The wholesale distribution business launch plan
Every step from deciding to opening, in the order it happens, shaped to your situation, with your own numbers beside it. About 48 steps in 8 phases, 21 of them specific to a wholesale distribution business. Free to read; ticking steps off and putting in your own numbers come with membership.
The plan48 steps
- 01Not started0/6Fold
Decide with the numbersa week or two
Before a dollar is spent. Most expensive mistakes happen here, and this phase costs nothing.
Wholesale distribution makes money on spread and turns, not markup.
Typical for one unit is $560,000 to $3,030,000 a year; the owner keeps 14 to 19% of it before paying themselves. If that band does not cover what you need, that is the signal to pause and look again.
~50% survive 5 years. Roughly half of all new U.S. businesses reach five years.
Twelve questions about your money, time, experience and temperament, scored. Then the 5 questions this business asks of its owner, about the hours and the work. Answer both before you spend a dollar.
Rule of thumb: if you can buy a distributor with transferable exclusive lines, a diversified customer base, and clean, fast-turning inventory, buying buys you years of supplier and customer... Answer it in your situation above and the plan reshapes.
Customers, prices, rent, staff pay, what it costs to open. We filled in typical numbers; change what you know and everything on this page follows.
- 02Not started0/5Open
Plan the moneya week
What it costs to open, where the money comes from, and the cushion that keeps you alive until the business pays for itself.
Opening a distributor is mostly a bet on stock: most of the money goes onto the shelves as inventory before the first invoice goes out.
The itemized cost to open9 lines
- Opening stock at cost: $83,000 to $166,000One to two months of cost of goods (12 to 6 turns a year); supplier terms can carry part of it
- Forklift & pallet jacks: $400 to $19,000Pallet jacks only at the low end; a used forklift once you rack pallets high
- Pallet racking, installation & office furniture: $5,000 to $25,000About 60 used to 150 new pallet positions, anchored by an installer
- Delivery vehicles (lease down payments): $4,000 to $8,000A leased cargo van, plus a leased box truck at the high end; buying a new van outright costs about $43,500 to $58,000
- Scanners, label printer, computers & cameras: $4,000 to $16,000
- LED lighting upgrade: $0 to $13,500Only if the building needs it; ask the landlord to fund it first
- Building sign & vehicle graphics: $1,000 to $24,000
- Permits, deposits, insurance & professional fees: $10,000 to $37,000Rack permit, lease and utility deposits, licenses, first premiums, legal
- Initial working capital: $25,000 to $120,000Payroll and rent through the ramp, plus the gap between paying suppliers and collecting from customers on 30-day terms; matching supplier terms to customer...
Costs start on day one; customers take months. Map the first twelve months of cash so the business does not run out of money while it is getting going.
The business has to earn your pay like any other bill. Set it in your numbers and watch the month it move.
How deals in this business are financed5 lines
- SBA 7(a) loan (Up to $5M · up to 10 yr (25 with real estate) · 75-85% government-guaranteed)Funds an acquisition, the opening stock, equipment and working capital in one loan.
- Asset-based line of credit (Revolving · borrowing base reported monthly)A revolving line secured by your receivables and inventory, so it grows as sales grow.
- Supplier terms (Net 30 to 60 · early-pay discounts common)Net 30 to 60 day terms from your manufacturers are the cheapest money you will get: they carry part of your stock until your own customers pay.
- Equipment financing & truck leases (Secured by the equipment · 3-7 yr)Finance forklifts and racking against the equipment itself and lease the delivery trucks, which keeps your cash for stock, where it earns more.
- Seller financing (Often 5-20% of price · 3-7 yr)Common when buying an existing distributor.
Most new shops pair an with 10 to 20% of your own cash. Know the monthly payment before you look at a single space.
Before you shop. A lender tells you what they would fund, what they need from you (credit, your cash in, a plan with numbers), and a pre-qualification letter makes a landlord or a seller take you seriously.
- 03Not started0/4Open
Set up the companya day or two
A day of paperwork, and it has to come before the space: a lease, a loan application and every permit are in the company’s name.
Your state’s business name search, the trademark register, and the domain, before the name is on a sign, a van, or a lease.
A , an , and the S-corporation election each change what you keep and what you are exposed to. Compare them with the numbers, confirm with a CPA and an attorney, then file with your state.
After:The is free from the IRS in minutes once the company exists. The bank account needs both. Keep business money separate from day one.
After:Pick the accounting software and connect the bank account now, so every cost of opening is captured and the numbers you later are real.
- 04Not started0/5Open
Find and secure the spaceone to three months
A distributor’s "location" is its footprint, the territory a DC can serve fast and cheap.
What decides it for this business: dense business / retail customer base, highway, rail & freight access, affordable warehouse space, proximity to suppliers / ports, available warehouse pool.
One call to the planning desk with the address: is this use allowed there, and what will it take (, permits, fire sign-off)? A space that needs a change of use can add months.
Rent, free months for the , who pays for what, the and the renewals, subject to financing and permits. The lender needs this letter or a draft lease to take your application.
After: ,, renewal options, increase caps, what the landlord adds on top of rent, and what happens if you have to leave. For a location business the lease is part of the purchase price.
After:at minimum; property, workers’ compensation and the rest as the business needs. The landlord asks for a certificate at signing and the lender at closing.
- 05Not started0/2Open
Get the loanfour to eight weeks
Four to eight weeks with an SBA lender, longer if the file is incomplete. Everything else waits on this, so send a complete file.
Your plan with numbers (download it as a PDF from this page), the company’s papers, the or draft lease, the and equipment quotes, your personal financial statement, and proof of the cash you put in.
After:The lender approves against the ; you sign the lease once approved; the loan closes against the signed lease and the insurance certificate. Ask for the to match the or longer.
After:
- 06Not started0/11Open
Permits and the build-outone to three months
A general-merchandise distributor needs fewer licenses than most businesses, but the products you carry can add serious ones, and the warehouse and trucks bring their own rules.
Bind the policies you had quoted before a contractor, a vehicle or a customer is in play. Keep the certificates; the landlord, the lender and the city will ask.
After:Your contractors pull the building, plumbing, electrical and mechanical permits and close them out by inspection. Hold the free rent months for this.
After:Most cities approve exterior signs separately; signs take weeks to make. Order early.
Register your or corporation and get a city or county business license for the warehouse address.
Register with your state tax agency, and give suppliers a resale certificate so you buy stock without paying tax.
Many cities require a permit for storage racking over about 8 ft, and the fire marshal reviews high-piled combustible storage for sprinklers, aisle widths and fire access.
Food needs FDA food facility registration and often a state food warehouse license; alcohol needs a federal wholesaler basic permit and a state license; tobacco, prescription...
Trucks over 10,000 lb in interstate commerce need a USDOT number on the doors and drivers with current DOT medical cards; many states apply the same rules to trucks that never...
Every forklift driver must be trained and evaluated on the truck they drive, and re-evaluated at least every three years.
Fire-marshal review of exits, extinguishers and load, after the build and before the .
After:City sign-off that the building is approved for warehouse use and the storage you plan.
After:
- 07Not started0/10Open
Set up to runduring the build
During the build, so the business runs from day one: the systems, the prices, the people and the routine.
The backbone, tracks stock, turns, buy prices, and orders across every line and DC.
Directs picking, putaway, and cycle counts so the warehouse ships accurately and fast.
A revolving line and clean cash management are not optional, is the constraint.
Invoicing on terms, collecting receivables, and managing days-sales-outstanding.
See the price the the business needs implies, then check it against what the market pays.
Federal plus state withholding, unemployment and workers’ comp registrations once you hire.
After:Wages are the start: , insurance, training time and the hours you stop billing. Owners usually post the jobs a month out and hire two to four weeks before opening so training happens before the doors open.
Early morning: Receiving checks in inbound trucks, stock is put away, and the pick... Daytime: Pickers and packers fill orders, drivers run delivery routes, and... Buying & terms: Buyers negotiate volume prices and vendor terms, place replenishment...
Opening, closing, the sale, the complaint, the cash. One page each. This is the manual a franchise would have sold you.
Free, and it is how most people will find you. Address, hours, photos and the menu or price list, live before opening day; then the sign, the soft opening and the first regulars.
- 08Not started0/5Open
Open and measurethe first ninety days
You own it. Now run it on the numbers.
Friends, neighbors and a short menu or list. Find the problems while the room is forgiving.
Enter the real numbers and see every cost line against the for this business.
(COGS); & inventory turns; Dead stock & obsolescence.
Growth consumes cash before it produces it. Find the rate your own cash funds before you push.
You are building an asset you will eventually sell, and distributors sell well when the supplier lines and the accounts can move with the business.