Saturday, June 11, 2011

The Business Chat - Wholesale buying

Lately I’ve received quite a few emails from readers and colleagues asking advice about wholesale buying and the best prices on silver these days. A couple of you have also asked me to list places where you can buy wholesale.

Buying wholesale is very important if you are trying to make a profit from your craft business. You cannot go to your local craft store, pay retail price for your supplies and think that you can make money, it’s just not going to happen. Once you start doing any volume at all you absolutely must buy wholesale.

That said, I am not going to post wholesale lists for 2 reasons. First, I don’t know where you are. I’m in downtown Toronto and although there are great online options I shop in downtown Toronto. I like to touch and feel my supplies and since that is an option for me I take it. I’m unfamiliar with other locations although I’ve certainly done my share of browsing online.

The second and most important reason I won’t post a list is because it is not always appropriate to buy wholesale. I would hate for someone to see a list of wholesalers and think “wow, cheap supplies, I’m going to buy a cart load.” Just because you can buy wholesale doesn’t mean you should. (If you want to buy wholesale you must be registered as a business. Registering your business is next weeks discussion.)

When you are making jewelry or other crafts as a hobby you can buy whatever you want just because you like it. You go into a store and see something shiny, go ahead, take it home. When you are making jewelry or other crafts as a business you do not have this freedom, you buy what you need when you need it; just because an item in a store is pretty and shiny doesn’t mean it’s going home with you. Making work as a business changes your relationship with your craft. A lot of new businesses (myself included) make the mistake of thinking, “I’m in business I need 1000 of everything”. Wrong. You need to buy enough to sell and no more.

Buying wholesale sometimes encourages people to overbuy (trust me, I know, I still do this all the time but I’m getting better.) Buying a large quantity of any one item is no good if you don’t use them all. 100 toggle clasps may be cheap but if you only use 2 and put 98 on your shelf then those 2 have cost you a lot. Yes you still have the other 98 but if you don’t use them for 2 years then that’s a lot of money sitting on your shelf and not in your bank. In this case you would be better off buying 2 clasps at retail. If you decide that this item is going to be a standard in your inventory, and you have a show coming up, or are selling a lot online, then you should look to buy the item in quantities at a wholesale price.

One of the trickiest parts of running a business is keeping your expenses down. Going to a craft show and selling $2,000 is fantastic, however if you spent $1500 on supplies in order to make inventory before the show then you really haven’t made a profit at all. Of course you still have inventory left over, but now you have inventory sitting on a shelf and no money in the bank.

The bottom line for running a business is that if you are selling a lot, then you can buy a lot and you must buy wholesale. If you are not selling much, then buying in quantity means that you are accumulating a lot of stuff and not a lot of cash. Your expenses are too high and your business is sinking before it’s even really getting started.

So I’m happy to share wholesale information with anyone who emails me. Just make sure that you really need to be buying in large quantities. As shiny and pretty as jewelry supplies are, cash is even prettier.

A last tip, just about every supply store has a bulk buy policy. If you’re spending serious cash, ask for a wholesale discount, usually they say yes.

No comments: