so you can have the products you need to establish your wholesale business. There are several online directories you can use to search for reputable manufacturers for various products, such as:
Now that you’ve found a couple manufacturers who will provide the wholesale products you need, you’ll need to find a way to store your stock!
Most wholesale businesses will use warehouses to store their products. Warehouses serve mainly as storage space, but can also be used as distribution centers, where products are shipped directly to consumers. Amazon is a great example of this, as their warehouses serve to store items while also distributing products for shipping.
You can look for available warehouse space by checking local property listings in the area where your business will be located. Set a monthly budget for rent, how much space you’ll need, where you want to be located, and any other features you might need for your business.
Many experts recommend visiting several different properties until you narrow it down to at least three different options for your perfect space. You can then compare each listing until you find the one that fits all of your wholesale business needs.
Getting a new business off the ground is an exciting time. It’s great to see all of your hard work paying off as your business launches and you start to make sales. As a wholesaler, you have a unique opportunity to provide products for other companies to sell, becoming essential to their business needs.
At JC Imports Inc., we’re committed to help businesses grow by providing the best value & quality available. Are you ready to start your wholesale business? Let us help you find the right products to get started!
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