Find out if you can and should start buying wholesale supplies for your craft business.
What are the biggest pros and cons of taking this step…
One of the expenses of running a craft business from home is buying raw materials. Just like you may look for discounted rates for developing your infrastructure like buying machinery and office furniture, you may also want to consider cutting down on the running expenses of your home business.
Buying in wholesale saves money in the long run. There is usually a sharp price difference between retail and wholesale prices. You must however wait to consider a few points before deciding to buy in wholesale.
There are certain disadvantages to buying supplies in bulk which you should consider.
- Buying in bulk can set your budget back by utilising a large portion of your available cash flow.
- Many wholesalers usually require you to buy the materials in a large quantity before the willing to provide you with the wholesale rates.
- You may either feel that your business is not extensive enough to warrant this large supply of raw material or that your capital cash flow does not permit it. It is all right if this is the case. You can always decide this later.
- Buying in wholesale can also require you to fulfil certain business requirements. You will require the tax identification number which shows that you have registered business. You will also require a sales tax identification number as you will be exempt from being charged a sales tax while purchasing raw materials. But this same tax will be levied on your customers when they buy from you. You will need to submit this tax to your state on a quarterly basis.
- The final benefit of buying craft supplies in wholesale is that you save money over the long run. For this purpose you will need to evaluate your savings over a long-term.
You will need to anticipate the sale for a particular craft in order to justify buying supplies for it in wholesale. For this reason it is advisable to first test the market of your craft and determining the demand for it.
If you buy a lot of material for a particular craft beforehand and are not able to make the matching amount of sales you may just be left with a lot of unused raw materials which will be a waste of your finances.
There are situations when the profit margin does not change by much when buying raw materials at a wholesale price. In such a case it may make more sense to buy your supplies in retail from a favorite craft store. Not only can you afford to be more choosy but you can also conserve your cash flow.
The reasons for buying in wholesale are thus:
- If you feel that you can save a lot on the cost of making your craft are buying supplies for it in wholesale.
- If you feel that the supplies of raw materials that you need is erratic at your local craft store. If there is uncertainty involved of whether or not you will find the supplies you need at a particular point of time in the year, you may choose to purchase it in bulk.
- If the supplies your craft are not available easily or buying them requires you to make multiple time consuming transactions, then you may choose to purchase them at wholesale rates at one time.
- Once you can be fairly sure that you will save on both time and money by buying a supplies in wholesale then that is the right time for you to start buying for your business in bulk.