Starting a new business

[LunaL]

I would like to sell branded children’s toys and get them dropshipped.

I have talked to a big national company that is willing to fulfill my orders when they come in. The person I talked to said that they require a commitment of £100k turnover in a year.

I said I think we will more than clear that in 12 months.

He is now asking for me to share more about my website. How long it’s been active, URL, turnover etc?

I don't know what to do as I am just starting my business. I am in the process of setting up my website. Do I wait until it's ready to go live? Do I tell him we are just starting up? Will that scare him and make him run away? What about turnover? Do I do an estimated one, wait for some orders or lie about it? Or can I not really do that? Would that be fraud? With the products I can get through this deal I think I will clear the 100k mark a year.

As I haven't started my business yet I haven't registered my business yet. I live in the UK and this would be a trade deal for the uk. Do I need to register my business before I open it? Is registering your business than registering with the whole VAT thing? When do I start paying VAT in the uk?

He wants my company details to run an Credit Check to open an account. What information does he need for this? What will show up?

I don't know why he wants to do a check as I was going to pay each time I get an order.

 

[ecommerce84]

Hi,

When the person says they will require a commitment of £100k turnover per year, are they expecting your business to turn over £100k per year or are they expecting you to spend £100k a year with them?

Have you sold online before? It’s very tough and driving substantial traffic to a new website requires a marketing budget in the tens of thousands at least. It cannot be done from the off simply by using social media, word of mouth etc.

Have you done any kind of business plan - even a basic one with what you expect to sell, your expected turnover, your expected margins, costs etc?

 

[WaveJumper]

I hate to be negative to anyone’s new venture, but to be planning to sell in excess of 100k worth of product in your first year of trading is going to be a very tall order, unless of course the items are very high priced.

Online selling is a tough market place and you will be competing I assume with more well established players in your given market. Personally I think you need to walk before you run here, get your site set up etc. so at least you have something to show potential new suppliers.

If you have not already got a business or details to share with this supplier you may well have to be honest with them and come clean especially if you business model is relying on their product you need to know either way now if they will supply before you go to a lot of expense setting things up.

I do wish you the best of luck

 

[Maxwell83]

Agreed - you need to learn to walk first. He wants to see £100k t/o so he knows that you know what you're doing and have some chance of being around in 3 months. A £100k t/o is a pretty low bar, so in his mind, he's not asking for a lot. Just a minimal level of experience.

No point in lying - he will know how long your company has been set up, he will see that no accounts have been filed so no turnover, he can check when the website became active, he can even get an idea of the level of traffic going to the website.

If you lie you'll get caught out, and the deal is dead forever.

You have to be honest - he'll probably say 'no thanks' but at least you haven't burned that bridge and can re-approach him later.

 

[Stas Lawicki]

Congratulations on starting your new business. A couple of tips you might find useful.

Do a business plan - it doesn't need to be overly complicated but do some research into competitors and the marketplace you plan to work in, crunch some realistic sales numbers, think about costs and things needed like staff, logistics, capital etc and come up with a reasoned plan.

Registering a business is a piece of cake and is done in minutes. If it's just you, have a chat to an accountant about the best options that suit you - it might well be a LTD company.

Registering for VAT isn't necessary unless you turnover more than 85k in any 12month period. Again think about the correct structure having spoken with an accountant, you pay and claim VAT.

Get an accountant! - a local friendly one that is happy to share ideas and thoughts.

As for the credit check - your supplier wont find anything. You haven't traded, you have no credit and bank accounts connected with the business and therefore you wouldn't have built up any credit profile. This may or may no preclude your from being a re-seller but it will limit you in credit options when buying stock or for invoicing.

Finally. Try to avoid lying. Some things are very easy to find out and if you want to be taken seriously and have lasting, trustworthy relationships then honesty is a good place to start. Some will disagree with this statement, and so they can, but who likes dealing with a liar? I know plenty of people/businesses who BS their way into situations. Sometimes it works for them, sometimes it doesn't. But once those bridges are burnt....etc etc.

Follow what you think is right. I don't know you or your business and it could be you'll do a lot more than £100k. A friend of mine started a gardening business only a year ago and is turning over a great deal of money, employing people and managing a business all having started with nothing - and I do mean nothing! Work hard, make the right connections and with a bit of luck you'll do well.