3 Common Mistakes to Avoid as a Wholesaler | Community Article
3 Common Mistakes to Avoid as a Wholesaler | Community Article
Learn how to maximize profits in your wholesale business by avoiding common mistakes. Manage inventory effectively, outsource credit, and maintain strong customer relations for success!
Like most businesses, your primary goal as a wholesaler is to maximize profits while minimizing costs. To achieve this goal, it’s important to avoid making three common mistakes — such as failing to manage and track your inventory, not outsourcing your credit and accounts receivables, and not maintaining relationships with your buyers and suppliers.
Learn more about these three commonly made mistakes and how to avoid them with these tips below.
Managing and Tracking Your Inventory
Your inventory is how you make money as a wholesaler, and failure to manage and track this inventory in real-time could mean stockouts and missed sales, incorrect cost values, damaged, lost, or expired products, and ultimately, unhappy customers. As such, managing and tracking your inventory in real-time is crucial.
While inventory tracking can be a complex and time-consuming process, it’s important to choose an inventory tracking method that works best for your business. Several methods include:
Pen and paper inventory management
Third-party logistics inventory management (known as 3PL)
Inventory management software (e.g. QuickBooks Commerce, Finale Inventory, and Primaseller)
Inventory tracker apps like Stockpile by Canvus, Veeqo, and Ordoro
Today, many wholesalers are veering away from the spreadsheet and pen and paper methods. Human error is common when managing and tracking inventory by hand, and these methods aren’t as effective as using 3PL, inventory tracking apps, and inventory management software.
Outsourcing Your Credit and Accounts Receivables
Issues with credit and accounts receivables are common among wholesalers, but this is where factoring comes in. Nationwide factoring companies offer accounts receivable factoring to help you to establish good credit, afford the inventory you need as a wholesaler, improve your company’s cash flow, streamline your bookkeeping process, and even grow your business.
Also known as invoice factoring, accounts receivable factoring is suitable for all types of companies — including startups, growing businesses, and seasonal wholesalers. Depending on your specific needs, DSA Factors also offers purchase order financing, non-recourse factoring, spot factoring, micro factoring, fintech factoring, and supply chain finance.
Lastly, your personal finances may play a role in securing funds for your business, if needed. This is especially important when you’re setting up a new company. You can easily do a quick estimate to calculate your debt-to-income ratio, which plays a crucial role in determining how much you can borrow. So, when you’re thinking about funding, do some basic work on your own, then work with a budgeting specialist when it’s time to begin the work in earnest.
Not Maintaining Contact with Your Customers
After finalizing a written agreement with a new customer, many wholesalers make the mistake of not maintaining contact once the deal has been made. And while it isn’t necessary to follow up as often as you did at the beginning, it’s still a good idea to check in with your customers after their first order has been received — and periodically after that.
Here are some ways to build lasting relationships with your customers via email:
Check in with your customers to ensure they’re satisfied with their first order.
Send quarterly newsletters tailored to your buyers and suppliers.
Offer product samples, coupons, blog content, and other freebies.
Use correlation IDs in your software to help you and your customers identify problems.
Retaining loyal customers is substantially more cost-effective than acquiring new ones, so don’t be afraid to go out of your way to maintain contact with your buyers. Keeping in touch with your buyers generates more return business.
The Bottom Line
There’s a lot to know about running a successful wholesale business — especially when you’re growing a business or first starting out — so don’t shy away from enlisting some help as you go. From factoring companies and 3PL providers to inventory management software tools and apps, these services can help to improve your business processes and avoid many of the mistakes other wholesalers make. By avoiding the three common mistakes listed above, you’ll prevent inventory overstocks and understocks, improve business cash flow and profits, and provide the best experience for your wholesale customers.
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