Starting a Wholesale Business in 2024: 7 Tips for Success

1. Other Forms of Wholesaling and Pulling the Trigger

Not everyone is meant for entrepreneurship.

But considering the fact that you’re here reading this article, I’m going to skip that conversation.

However, it’s important to note that not everyone is meant for wholesaling.

To put it simply, there are business opportunities that even the most talented businessmen shouldn’t pursue…

So the first step in starting a business should always be deciding if it’s a match for your abilities and preferences.

But before we do that, let’s look at some other ways that you can enter this industry (sort of):

For instance, a few cents on the dollar per each item sold is given to you if you approach the manufacturer with a good bulk order.

This is often done freelance.

This is often done freelance but it is less common and more difficult than being a manufacturer's representative.

This is pretty rare simply because many manufacturers produce so much stock that it’s a waste of time to sell it in such low quantities, but it’s possible.

I’m not gonna talk about any of those, but if they sound more interesting than regular wholesaling, look into them yourself. 

Now about wholesaling…

Wholesaling will require a good amount of capital, a warehouse or somewhere else with enough storage space to put your inventory…

And preferably some sort of mass cold-call outreach system. 

It will also require a knack for sales: more than is needed for many other startups.

Sales skill is required both to get good deals from manufacturers and to get the highest price possible from retailers.

You’ll also need to be on the phone constantly, as you’ll have a TON of different options between retailers and manufacturers to choose from.

In addition, you will need to do endless amounts of research to find clients and vendors in the first place, especially if you are tailored to one specific product or client.

The upside of this business is the big money you can make and the freedom that it can give you…

Considering you won’t be driving around to see people all that often, and most deals can be worked out over the phone.

No matter how strong you are or how good you are at sales and research, there will be times where it feels like there’s no end (to the sales process) in sight. 

There is, but it will take a lot to reach it and keep your momentum.

If this sounds like a major chore to you, then consider other options. 

It may not be that entrepreneurship is too much, just that wholesaling is too much.

There are other business models that are highly scalable, very profitable, and won’t require you to do nearly as much research or take nearly as many “no’s”. 

Lead-gen is one that I have personal experience with, and it’s freaking awesome in my personal experience, so you may want to check that out here.

2. Decide How You Want to Start

Still here? Great!

Now let’s get things going.

Almost all business models that you can possibly think of can be started in these next three ways, but for wholesaling, I think the decision is even more important.

Before I get into these three different startup techniques, I want to tell you why this decision is so important for wholesaling especially:

Now remember those points and take a look at your options for starting up your company...

Starting from the ground up will cause the most stress by FAR.

Nobody has a profit motive to help you succeed, so you won’t really be getting much help.

It will be fairly expensive, and you’ll have to work your ass off to get things in motion.

In the long term though, if you do everything right, it’s also the most rewarding.

It’s the most stressful because it’s the most risky, but that also makes success the most meaningful.

franchising takes the least amount of investment and is also usually the least risky.

The franchise that oversees your operation will have a profit motive to help you out so you will always have support that you can trust.

Franchising is basically paying to use a bigger company’s name and resources.

You’ll also run under an established name in the industry, so building relationships will be easier.

Each franchise is different, but they’re the same in a couple ways.

You will have “superiors,” you won’t be able to make your own rules, and you’ll have to give the franchise a certain amount of cents on each dollar you make.

Here’s a list of franchises if this sounds interesting.

This is the middle ground in a lot of ways, but it usually will be the most expensive. 

As opposed to building everything from scratch, or potentially using the franchise model, you’ll be buying the entire infrastructure of a company.

This means property, employees, and warehouses.

This also, however, means relationships, contracts, and assets/recurring revenue.

This can be a great option as you will suddenly own a company that has proven it has what it takes to make it as far as it did.

But be warned - people don’t just sell companies on a whim. You’ll need to do a lot of research before handing over the cash.

Check out this page for a couple businesses currently for sale.

3. Choosing Your Niche and Defining Your Customers

When starting any business, you should always apply some degree of specialization.

Specialization is basically just narrowing your services, offerings, and target market down into something more bite-sized. 

While this is the key to procuring and maintaining relationships with clients (and becoming even more of an expert in your chosen sector), there are considerations:

If you run a wholesale business and you want to narrow yourself down into medical supplies, you may have a good chance of getting business…

But niching down further into something like PPE, syringes, or tools like scalpels would be better to start off with.

However, you may not want to get too specific - for example, only selling syringes that hold exactly 30mL of fluid and exclusively have a 2-inch needle.

Just selling syringes would be a great place to start for this example…

But only offering syringes that hold a specific volume with a specific needle length might present you with so few potential clients that you won’t make money.

As you can guess, finding your niche is a Goldilocks-type situation: not too narrow, not too broad; you want your niche to be just right.

Sticking with our medical supplies example…

You shouldn’t start out by offering syringes, scalpels, all types of PPE, plus X-rays and sanitary wipes. 

Some companies can offer everything under the medical sun, but it takes a long time to build the reputation and the capital required to move in that direction.

It’s simple. 

If you sell syringes to hospitals, you shouldn’t also invest in selling tinted glass windows for 2013 Dodge Avengers to auto glass companies.

Networking will take longer (mechanics don’t usually know hospital administrators), and you will be forced to split your payment between two completely separate manufacturers…

Raising the per-item cost for each product you offer.

No matter how specific you are, you are not going to be the first person to see an opportunity. 

If you want to innovate, or to sell a manufacturer’s innovative product, then so be it (high risk, high reward).

But always take a look at your potential competition. 

You can call them up and act like a buyer to see their prices, and you can research them and determine the scope of their operation, etc.

Competition signals a viable market, but in some cases, it may be smarter to just go down a different road.

4. Finding Your First Products and Understanding Paperwork

Once you have your niche and your ideal customer picked and have decided how to start your business, you have a clear vision and all it takes now is paving the path towards that vision.

This path can be paved in a number of ways, but the first step is always to find your first product and to understand all the licenses, regulations, and other necessary paperwork.

Firstly, the paperwork. This is the boring stuff so I’m just gonna run through it as quickly as I can:

Remember that neither anything in this step nor anything else in this article is legal or financial advice.

Now let’s talk about picking your first product!

Finding your first product will involve a lot of price shopping.

You’ll need to contact dozens (or better yet, hundreds if possible) of manufacturers or larger wholesalers to find all of their different prices…

As well as how their price per-item decreases down as order quantities increase.

You can also visit places like AliBaba.com to view the prices and minimum order quantities (MOQs) of hundreds of different products from various manufacturers.

You can also use directories like Dun and Bradstreet or more specific directories like this one.

5. Setting up the Infrastructure

Setting up your infrastructure is key for any business, but wholesaling has a lot of moving parts… 

So it’s not only important, but it’s easy to screw up.

All of the first three parts of your infrastructure can be taken care of by third party companies like Shipbob. 

Outsourcing services like this can be lifesavers to startup wholesale businesses but will cut down your profits.

Admin duties can be taken care of by you, especially when starting out…

But once you can afford it and once you feel it’s time to grow, you should definitely start to outsource your “headache” labor or hire employees to do it.

Online presence can be done by yourself or you can hire someone to do it. 

The look of your site isn’t as important as it is for many other businesses, but you always want to make sure it works and won’t strain anyone’s eyes to look at.

This tutorial that I wrote will help you with building your site and upgrading your online presence.

6. Taking a Sliver to Deliver

In order to keep your business running and to keep your income evolving, you need to keep customers happy.

To keep them happy, one key step to take is making sure that you aren’t overcharging.

But to keep yourself happy and to keep your business thriving, you also cannot afford to sell yourself short.

Finding that balance is just like niching down: a Goldilocks moment where you need everything “just right”.

This will highly depend on:

However, you could research the average profit margins for the industry through online resources or by speaking with other wholesalers.

Here are two fool-proof ways to get the most out of your products:

They should be willing to give up this information because it can help you make money, which in turn will make them more money each time you run out of stock.

You’ll be able to gauge how reasonable your price is based on their response to it.

Each person is different, and many people expect to buy things for way too low than is fair, but this is a good method for reaching a fair price...

As long as you apply this method to multiple people.

I do think it goes without saying that you’ll need to have a number in your head that you absolutely cannot go below, though.

This will be based on how much you spent, plus a minimum profit that you should make.

Just remember that you have less leverage to negotiate when first starting out.

7. Finding Clients and Expanding Your Influence

Finding clients can be done in many ways. 

You can run PPC ads, do local or regional lead gen, write blog posts, and run mass cold-outreach programs. 

You also need good training or to hire someone with training to get results.

This can cost a lot in either time or money.

However, national ads for manufacturers/wholesalers may be very cheap depending on the industry.

With this, your demographic is perfectly targeted, once you are ranked you will get results permanently and without any more investment...

And you can pick and choose where to market based on competition.

The downside is you can spend weeks or months working on your site without results.

Learn how to do this here.

This is a really good fit for wholesalers. Just get your copy down and work on getting appointments and you’ll see results.

Copywriting is difficult though, so refer to this article if you have questions.

Close on those client contracts... sales are hard, man. 

It’s a process that you’ll learn over time, but I have three tips:

Harvard knows what they’re talking about. Refer to them!

Keep being respectful to your clients, keep offering them a killer service, and add in some extra flavor, like holiday wishes, business anniversary gifts, etc.!

Get more space for more products, find better relationships, keep finding customers, start branding a little bit on social media like Instagram, get more salespeople, admin workers, etc.

Buy higher quantities, stop using third-party shipping services, and start expanding your selection of products.

A Wholesale Business Can Work, but Lead Gen is Better... Here's Why:

I’m gonna be honest…

Wholesaling can be AWESOME.

While you do need to have space to hold all the stuff you’re about to sell, you can do everything from the comfort of your own home.

And while some people would prefer to meet you in person, most deals can be closed within a few phone calls.

Your duties as a wholesaler are also very straightforward and closing deals is largely price oriented.

So most clients won’t need to have much faith in you in order to move forward, but instead just need to know your price.

You’ll no doubt have late nights, but you won’t be putting in much, if any, manual labor to get things rolling.

However, the harsh reality of the wholesaling industry is that it requires a considerable amount of startup funding, the profit margins are slim, and it’s a high competition business.

Without a shadow of a doubt, I can tell you that there are much more profitable and worthwhile business endeavors to consider.

And how can I say this?

You see, when I quit my 9-5 job in search of sustainable passive income, I tried everything from drop shipping to affiliate marketing.

But when I landed on the local lead generation business model, I knew I’d hit gold.

Not only did it allow me to create a steady stream of viable new business leads for other small businesses…

It also took me from barely being able to pay my bills, to bringing in well over 50K per month in less than five years!

And one my online lead generation “properties” are established, they are virtually a self maintaining source of monthly income.

But I haven’t even gotten to the best part…

Anyone can learn how to do this!

And the startup costs and profit margins are much more appealing than the wholesale business model ever will be.

Trust me.

So if this sounds like it’s more your speed…

Click here to learn more about how we can help you get started with your local lead generation business model today!