How do I find suppliers and wholesalers?
Three essential tips from Startups to help your small business find suppliers, find wholesalers and secure both for the best price.
Unless you happen to own a factory, if you plan to sell products through your business you will need to deal with suppliers at some point.
This will be a large part of setting up a new business and you need to make sure you get the best deal you can.
Follow our tips below to ensure you’re well set up for finding suppliers and negotiating with them, and click the links for in-depth information on a topic.
1. Identify what kind of supplier your business will need
Your first step is to think about what kind of supplier your business will need. If you have developed a prototype that needs to be made on a large scale, you will need to look into choosing a manufacturer to do so – think about whether you want a big-name manufacturer with a proven track record or a smaller company with more niche expertise.
If your product is one that is already in wide circulation, using a wholesaler is normally a good option. Contrary to popular belief, you don’t need to be a certain size to buy from wholesaler suppliers.
Not sure of the advantages of wholesalers or don’t want to go down the wholesaling route? There are many alternatives to wholesaling, such as buying stock direct from the manufacturer or importing from overseas; however, be aware both options will normally require very large bulk purchases and could therefore be very expensive.
If you do see the lure of importing from overseas suppliers, there are ways to save on the costs associated with paying for products in different currencies. One is to consider a payment service that’s not your bank or PayPal.
Many businesses don’t know that banks and PayPal give bad exchange rates when a payment involves a foreign currency. This can add hidden costs to your international invoice payments.
Unlike banks and PayPal, providers such as TransferWise give you the mid-market exchange rate and only charge a small, upfront fee each time you make a transfer. TransferWise also makes sure you know the cost before you make the payment.
2. Choose the right supplier for your business
The next stage is choosing a supplier that’s right for your business. Wholesalers tend to shun flashy advertising and web search optimisation, so Googling manufacturers is not a great method to find wholesalers – although The UK Trader and The Wholesaler websites have large directories of UK wholesalers.
A better option is to visit a large trade show or exhibition – even if you don’t commit, they can be a valuable networking opportunity and your fledgling business can get a feel for what’s on offer.
3. Negotiate the best price
After you’ve settled on a supplier, it’s time to sit down and negotiate; but before you set off, work out your business’ budget for buying stock. Have some basic principles in mind when thrashing out a supply contract to ensure your business is protected – and don’t be afraid to haggle.
If you’ve chosen your supplier well, you will hopefully be dealing with them in the future, so emphasise this to them in order to secure better credit terms early on.