There is only 7 days in a week- Wholesaling pt. II

This is the second part on wholesaling. To see the first part click here.

When posting a question about wholesaling, one thing no one ever seems to address is a production schedule. Sure, your terms and pricing are important, but what is the point of even bothering with that if you can't deliver the goods on time? As a crafter, chances are in the beginning there is only you, and you don't hire out any of your work. If you are also selling elsewhere, at fairs or online, you will also have to figure that into your production schedule.

A production schedule is exactly what it sounds like. How much product can you produce while keeping up with your other business responsibilities in a set period of time? Deadlines are serious business, and if you habitually miss them, you might as well kiss your customers goodbye.

Setting up a production schedule is easy, sticking to it is the hard part. If you are already treating your business like a business, then you are ahead of the game. Even if currently you have no or low sales, to succeed you need to treat this like a job to succeed. I do not work outside the home, so this is my full time job. I don't punch a clock, or insist on working a set amount of hours either. I goal my time instead. At my current pace I work an average of nine hours a day, and a majority of that time is spent marketing or designing because my sales are not at their optimum yet. This is normal or a new business. In those nine hours I achieve the goals that I have set or that day on a consistent basis. You must be meeting and exceeding your realistic daily goals on a consistent basis before you are ready to wholesale.

Once your business begins to boom, you will spend less time on marketing and perhaps on design as well. Here is an example with widgets and doodads. Remember, widgets are less cost effective and take longer to make, doodads are quick and cheap with a high profit. We are assuming both are selling well in your retail outlet.

I start my business. No one has ever heard of me. I maximize my time by marketing 2/3 of my time. I spend the other 1/3 of my time producing and perfecting my design. I average 100 doodads and 50 widgets a week on this schedule. The marketing works and I begin selling 20 widgets and 70 doodads a week through my retail venture. Excited with my success, I seek out and get a wholesale account. They want to order 80 doodads and 45 widgets a week. I sit down to review my production schedule and realize that between wholesale and my current retail sales, I will need to produce 65 widgets and 150 doodads a week. I scale my marketing back to 1/3 of my time, and can now produce 200 doodads and 100 widgets a week. This also leaves extra being produced to cover any surges in sales I may experience.

This is highly simplified. You can also up your production by hiring outside help, even just to cover your office work, shipping, and marketing, though most likely you will be wearing all hats until you experience a modicum of success. So before you wholesale, sit down and figure out your maximum production for a week, and set up a production schedule stating how long a wholesale order will take, and make a nice list so you can produce it when a wholesaler asks.

Payment

If you are ramping up your production schedule to accommodate wholesale, you better make sure you are getting paid. Credit is rarely extended to a first time buyer. Decide on your payment terms up front. Stick to your guns, even if they say they normally only pay on receipt of order. If you decide to accept checks, do not ship the order until the check has cleared. Even some very large businesses are notorious for late payment or bounced checks. With the first payment, insist upon receiving three business references and a copy of the store's resale exemption certificate, if applicable in your state. Keep these in your files to stay legal. Don't forget to charge them shipping! If the first sale goes well, you can extend them credit where they pay you once their order is received or they pay on a certain time line, or you can continue to insist upon payment up front.

That's it for production and payment, come back on Friday for the final installment- Terms and Invoicing!