Value Drivers for Footwear Wholesale
Footwear wholesalers are the middleman between shoe manufacturers and retail companies. Unfortunately, over the last five years, manufacturers began bypassing wholesalers to cut costs. While going straight to the retailers helped manufacturers, it hurt the footwear wholesaling industry. This has significantly impacted footwear wholesalers’ profits. However, as disposable income increases, consumers are shopping more. This has minimized the impact of manufacturers bypassing footwear wholesalers. Although there have been difficulties, footwear wholesalers have managed to increase their overall revenue. These and many other factors impact the value of a footwear wholesale business. In this article, we will discuss many of the key value drivers for footwear wholesale.
It is important to understand the value drivers of a footwear wholesale business. They will impact the value of your business. Consider what drives your business’s value whether you want to buy, sell, or grow your business. Focusing on these value drivers will help maximize the value of your footwear wholesaling business. Peak Business Valuation, business appraiser, considers value drivers when determining the fair market value of a footwear wholesale business. We value companies across the nation including footwear wholesalers. To learn more or receive a business valuation, schedule your free consultation.
Value Drivers for Footwear Wholesale
In the following paragraphs, we discuss key value drivers for footwear wholesale. To better understand the value of your footwear wholesale business, obtain a business valuation. Peak Business Valuation, business appraiser, is here to help!
Maintaining a Strong Business Plan
As we all know, the pandemic significantly affected the supply chain. Unfortunately, this is still a problem for most companies. The footwear wholesale industry is no stranger to this problem. While we cannot change the economic conditions, we can plan and prepare for them. This is where a good business plan comes into play. A company that adapts to the changes and prepares for the worst will survive the droughts. Footwear wholesalers must maintain good communication with their suppliers and retailers throughout this shortage. This is a great value driver to start working on as it will take time to assess needed changes. Keep in mind that a business plan needs to be consistently updated to match the needs and goals of the company.
Technology
Technology plays an important role in the footwear wholesale industry. It allows your business to keep track of processes and delivery, and optimize your systems. While technology is an investment, it will bring value to your footwear wholesale business. Technology has helped shift our world from manual labor to automated processes and systems. This decreases company expenses which increases profits. It is not possible for a footwear wholesaler to avoid the use of technology. Consumers, manufacturers, and retail companies expect communication and updates via technology. When valuing a footwear wholesale business, the business appraiser will analyze your profit margins and operating margins. They will compare your wholesale business to similar footwear wholesalers. For additional questions, schedule a free consultation with Peak Business Valuation.
Key Partnerships/Recurring Revenue
With any business, recurring revenue is a great way to increase the value of your business. One of the best ways to gain recurring revenue is through key partnerships. Business owners who gain and maintain key partnerships will increase their recurring revenue. Wholesaling is only successful when the wholesaler is the main supplier to companies. Because of this, there are many barriers to entry in a footwear wholesale business. This value driver is one of the most difficult to obtain. As a business appraiser values your footwear wholesale business, they will look at your revenue streams. The most valuable revenue streams are recurring revenue.
Efficiency
A footwear wholesale business relies on efficiency to maximize profits. The faster a product can get from point A to point B, the better. However, being efficient also means doing the job correctly. If a footwear wholesaler is moving products fast but damaging them in the process, they are lacking the efficiency factor. A great way to improve efficiency is to properly train your employees. Put systems in place to ensure training is happening and protocols are set. This is an important value driver because efficiency determines profitability. When valuing a footwear wholesaler, the business appraiser will analyze efficiency ratios and profitability ratios.
Product Pricing
To be the best in the business, you have to stay competitive. If you do not offer competitive pricing, your clients may consider switching wholesalers. With issues in the supply chain, manufacturers and wholesalers are struggling to get their supplies. This is causing a rise in prices. While you may not be able to keep your pricing where it once was, keep informed of competitors’ pricing. Ensure you are delivering the best customer service with the best prices you can deliver. Take some time to analyze this value driver before making drastic changes. It is important to stay up to date on industry trends and pricing.
Summary
In conclusion, there are many key value drivers for footwear wholesalers. Each of them impacts the value of your business. A business appraiser will consider these when valuing a footwear business. The footwear wholesale industry is very competitive. It is beneficial to understand the value of your footwear wholesale business whether buying or selling. Obtaining a business valuation will identify the fair market value. It will also show you how to increase its value.
Peak Business Valuation, business appraiser, values footwear wholesalers across the nation. We would love to answer any questions you might have. Let us help you start the process of obtaining your business valuation. Schedule your free consultation below!
Be sure to also check out Valuing a Footwear Wholesaler, How to Value a Footwear Wholesaler, and Valuation Multiples for Footwear Wholesale.
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