SOP #55 — Supplier Dependency Check That Stopped a $200k Deal

SOP #55 — Supplier Dependency Check That Stopped a $200k Deal

Dropshipping store, $16k/mo, listed at $200k. The numbers were real. The risk was not in the P&L. Procedure:

1. Map every supplier — request the actual supplier contracts and order history.
2. Compute concentration — what share of cost of goods runs through one supplier. Pass if under 40%. Result: 100% through one unverified AliExpress seller.
3. Test transferability — can YOU open an account with that supplier at the same pricing? Result: pricing was a personal relationship, not a contract.
4. Model margins at retail-replacement supplier cost.

Outcome: at replacement supplier pricing, net margin fell from 22% to 4%. The business was the seller's relationship, not a transferable asset. We walked. The $200k 'business' was unbuyable.

Save this — run it every deal.