Once you’ve officially opened your doors — at least legally — the next step is finding suppliers.
The first thing I did when launching Yorktown Tools was reach out to the big suppliers in my area and set up accounts, this is your foundation. Think places like White Cap, Grainger, Ferguson, and others local to the area you plan to serve. If you have several of these companies nearby, set up accounts with all of them.
Next, I recommend opening accounts with the big box stores — Home Depot, Lowe’s — plus Amazon. It seems like a lot, but having multiple options is smart for a few reasons. This helps you conserve your company’s resources — time, money, and convenience. The margins on items from these companies are razor thin at best. All the companies listed thus far sell directly to consumers but it’s important to streamline the process, so just do it!
Tip: Having a pro account or showing your military ID (if applicable) can save you up to 10% on purchases. Also, a lot of these companies have tier systems. The more you buy from them the better pricing they offer.
It takes time to set up accounts and get your tax exemption registered. As a reseller, the reason you set up these accounts isn’t to make big profits on the items you buy from them. It’s to make sure you can give your customers what they need, when they need it. Don’t wait until you’re desperate for a specific item before opening an account.
After you’ve built that foundation, it’s time to start networking. You can use Google and social media to find manufacturers’ representatives — their names, numbers, emails, and job titles. This is key when building real relationships, because that’s what this industry is all about.
You’ll find out pretty quick that if you don’t have a ton of capital, you probably won’t qualify to become a full distributor right away. I reached out to big names like DeWalt, Makita, Milwaukee, Werner, Knaack, and others. Most of them are looking for roughly the same things. The only real difference is the size of the initial purchase order. For example, many want you to have a brick-and-mortar store and an initial buy-in of around $50,000 in tools and accessories, then a set amount every year after that.
If you’ve got the money and you’re confident you have the customer base to support that kind of investment, then go for it. But there’s a middle path that sits between the industry giants and going straight to the manufacturers.
This middle route is probably the safest for most people just starting out. It gives you better margins than the big box stores and requires a lot less upfront investment than dealing directly with manufacturers. Companies like ORS Nasco, Orgill, and others buy in bulk at great prices, take their cut, and then sell to businesses so you can make a profit. They don’t sell directly to customers, which helps small businesses stay competitive.
In the beginning, you’re going to have to hustle and work extremely hard to make this work — just like every other business out there. The goal is to start making a profit immediately so using wholesalers like ORS Nasco or any other creative options until you grow to the point where it makes sense to go direct with manufacturers is the way to do it. The process isn’t going to happen overnight. Even after you land your first manufacturer, you’ll still need support from wholesalers and big box stores.
This industry is all about relationships and whether or not you can solve problems for the people you work with. So get out there, build your community, and focus on building real relationships. Let’s talk about mentors in the next newsletter.
If there is anything I can do to help you or your company please reach out.
757-940-5171