Startup Concern

Discussion in 'Starting a Business' started by DCAggs, Oct 15, 2013.

  1. DCAggs

    DCAggs
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    Morning all

    I am currently employed by a company who are a reseller, they do not own anything but instead use relationships to get the best prices and great sales techniques to generate millions of enquiries.

    One of our current customers set up 2 years ago and he currently has an estimated profit of £200,000 this year alone and he has approached similarly to what we do but online. He basically has his website at the top of google, enquiries come over, he comes to us, gets his price, puts his margin on and makes the sale.

    I am looking at doing exactly the same thing, as I have experience in the industry I can go direct to the supplier rather than pay the middleman fees like he does so I feel I can have an added bonus in this area.

    My only concerns are is that margins are VERY very slim in this industry, average 9-10%.

    If I make £20 per sale, how much of that would be tax in the uk? Whats the minimum I need to make to ensure i'm not making a loss?

    Once thats cleared, I can calculate my monthly costings and go from there. I'll be aiming for 10 deliveries a month in the first 2-3 months while the website is being setup and optimised and from then on in itll be my target for 1 day which should generate approx £500 profit per month going onto £1500 per month in the following year. That is excluding tax and any other costs besides my cost from the supplier.

    What do I need to be careful of? I'm in the UK by the way.

    Thanks alot.
     
  2. Changed Creation

    Changed Creation
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    Is it possible to give the website of the business you are currently working in, so that one can have a better understanding of what it is you want to do?
     
  3. Fergal

    Fergal
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    Welcome to Business Advice Forum DCAggs and thanks for posting your business questions. The taxes you will be obliged to pay will depend on the profit you make, not on your sales. Hence, if you don't make a profit, you won't really have to worry about taxes.

    It sounds like you have a great opportunity. You say that margins are tight in the business, but the fact that you can purchase directly from the supplier, will help you to get better margins than your direct competitors, which will give you a very strong competitive advantage.

    That really will depend on your fixed costs. For example if it costs £4,000 to set up your website and cover your ongoing costs for a year, and every sale you make generates a gross profit of £20, you will need to make 200 sales in order to break even. Does that clarify the issue for you or do you have further questions on that?

    Good luck with it, it sounds like a very exciting project.
     
  4. amwarner

    amwarner
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    I'm confused ... what is your company resellers of? It is just that they get items at a discounted price and then go back and find buyers to resell the items to? Please elaborate.
     
  5. DCAggs

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    My apologies for the brief message and also the long reply. My product is building materials, the demand is massive as, like i say, my current employer turns over 80m a year doing it but theyve been too slow to react to the market of people searching this stuff online. People dont have the time to drive to a builders merchant to get a price and sprt delivery etc. my only issue is it will mean leaving a well paid job at the moment as they are unlikely to allow me to be a competitor?
     

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