Finding Suppliers (Trade)
If you have a clear idea of what you are looking to sell finding suppliers is relatively straight forward. A lot depends upon your distribution channel, and how much margin you need to make it worthwhile.
As a Schoolboy I got into trouble at school for setting up in direct competition with the School Tuck Shop. I lived in town and took the bus out to a village community where the choice of candy was more limited. The School Tuck shop carried a very limited range of crisps and 2 types of chocolate biscuits, so some of the older kids would go down to the village and buy things for their friends. I realised that by carrying some different types of candy from town I could sell them for a profit even by buying them at the local store. Starting with £1 pocket money I was soon turning over £30-40 a day and had ¡§employed¡¨ a couple of friends to help with the distribution. Ultimately of course the business was banned by the school, which with some pressure from my parents started to carry a more comprehensive range of goodies. I was bitten by the entrepreneur bug however and would try many more schemes over the years.
The point of this story is not to brag about how I made £100 a week from initial capital of £1 but rather to show that it is possible in the right situation to buy your stock at retail rates and still turn a profit.
Assuming that you plan to compete with other retailers in a non captive market you will however need to find cheaper sources of stock for your business. My suggestion in this day of the internet and international trade is that you utilise resources such as www.alibaba.com and even www.EBay.com to find suppliers who are willing to trade in small lots at wholesale prices or below from overseas. Alibaba specialises in finding manufacturers and services in China, the rates available are pennies on the Dollar compared to sourcing in a more developed market and most Wholesalers will be sourcing their goods from similar places.
When you speak to the suppliers ask initially for a unit cost and what volume discounts are given. You should be able to negotiate from here. Do not at this point discuss minimum order sizes as you may lose the manufacturers interest. If quality is important then you may wish to ask for some samples (which you can show your own customers later) so that you can check the quality. You should also ask about quality checking and whether they can ship directly to you.
Once you have a ball park idea of the cost of the items that you plan to source you are in a good position to start your business plan. If you know what your chosen market will pay then you have an idea of your initial mark up. In some industries such as Jewellery this may be 100's of percent whilst in others such as recordable CDs it will be a very small %age. You should factor in the cost of shipping and import duties in your plan and work out whether you think you can make a profit.
Assuming that you can make money, focus the majority of your attention on making sales or finding potential buyers. Ideally you will be able to order your initial stock when it has been pre-ordered by your customers. In a perfect world you will also have sufficient deposits to cover the cost of your first order.
Before you place your initial order it is OK to go back to the supplier and ask for a lower price. This is likely to be more successful if you have a large order or are in a position to demonstrate that you will be a loyal, long term customer. It is unlikely that the first price quoted will be the lowest that you can get.
Before you finally confirm your order make sure that you understand how to get through the paperwork for importing the goods, and what additional charges there will be. Also ensure that you know how long shipping will take so that you can manage your customer¡¦s expectations.
Once you place that order you are officially in business. Congratulations.