Trading Advice

How do I get started in wholesale trading without much investment?

It’s a question that many traders have asked themselves at the start of their wholesale buying journey and is something that will always be pertinent to budding re-sellers. In this world of corporate giants demanding that sellers have bricks and mortar stores and that they commit to purchasing £25,000 a year in stock it’s no surprise that many of our members pose the question; just how do I start a successful re-selling business with a small investment? In this article the Wholesale Scout team explore the possibilities and opportunities available to wholesale buyers even when there’s not much cash to hand.

Use UK Wholesalers that Deal in Smaller Order Quantities

If you’ve only got £200 to invest in stock there’s no point in looking at wholesalers based in the rest of Europe or overseas in the Far East for example. Due to the distance involved the majority of your small budget will end up going to the courier or shipping service meaning less product for you to re-sell and profit from. So seek out UK wholesalers that deal with small start up businesses on a regular basis and offer a low minimum order value. Another positive point about dealing with wholesale suppliers from within the UK is that in many cases they are within driving distance of you, therefore allowing you to see their premises and their goods first hand. This enables you to build a rapport with the company and helps to eliminate any risk or doubts in your mind about the quality of the products as you can inspect them personally before purchase. There are plenty of UK trade suppliers of all kinds of items in our directory that deal in smaller orders so whatever industry sector you’re looking to get into we’re sure you’ll find a few UK contacts that can help. For more information on these kinds of issues check out our further advice on verifying wholesale suppliers.

Don’t Imply You are a Bigger Outfit Than You Actually Are

In the early stages of starting your business it’s very tempting to let onto potential suppliers that you are more established or simply a larger organisation than you are. Of course if you are a larger company with the buying power to place thousands of pounds worth of orders you are likely to get a better deal but you would also more often than not be dealing with official distributors and overseas manufacturers – not UK wholesalers created to service small set-ups. So bear this in mind when speaking to potential suppliers and be honest about your business circumstances. Remember there’s no shame at all in being start-up business, every company in existence today started that way, and trade suppliers appreciate and respect honesty.

Contemplate Forming a Limited Company

As a start-up business you can of course trade as a sole trader meaning that all you need do is keep a record of all expenditure, revenue and pay and file a self assessment tax return each year via a qualified accountant (unless you are one yourself) ensuring you pay the relevant taxes if applicable. However some wholesalers may require you to have a limited company in order for you to trade with them as in some cases this makes it easier for them to check your credentials before dealing with you. It also shows that you have taken the official standardised route into business which can re-assure those you deal with. Additionally, depending on your revenue and business model, it can also work out more tax-efficient for you to operate in this way so it’s certainly worth considering.  Take a look at our associated article to find out more on forming your own limited company.

Start Small

It’s alluring to start thinking about luxury style expensive products which retail for high amounts and have a big demand in the market when your forming your re-selling operation but you need to be realistic. High value items are expensive all the way through the supply chain so even if you manage to buy direct from the manufacturer you’re looking at a large outlay to purchase the stock. In many cases the higher return on investment is had toward the bottom end of the price range where you can buy 100 low value items for 50p and sell them on for £1.50. This is where and how many start-ups successfully build their businesses so you should not overlook these cheaper items of stock. Also consider more opportunistic purchases like products from police auctions where if you’re quick you can often buy an item at well below the normal sale value and re-sell it the next week for double the price. Check out our wholesale product case study articles for more stock ideas.

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