Buying a Wholesale Business: What You Need to Know
Buying a wholesale business can be a great decision for you in the long term. It affords you the opportunity to inherit an expansive customer base instead of depending on a few clients who may not give you business as often as you want. Another great thing about purchasing a wholesale distribution business is that it reduces the competition. You do not have to compete with every wholesaler on the planet since you would all be selling different brands.
A wholesale business is a cool business to run if you purchase one with an active customer base and well developed distribution channels. The strategy is just to continue to seek out new products and cross-sell to your repeat customers.
If you want to buy a wholesale distribution business, there are some potent things you should put up for consideration:
High Profit Margin
The best way to kick off your business on a high is to find a wholesale business that is hot. In other words, it should return high profit margins and strong turnovers. And for you to accomplish this, you need to go for something that people do not want but desperately need.
Another factor you should consider before purchasing a wholesale business is how the income spread comes into your business. Is there a client that accounts for over 10% of the gross income of the business? It is important that you give these clients extra attention. The seller should be a good guy and stick around and help you identity these big players and if possible help break the ice and give you a vote of absolute confidence.
Try to also keep efficient staff for at least 6 months. Buying a pre-existing business provides you with the chance of keeping the people that make the enterprise tick. You need to learn the ropes and know the ins and outs of the business. So it is important that you keep some valuable employees close and this includes the people in the finance department and the sales representatives who meet up with clients and close deals regularly.
A wholesale and distribution business is an exciting prospect to handle once you know what you are doing. It usually involves large sales instead of itty-bitty money trickling into your accounts. It also involves business to business interaction as well. Remember that wholesale clients do not make straight forward payments like other people. It helps to ensure that your customers operate within a 30 day deadline limit. However, try to play it safe and not enter into this business with limited funds after a purchase. You will only struggle, bungle your operations and achieve little or nothing in terms of business growth.
About The Author
Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps business owners learn how to sell a business so they can get the maximum value for their company. call us 416 364 5550 or CONTACT US to get in touch.
Date modified: 7-27-2019