Q: I’m in the process of setting up an online business selling educational toys. I’ve set myself up as a sole trader, set up my website and enabled it as an online store. Unfortunately I’ve run into a Catch 22 situation because I can’t start trading without stock, and as I’m not trading online I worry about looking like a Mickey Mouse operation to the very companies I’m looking to buy the much needed stock from. Most of my targeted suppliers are on mainland Europe. What can I do to make it clear that I’m a reputable business, and is my sole trader status going to cause me problems?


A: Operating as a sole trader isn’t necessarily a barrier to being taken seriously by suppliers, and there are a lot of advantages to it. What you’re experiencing at the moment is something that a lot of fledgling businesses go through, and there are some things that you can do to establish your credibility as a legitimate business.


The first thing to do is to get a VAT number. You mention that your suppliers are based in Europe, and many European businesses won’t do business with you unless you have one. A VAT number will allow the supplier to verify your business. As you haven’t started trading yet you probably don’t have one, and if your projected turnover for your goods is less than €75,000 you don’t require one by law. However, you can voluntarily sign up for one which would probably be especially helpful in your case.


Another important thing to bear in mind is the maxim money talks. It may be difficult for you to get goods on credit at this early stage, but if you’re able to pay up front most suppliers will have no problem dealing with you. Remember, suppliers are in business too and it’s in their own interests to supply to you. If you don’t have the cash flow available to pay up front, you may have to start trading with a smaller range of products and expand as you build up more favourable relationships with your suppliers.


Even if a company tells you that they require cash up front now, ask them what their criteria is for instalment plans further down the road. Not only is this useful information, it establishes that you are taking your business seriously and that you’re in it for the long haul. It’s a statement of intent.


If you’re still unsure, don’t be afraid to contact them directly. Although it can be intimidating approaching major suppliers as a sole trader, most companies will be happy to tell you exactly what they require from prospective business partners. Chances are they’ve dealt with people in similar situations before, or perhaps been in that situation themselves. We’ve all got to start somewhere!


Best of luck in your business endeavours.


Declan Dolan


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