Before explaining how to start a home-based wholesale/manufacturer distribution business, it is important to explain what a distributor is. Basically, a distributor is a middle person that serves to move product from the manufacturer to the market. While some distributors are retail and sell directly to end users, others are merchant-oriented and sell and move products from the manufacturer to wholesalers, that in turn sell to retailers.
The practice of wholesale distribution is a true buying and selling game and can involve risk. It is a game that requires good negotiation skills, a nose for sniffing out the next “hot” item in the particular category you are known for, and good salesmanship to find the right buyers. The basic premise is to buy the product at a low price, then make a profit by tacking on a low enough dollar amount that it still makes the product financially attractive to your end customers.
In the case of many products, as a distributor you do not need to take physical possession of the product – and therefore could run this type of business out of your home and not require a physical office or warehouse facility. Those who work in the distribution game will tell you that it is not always the easiest business to succeed in. You need to have a varied skill set that includes salesmanship, cold calling abilities, an ear to the ground on trends, be willing to take risks, and research skills to find new product sources as well as new customers for the products you find.
One of the biggest risks in being a distributor is when a manufacturer implements consolidation, basically forcing you to take and sell some of their other products in order to earn the rights to distribute the product that you want. To combat consolidation, some smaller independent distributors choose to serve the specialty market instead of trying to compete with larger chains. They pick up the the small pieces that the larger distributors don’t take, and then serve the smaller customers that the larger companies do not see as being as profitable to them.
Sometimes starting a distribution company requires a greet deal of capital, especially if you are buying an existing distributor or trying to start a new distributorship from scratch. A third and more risky option is to buy into a new opportunity that does not have a track record and may not succeed. You, as a business person, do not want to be left holding the bag if the company providing the products, or the products themselves, fail.
Just like any new business or start-up, it can take a few years for a distribution business to become profitable. That is not say that it will always take that long for your distributor business from home to make money. There are plenty of cases where a company was in the right place at the right time and took off within months of starting. It is all about finding the right product that is in demand at the right time.
Again, like other businesses that you want to start, you do not want to use your home address or a Post Office Box as your business address, basically because it looks extremely unprofessional. A virtual office could be a great solution for you, but you might be better served with a shared office space that gives you not just a professional business address at a prestigious location, but also access to meeting rooms and office machines that you do not have to buy. This is especially true since a great deal of paperwork is still done by fax and direct mail.