###Guide to starting a wholesale B&M eliquid business

##Introduction:

I occasionally see posts regarding starting an eliquid business and wanted to create a comprehensive guide that people can refer to when considering starting their own business. I will share my experiences and what I have done over the last 2 ½ years of running a wholesale eliquid manufacturing business.

##Business plan:

When starting any kind of business, the best thing to do is write a comprehensive business plan. A business plan not only provides as a guide to what you will do, but also will make you question things you would have otherwise not. It is very important to write as detailed of a business plan as possible. A well written business plan may also assist with getting investment funds to start the business (be it a bank, friend/s or family). There are many resources on the web about how to write a good business plan, but this is a good starting point and should not be the end of your education. Business plan.

##Structuring your business:

Your business plan will assist you in deciding how to structure your business, but this will go in the pros and cons of different structuring.

There are basically 3 different types of business structures with subset structures that branch off of the 3. Sole proprietorship, LLC (Limited Liability Company) & Corporation.

A sole proprietorship is by far the easiest and cheapest to get, but provides the least amount of protection to personal assets (cars, money in the bank, house, ect). For a high risk business like manufacturing eliquid, a sole proprietorship is the least recommended. However, if you do decide to structure your business this way, you will need a DBA (doing business as). You can contact your county for more information. Here is a guide to getting a DBA.

The second option is an LLC or LLP (if you have a business partner). An LLC gives your assets a certain amount of protection if you are litigated. Mind you, they will be able to sue the company and take all assets that the company owns. There are many cases out there where the plaintiff continues legal action and eventually gets personal assets as well; so it’s not a guaranteed safety net. LLC costs vary from state to state, some worse than others (like in California, where I live). Here is the guide I used to start my LLC. It’s very simple to do. If you plan to do business as any other entities (multiple different juice lines, under different names), you will again need a DBA.

The third option is probably going to be the least used option because of the cost, employee structuring requirements and paperwork nightmare. A corporation under the law is considered its own entity and provides the most amount of legal protection. If you want to structure for a Corporation, I am not the one to give you advice about it. Please contact your state for further information.

You will need a business banking account to be taken seriously by a lot of B&M vendors. A DBA or your LLC will be able to do this. Go into your preferred bank and inquire about the process of setting up a business bank account.

##Federal and State Taxs:

You will need to get an EIN from the IRS and a reseller’s license from your state board of Equalization. Because you are wholesaling, you will not be responsible for paying sales tax (if your state has sales tax).

##Insurance:

Eliquid can be harmful and if a customer is injured or dies as a result of your product you could be liable. Liability insurance isn’t anything new and any company that produces something the public is going to use usually has it. Eliquid is considered more dangerous than say, broccoli, so the cost is significantly higher. You can google around or contact various insurance agencies to inquire, but many do not cover this product. A wonder company that we use is E-Cigarette Insurance. Contact your potential provide to inquire about costs. This should be a step in your business plan anyways.

##Supplies:

Ok, so you’ve got your kick ass recipes, you’ve figured out your business structuring, you’ve figured out your cost of insurance and you’re pretty ready to rock and roll.

We want to make the most amount of money possible, while providing the best quality product. Some ways to save money are in bottles. Most bottles are of similar quality and you have to make the decision if you want to go with glass or plastic. I have vendors who have preferences either way (some like glass, some like plastic), so I provide both options. A great resource for finding bottles in bulk at the best price possible is Alibaba. Before you get all gun-ho on it, Alibaba can be a tricky place to find the right vendor. Scammers and low quality products lurk around every corner. The best thing you can do after you’ve find the product you think you want is to get a sample sent to you. If they won’t provide a sample, move on, they’re probably trying to hide something from you. Here is a good guide to buying using Alibaba. There are many guides out there, so I recommend reading a few. You’ll also learn as you use it more.

We also want to source bulk VG & PG at the best price. So far, I like dealing with Bulk Apothecary because I’m not ordering 55 gal drums at a time. When/If I need larger quantities I will reevaluate my supplier.

Labels and design: You can hire an expensive graphic designer or you can pay someone on Fiverr $5 to do. It’s up to you and the quality you want. I will say this, the better the label, the more likely you’ll get into stores and the more likely it will sell. I recommend looking into a local printer because turnaround times are quicker and they will work with you to make the best label possible. The costs can be higher, but the product is usually better. Alternatively, many vendors that sell bottles on Alibaba also do labels for cheap and will even prelabel your bottles before arriving; this can be a huge time saver and the quality can be good (as always request samples). Its important that your labels have information on them: nicotine strength, ingredients, Prop 65 warning (California), name, facebook, website (if you have it, otherwise facebook works fine).

Depending on what flavor vendor/s you’re using, you can contact them and signup for a wholesale account. This is where your EIN comes into play and you will be able to get wholesale pricing (usually much better).

##Lets make some fucking money:

Ok, we’ve got it all done, we have our products and we are ready to sell. Get business cards (vista print is the cheapest) and make a line sheet (google it). The best way to get new customers is to go in face to face and ask to speak to the owner or manager. Be nice, be endearing, be smart, be sexy (not really), and be informed. They may ask you a lot of questions and be prepared to answer them fully. Most importantly, go into the shop with your full line, labeled, presteeped & tasting awesome. If you think the recipe is just OK, scrap it. You need your best.

Now I want to explain something. When shops first started to open and there weren’t a lot of eliquid manufacturers out there, they would carry their entire line. They quickly figured out that only a few of the flavors in those lines were good sellers and often had to unload the rest at cost or worse. This has left a bad taste in B&M mouths and they're often scared away by too many flavors. My recommendation is to go in with 3-5 SOLID flavors. If we look at a lot of successful companies, they only started with around 5 flavors (5 Pawns, Space Jam, Cosmic Fog, The Standard, ect). You will probably find that you will only have 1 or 2 best sellers anyways, so more flavors does not = more money.

Befriend the B&M, leave the juice and recommend they leave it on their tasting bar for customers to try before they make a decision (this is where good labels comes in, eye catching) and tell them you will follow up in a few weeks to see what they think. Also leave your line sheet and business card so they can get an idea about pricing structure and how to contact you. Be prepared for rejection, it happens all the time in business and is ok; just move on.

The pricing you should be targeting is 30-35% of retail. Most B&M vendor juice for around $12 for a 15ml and $22 for a 30ml bottle; so this equates to ~$4.00 for a 15ml and ~$7.50 for a 30ml. They aren’t going to consider buying your liquid (no matter how good), unless you can provide a good profit margin for them.

###End

I hope you enjoyed this and it helps you if you’re considering starting a company. It isn't easy and it takes a lot but being your own boss is one of the best/worst feelings in the world. This is just a starting point and does not cover everything in detail that you need to do. If you have something to contribute or questions you can always post here or PM me (don’t flood my inbox please).