If you have just been bitten by the entrepreneurial bug and are looking to set up your own business, consider buying wholesale and selling retail. Retailing usually attracts better margins but is associated with lower stock turnaround and blocking of your capital.
The very first step you need to take in setting up a wholesale account as a new business, is to register your business. Assuming that you have already figured out a catchy name for your business and opened a checking account in that name, you must now give your business legal validity. You need to get licensed in your state by getting a Federal Tax Number (EIN). Unless you are legally registered, most wholesalers will not even look at your proposal. The ones that may give you a hearing would be the middlemen who usually will not give you the best prices.
The next step is to do your research. Check out the websites of the companies from whom you wish to purchase. Go to the section which lists “Dealer or Associates” requirements. You will gain most of your information here about minimum order size, payment terms, shipping, pick up and returns policy. Narrow down your list to a few select companies where you feel the terms of business are most favorable.
The key to setting up a wholesale account as a new business is to act like a professional. Type out your introductory letter preferably on a well designed business letterhead and state your business proposal in clear and simple language. The acceptance of your proposal hinges upon how well thought out your business plan is and how clearly you are able to communicate it.
If you can make a personal visit and meet with the management, you stand a better chance of selling yourself to them with your passion and vision for the business.
If you have done your homework well and have a legal standing for your business, some wholesalers will extend their hand of cooperation. However, it would be asking for too much to expect them to extend credit facilities or sell to you on consignment basis in the beginning. Most will open a COD account and assign an account manager to you. The relationship that you build with your account manager will go a long way in establishing your credibility as a serious player. After all, they want you to succeed but you have to convince them that you are in it for the long run and are willing to walk the extra mile in ensuring the success of your business. As your relationship with the wholesaler builds up you can ask for credit facilities or better terms of business based on your past performance.
If you can execute most of the above steps successfully, you are on your way to setting up a wholesale account as a new business. Now take it forward and put your business plan into action, the sky’s the limit.
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