4 steps to wholesale
You’re ready to start wholesaling. But do you have everything in place to be successful? Here’s where you need to start:
Step 1. Register Your Company Correctly
This sounds basic but it’s a big one. You’re putting your products out into the world and you have no control over who uses them or how they’re used. Legally, you’re on the hook if someone is injured or damaged by them. The best way to protect your (ahem) assets is by registering your company correctly. It ensures that you won’t be personally liable for your company debts. That means lawsuits and creditors can only come after the company bank account and not your personal one. Bonus: you can save a lot in taxes by picking the right entity.
Step 2. Protect Your Brand with a Trademark
I’m guessing you put a lot of time + money into creating your brand. Everything from hiring graphic designers for your logo and product packaging, planning out your website, running your social media, and pitching buyers. Trademarks are your company's #1 financial asset because they protect your brand and ensure that you’re the only one who can use it. Without a trademark, any copycat can see your beautiful product on the shelf and start the exact same company.
Step 3. Label Your Products Correctly
All products sold to consumers must be labeled correctly by the manufacturer. If you’re selling apparel, cosmetic, food, children’s, or imported goods, you have extra regulations to follow about product labels, record keeping, and testing.
Step 4. Get Your Wholesale Contracts in Line
Relax. I’m not asking you to hand buyers a 10 page contract to sign. But you do need to cover the basics on your order form or website (anywhere buyers place orders.) Here’s what you need to cover:
Minimums: The minimum amount that buyers need to purchase in order to receive wholesale pricing. It should be enough of each to create a robust display in stores but not so much that it puts off first time buyers who aren’t sure how your product will perform in stores.
Reorder Minimums: The minimum amount that repeat buyers need to purchase to replenish their orders. Typically 1/2 or 1/3 of the regular minimum.
Payment Terms: What cards do you accept? Do you accept PayPal? Venmo? Checks? Net30?
Lead Time: How long will it take you from order to ship.
Shipping Policies: Where are your products shipping from? Are they shipping via a specific carrier? Who pays for shipping (typically the buyer)? Are your products FOB (aka Free on Board, which means you’re not legally liable for any damages that happen once your products hit the FOB point.)
Return Policy: Will you return products that are damaged in shipping? What about products that aren’t selling on shelves? Or that the buyer has changed their mind about? Think about what time periods, reasons, and restocking fees you’re comfortable with.