Wholesalers
Examples:
Importers, Distributors, Agencies, Business to Business Merchants etc
INDUSTRY DESCRIPTION
Wholesaling, importing or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers and related subordinated services. In general, it is the sale of goods to anyone other than a standard consumer. With the advent of Amazon, Alibaba and many other online sites, supply chain opportunities have expanded significantly in giving more and more people access to imported goods. In addition, many manufacturers are utilising online sales platforms and many retailers can “go-direct” meaning the critical part of operating a successful wholesale business is finding, securing and maintaining (or in some cases, defending) supply agreements.
Source a product, add a margin to cover overheads for sales personnel, warehousing, logistics and profit, then sell it fast enough to manage the gap between when you pay for the goods and when you get paid for the goods.
A typical life cycle of a wholesale business often starts when an owner attends an overseas trade show or has a long-standing relationship with a supplier and secures the “rights” to an area or product and gains some form of supply agreement. Obviously, wholesale businesses are often purchased as going concerns or split away from other businesses who wish to focus their working capital elsewhere.
The expansion of a wholesaling business often means adding warehousing and/or showroom facilities, logistics, sampling and/or demonstration functions, service and/or maintenance teams, parts supply, sales teams and customer support services etc. Because this is all in addition to simply providing the product, overheads need to be carefully managed in line with the volume of sales being made at sufficient margins as well as the terms being extended to customers. The expansion of a wholesaling business therefore relies heavily on managing cashflow especially the timing of when goods are paid for relative to when sales are being banked. Therefore terms of trade, financing facilities and inventory volumes including assortment selections are all critical.
Wholesale businesses get into trouble when outgoings grow faster than the cashflow being generated from sales. They also become stretched when additional outgoings are added without sufficient management e.g. sales teams being recruited but not trained or debtors ledgers blowing out with unmanaged terms of trade etc.
When to get help
Owners of wholesale businesses will tend to need help from a Business Advisor for any combination of the above circumstances. A key indication of needing help is when they are struggling to manage cashflow or when they need an expansion strategy to take advantage of market development opportunities. Typically we assist Wholesale businesses with an initial assessment of the current cashflow position together with their sales and marketing systems. Then we’re able to assist on how to optimise their current operation model before engaging in strategies to drive sales.