Business wise, is it ethical, is it legal?
 

Hi everyone.

Im just getting together a business plan for purchasing old stock off a company. Now because they want the best price possible and I dont know the final sale price (varies per item). What I thought was this:

I purchase each item of stock (there are over 50,000 individual items ;) ) for £1 per item.

Now when I go and sell these I make a profit, but pay them a 48% "consultation" fee after tax? That way it ends up at ~50/50 each.

Is it legal and does it have any ramifications ? I know its a question for an accounant really but I need to find another way to put it to them if isn't legal.

Cheers

Stu

Not sure what the problem is. Sounds like the companies in liquidation. You go, you offer what you want (£1 per item) and if they accept it thats up to them.

Why do you need to give them 48%?

Long story but basically its last seasons stuff and they want rid of it because obviously they cant sell it through normal retail channels

OK. But why do you feel the need to give them this consultation fee. you're taking on a risk yourself by buying a huge quantity of things that may not sell at all.

Don't get the 48% bit.. Do you work for the company?

They'll have written off the old stock so can't see why you can't just buy at cost or some agreed lesser value and take your chances or sell the stuff on for them (they keep ownership) and they give you a commission on sales which is less risky for you. Doesn't seem to be anything illegal in that. But I think I have missed something here? What sort of goods are you talking about? Not foodstuffs I assume :) Sounds like fashion accessories? dl

Confused here too.

If you are buying the stock then you are taking the risk. They can only refuse the amount you offer.

I do a similar thing with a company who take a second-hand product in part-ex for their brand new stuff.

They can't be seen to be selling second-hand and also don't need the extra work.

I happened to approach them and they were actually over the moon I had because they needed an outlet and they saved on storage costs.

They even wrote the lot off so it didn't owe them a penny and never wanted a bean off me as long as I could take them off them, even though there is a lot of money to be made.

What will they do with the goods if you don't buy them? That's the big question.

Surely the whole idea of starting the business is to buy at x and sell at y and x needs to be less than y even if your margin is 50% so what? thats business and perfectly normal!

Deoends... Is this guns or plutonium...;)