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How much effective capital does it take to open a water-based paint business?

How much capital is needed to open a paint agency is a question that many people are interested in. How much money does a watercolor paint business need? Below are the cost items required to open a paint agency for you.

Opening a paint agent is a business that is known as LESS CAPITAL – HIGH PROFIT. This is absolutely true if you know how the process to become a level 1 or 2 agent of a certain paint company. However, many people are pondering how much capital it takes to open a paint agent. Here are the expenses you need to have.

How much capital does it take to open a paint agency?

To open a level 1 paint agent or a level 2 paint agent is not as difficult as many people think. The amount of capital they initially invest completely depends on their own economic potential. From there make an agreement with the supplier. And depending on your financial ability, you may be eligible to be a level 1 or 2 paint agent.

Usually the amount of capital needed and enough to open a paint agent for you ranges from 30 million to 200 million. Of this capital, you must divide and clearly identify 2 main types of investment capital. That is the initial capital input and the outstanding debt when the customer has not paid for the purchase.

Initial capital input

The initial capital input is the part of the cost you spend to do business. It is the money to buy paint from the company about the place where you do business. However, this capital does not include the cost of risk prevention, the cost of renting premises, storage, staff rental and other expenses to maintain the business operation of the paint agent.

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Open a paint dealer

How much capital does it take to open a paint agency?

Outstanding debt capital

This is the amount of money that is planned in the paint business for the purpose of preventing cases such as customers who owe money, customers who do not pay immediately after purchasing but schedule another time to pay, or customers who are underpaid.

In these situations, you cannot wait for the customer to pay off the debt before importing new goods, but must add this amount to the capital spent when importing goods. You will not be able to wait for the customer to pay the debt before importing the next item, but you will have to add this amount to the capital spent when importing the goods.

In general, the issue of how much money to open a paint agency and how to spend it, you will need to make a detailed financial plan.

The cost for level 1 paint agents: ranges from 80-100 million VND.

This includes the following items:

  • Expenses for opening a showroom or opening a paint shop
  • Employee hiring costs: At a minimum, you need to have delivery staff, sales staff and accounting staff – warehouse (if necessary) to ensure the smooth operation of the paint agent.
  • Marketing expenses (if any): Including money for running ads, money for making banners, prochure,…
  • Working capital: you should always have some cash on hand for incoming goods when orders come in or when your inventory is running low. This is essential to ensure consistency and continuity in the water-based paint business. Because usually the contractor, the owner of the household will pay the paint agent after completing the work or in certain stages. Rarely do they pay right after purchase, so you don’t need to feel strange or uncomfortable.
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Thus, calculate the total capital you have to open a level 1 paint agent about 100-200 million, and a level 2 paint agent about 30-100 million.

However, this is only an estimate, and the reality is that personal finances, paint industry characteristics and your own business ability add or reduce those costs. If you already have the premises, there is no need to pay the rental fee. If you have a wide relationship with contractors, it will reduce advertising investment costs, …

Mechanism of opening paint agents of brands

To know how much capital is required to open a paint agent, you need to understand the company’s mechanism. Currently there are many different paint brands and many types of paint from wall paint to water. Therefore, to be an excellent agent you need to understand the following mechanics:

  • Mechanism for those brands that have tinting machines.
  • Mechanism for those brands that don’t have a color mixer.

General mechanism

  • Sign a contract to be an agent/paint shop
  • Sign a commitment that the amount of sales in a year is the amount collected after deducting all paint discount promotions.
  • Enter the first order as samples and display goods (quantity depends on the regulations of each company)
  • Provide billboards, color catalogs, color fans (color trees), agent price lists, retail price lists….Maximum support for paint dealers to operate smoothly.

Own mechanism

– With paint products with color mixing machine:

  • It is possible to register a color mixing machine and pay a deposit for the machine at the same time as the manufacturer
  • Enter the first order: Now mix the paint and refine the paint color

– For paint products without color mixing machine:

  • Enter the first order: By order pricing or by product structure
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In general, the mechanism of opening a paint agent is not too complicated, but the most important thing is how the agent sells after opening the paint shop.

Effective paint business experience

To open a paint dealer that works well and lasts, you need to do the following:

  • Determine the market area to sell
  • Market demand of that area
  • Amount of initial capital spent
  • Level of working capital for business (orders, debt, etc.)
  • How much profit does a paint brand bring?
  • Is the quality of the paint company I want to be an agent with?
  • Regulations of that paint manufacturer
  • How does the manufacturer’s paint agent support mechanism?
  • Is the price competitive in the market?
  • Brand is strong or weak or newly produced compared to the market
  • Ability to withstand the sales level of your store
  • Must understand what is a house wall paint or water-based paint?
  • How much paint must be used to complete a house; what kind of paint in the house; What kind of paint outside the house….

Should I open a level 1 or level 2 paint agent?

Many people think that opening a level 1 paint agent will enjoy a higher discount. In fact, in the field of paint, level 1 agents will not enjoy the same discount, but they will receive a discount according to the amount of goods sold. The more sales, the higher the sales, the bigger the discount.

Therefore, there are many level 1 agents but cannot compete with level 2 paint agents. Therefore, consider carefully before opening your own paint shop.

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