Starting up my own shop, personal loan v business loan?

ajc18

I'm trying to start up my own shop in my local area, as a joint venture with my husband, selling specialist running gear. We have taken "advice" from our local small business enterprise service (which consisted of "ring stockists and ask for their price lists then we will do a business plan".....multinational companies just don't do business this way!) and now we are stuck.


We need funding, to get this we need a business plan to take to the bank, to get a business plan we need costing and prices of items...however the companies we wish to deal with such as Asics, Brooks, New Balance, Saucony...all keep coming back with the same answer "who else do you have open trading accounts with, get back to us when you have more people onboard".


One company is willing to come to see our premises which we have identified but we are not in a position to sign up to a 3 year lease until we have stock to sell and have our costings so essentially we have no premises until we sign a lease, but we cant do this until we know we have stock to sell.


The companies wont give us these price list details seemingly until we are trading (one has specified no opening of an account until we already have 3 open accounts with other brands!)


So....do we just go and take out personal loans which will not require any business plans and therefore get over the stumbling block of not getting price lists?? My main concern with this is how on earth do we know if we have a viable business without these crucial numbers....has anyone been here, has anyone any advice to help us achieve this? thanks in anticipation!

Pennywise

Most major brands simply won't supply to small unknown start-ups.

The big boys will also usually require relatively high minimum order levels, not just you having to take a specific minimum number of each product, but often they'll insist you take on the full product range and also that you purchase the accompanying POS and marketing materials too. All in all, they're looking for you to spend thousands per order.

The usual way to get around this is to start up with other, less quality-named suppliers who are more open to smaller orders and start-ups, to get a foot-hold and then you transition over to the main brands as and when you can.

Rome wasn't built in a day.

ajc18

Thanks Pennywise, that certainly makes sense. I guess we are going to have to pursue this from a different angle to start with. May I ask, do you have experience in this area? Is there any advice you would give a newbie who is approaching a brand as to what we should be saying? For example is a "cold call" saying "Hi I was wondering how I go about opening an account with <insert brand> and can we meet to discuss your current products/prices/range" to amateurish?? Thanks again

Pennywise

Depends which sector you're thinking about.

There are usually annual trade shows for most sectors. For example, there are a couple of yearly toy fairs where all the main suppliers have a stand showing off their product range and new lines, usually with several merchandisers who are there to talk to potential buyers. You should find out where they are, book yourself in and go along to any that are relevant to your plans. Very good for picking up business cards of their sales and merchandising staff.

There are also sectors which have wholesalers and distributors, specifically aimed at the smaller outlets who aren't big enough for accounts directly with the manufacturers/importers.

Nothing wrong with phoning up the manufacturer and asking if/how you'd be able to start selling their stuff. At least you'd know if there was hope in getting them to supply you. Why worry about looking amateurish - what have you got to lose?

paddyrg

They may not set up accounts, but if you turn up with cash will they sell to you wholesale on a cash basis?

ajc18

Well, this is what we were hoping however for us to place an order we need prices and they seem to want to put lots of obstacles in the way of a new business such as "I'd need to view your premises first", "which other brands are you with" etc etc. However now Im wondering if the reason behind seeing premises is mainly for them to visualise their marketing in your store as Pennywise has mentioned, and not so much about us as a shop/new business! Have been looking online for Irish/UK wholesale distributors and trade shows (we are in N.Ireland), any possible resources for where to find tradeshows for the running apparel market? Thanks in advance, great advice so far and proving fruitful

BakerBoy

ajc18 wrote: »

Thanks Pennywise, that certainly makes sense. I guess we are going to have to pursue this from a different angle to start with.

One angle would be to look for a similar business that is for sale. Look at the range of products they sell and what %GP they make. That will allow you to write your business plan.

BakerBoy

Also try and get hold of some trade publications for the sector - they will often have new products in them which tell you trade price Vs retail price.

ajc18

Thanks BakerBoy, that is certainly a new angle I hadn't considered and would give us more info about the area of business itself. We know our gear as we are both runners and we know the local market is very very thin on the ground hence (like all newbie businesses) we believe "there is a gap in the market", but that's based on personal opinion of what we feel we would like to see.....but the business side is all new to us

ajc18

BakerBoy wrote: »

Also try and get hold of some trade publications for the sector - they will often have new products in them which tell you trade price Vs retail price.

BakerBoy this is exactly what we have been searching for, any thoughts on where we might be able to source something like this?

BakerBoy

If the business side is new to you then I would strongly recommend taking a look at something like School for Startups. They offer very good courses on the steps you need to take when starting, and they are often govt. funded.