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Considerations when starting your own distribution business

There are a number of factors you need to consider when starting up your own distribution business. We’ve put together an overview below to help you get started.

Your business – wholesaler or end-user?

First and foremost you’ll need to decide what sort of distributor you’ll be, whether you’ll act as a wholesaler delivering stock to retailers, or whether you’ll distribute items straight to customers or end-users.

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One product or many?

Another key consideration is whether you’ll be distributing a single item or many. Are you aiming to have a few larger customers or concentrate on supplying smaller independent retailers? Perhaps there is a product you have particular knowledge of, like organic baby food, that you could turn to good use, helping to fill a niche in the market. As a concentration of ownership has taken place in the distribution business in recent years, leading to fewer national operators, opportunities have opened up in specialist markets, in particular, those catering to the needs of smaller businesses.

Your plan of action

Write a plan to give you clarity about the direction of the business. From an overarching strategy to the specifics of what products you’ll distribute, how and to whom. A plan will help get you started and set you off on the right road to progressing your business.

Your paperwork

Another key consideration in setting up your distribution business is to ensure you have all the correct paperwork in place, from registering your business to having the right licences and insurances policies. If you’re not sure how to get started there is lots of advice online for start-ups and small businesses.

Your marketing

From advertising in trade publications to setting up a website for your business, marketing will be key to raising the profile of your business with your prospective customers. Also, take the time to build up helpful business contacts from your local chambers of commerce to relevant trade associations.

Your vehicles

Of course, a huge consideration for you will be your vehicles. Whether it’s a single second-hand vehicle or several new vehicles, you’ll need to consider factors including any special requirements such as refrigeration equipment, security, fuel efficiency and maintenance costs, to name but a few.  Buying a vehicle at auction that has belonged to a larger respected fleet, can be a cost-effective means of building up your fleet with vehicles that have been well maintained.

Your insurance

Insurance is a key area of expense for all new businesses. If you have employees, then employers Liability Insurance is a must, and public liability insurance is highly recommended too. You may want to consider product liability insurance too. However, fleet insurance will be particularly helpful to you as it can cover multiple drivers and vehicles in one policy – a key benefit in your chosen sector. It’s a particularly flexible policy and can cover bikes, cars, and vans, small fleets of fewer than 5 vehicles or larger fleets of up to 500 vehicles – meaning it can be tailored to meet your specific needs. In fact the more vehicles you cover, the cheaper each vehicle is to cover, so as your business grows, your costs per each vehicle could even decrease. To find the right insurance for your distribution business, get a fleet insurance quote from a broker.

So there you have a few factors you need to bear in mind when setting up your own distribution business. Although it’s not an all-embracing list, we hope it will give you some pointers on how to get started in the distribution business and the key areas you need to consider. We hope your new venture will be underway soon.

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