Catch 22 on business planning - (wholesale prices/planning)


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I am looking into starting up a retail business. Part of what I would like to do involves researching wholesales costs and projected sales and profits based on the wholesale costs. However, I do not have a wholesale license yet because I need to finish my business plan and get funding then start the legal work to create the business. I have contacted 10 different wholesale suppliers I would like to look into using and none of them will grant me access to view wholesale pricing without a resellers and wholesale license and a business location. How can I do my research if they require me to already have a running business? I can't get financial help to start-up my business without this information to build into my costs/profits projections, estimated inventory start-up costs etc. There are no local shops that sell what I will be selling so I can't ask any other local owners, plus the details I need are more then what a competing business would want to share with me. What I am supposed to do in this situation?

Thanks,
Danny

Getting Started Startup Costs Business Plan

asked Aug 31 '13 at 09:44
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Danny
106 points

2 Answers


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Unless you live in a very unusual part of the world, or have a very unique product, your business plan isn't likely to lead to any meaningful funding, especially not for a retail business.

Retail markups can range from being negative (loss leader products) to massive. Without more information, there's no way we can really help answer this - except to say - find other ways to do the research. If you can't get past this, you weren't going to run a success retail business anyway (retail is brutal).

answered Sep 3 '13 at 07:05
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Nick Stevens
4,436 points

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I found that when I was in business school, calling businesses and asking for informational interviews worked quite well. Tell them you are researching the industry and see if you can just meet one on one with anyone who works at one (or more) of the wholesale companies, in almost any function. Once you get in-person, you're more likely to find someone on the inside to help you. It doesn't have to be someone in sales - it can literally be anyone in the company. Once you meet with them, you can first show great interest in their position and then ask about being connected with someone else in another function. An internal referral will be golden compared to a cold call or email.

Another option would be to come up with best-case and worst-case financial projections. You can make an educated guess at the high/low ranges for the products you want to stock.

Lastly, you could go about it backwards and determine what wholesale prices you NEED to achieve in order for your business to be a success based on all your other factors. Once you have those numbers you can contact the wholesalers and just ask if your price target is doable. They should be able to tell you yes/no based on that without disclosing all their wholesale pricing. The risk there is that you never want to necessarily be the first one to throw out a number in a negotiation. But I think the risk is low in this situation.

answered Sep 25 '13 at 08:34
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Ts Haines
181 points

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