Buying low, selling high: How to make a profit on your stock

Top tips for negotiating with wholesalers

As outlined in our budgeting section, there are several options open to you when it comes to the actual purchase of your stock. On your first visit, however, don’t expect wholesalers to offer you a cushy credit account with them, you will have to make some straightforward purchases with them first. This is generally what wholesalers will expect from you.

As it may be cheaper to set up a credit account that get involved in any finance deals with your bank, it is best to avoid getting into a never-ending circle of loans and deals to fund your stock purchases.

“Wholesalers will expect payment with order unless you have a credit account with them,” says Grady. “It is not usually appropriate to finance stock purchases with other finance deals or instalments as the purchases would normally be too regular – every couple of weeks or monthly.”

Simple cash payments may, in the end, be the most beneficial for your business as many wholesalers give discounts to customers who pay upfront in this way. The method of payment, however, depends greatly on the cashflow situation of your company, it is important not to risk over-stretching your business by making large cash purchases early on.

Try to build up the amount of stock from a low level to begin with, to ensure you can sell all of it on and to save valuable funds for the future.

There are also other simple steps you can take to make a profit on your wholesale stock. Once you have a firm idea of the amount of stock your business can sell on, you can ‘price match’ wholesalers against each other on large orders.

Don’t be afraid to ask your supplier to compare prices with somebody else for you – wholesalers are generally, contrary to their image, approachable and happy to see your business flourish (as well as keen to keep your custom) and will often knock down their prices to a competitor’s level.

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Discounts will be roughly in proportion to the amount of money you spend, much like many other trades that offer such incentives to encourage you to place large orders. Therefore, orders under £200 are generally not going to make the earth move for wholesalers in terms of discounts, so to get the best discounts you need to make your purchases on a grander scale.

Don’t forget, however, that if you buy goods for the sake of a discount and are left with excess stock and a big whole in your budget you could end up in trouble. Strike the right balance so that your customer’s needs are satisfied without you buying too much stock.

Don’t be frustrated if you don’t see instant profits on your wholesale goods. If you continue to stick to an appropriate budget, shop around for good value and strike up a good working relationship with your wholesaler, you should start to see results within a few months.

Of course, much of this depends on the size and circumstances of your business, but by sticking to this formula you will be on course to meet the potentially large profits that buying wholesale goods provides.

Try to build up the amount of stock from a low level to begin with.


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