Everyone wants to prosper and become successful, and there’s nothing better than starting your own business to improve your life personally and financially. Sometimes, however, the road you are traveling may become a bumpy one. The first couple of years of your distributorship’s existence will be the “training and learning” years, where you encounter the ups and downs of being a new business owner in an industry.
Looking at the positive side, a lot of distributors came before you and are now flooding with advice and inspiration that will help you reach your goals. Here are a few thoughts to keep you going through the startup phase.
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Managing the credit game
The real challenge lies in leveraging that position to your best advantage because every wholesaler plays the middleman position between manufacturer and distributor. While it may appear that you’re powerless being stuck between the two, there’s also a “glass is half full” way to look at the relationship. As a distributor, it’s up to you whether you wanna make the other two businesses work in sync: You’re providing help to the manufacturer to get its products to market, and you’re helping the end-user in obtaining the products they need to run a business.
While playing that important role, one of the main errors a distributor should ignore at all costs is the extension of credit to end-users. This occurs when one or more of your customers' requests extended payment terms on their invoices, yet your manufacturers are asking for their own payment terms on their end. You can ignore this by being particular about checking credit references, careful while explaining your payment terms to new customers, and diligent about not letting your receivables become too old.
The different part of the credit issue is the end-user who purchases too much and leaves you “uncovered” (meaning one customer owes too big of a percentage of your receivables). You can ignore this by setting a proper credit limit upfront, then reviewing the customer’s account in whatever time frame works best for you. Credit limits can then rise depending on the customer’s payment history.
Clearing the hurdles
One of your firm’s biggest challenges is minimizing the time between receipt of a customer order and receipt of the goods from the manufacturer or supplier. To work through it, you won't only have to pressure suppliers to fulfill orders faster but also provides realistic time frames (such as “allow two to four weeks for delivery”) to customers. To guarantee that those customers are well taken care of in the interim—and on all future orders, you should impress on your staff the importance of impeccable customer service.
Good advice to heed
We advise both new and growing distributors to pay attention to consumer tastes and buying shifts—both of which can quickly derail even the best-laid business plans. “Keep an eye on economic variations, what people are willing to spend, and other things that could remarkably impact your business,” says our distributor.
Knowing what your strengths and weaknesses are—and then rounding out those attributes with either in-house or outsourced support/help—goes a very long way in order to help businesses get off of the ground and stay put in growth mode, I don't think you want to come across all the answers at the beginning, so just trust yourself that if your idea is good, it probably is. For us, it was one baby step at a time, and before we knew it, we were selling loads of it.
Even in today’s technology-oriented world—where users can get new sources of products with just a simple click of a mouse—relationships remain a powerful foundational element of any distributor-customer deal. As the world gets larger, it really gets smaller and flatter. So while someone can do a deal directly with a Haldiram distributor in India, the reality is that the customer may never hear from that source again once they’ve paid for the merchandise. You shouldn’t be focusing on being the low-price leader, you should be putting an effort into building strong relationships. That energy will be well spent over the long run.
Keep Inventory Under Control And Automate
As a distributor, you may want to stock up more to complete orders. Nonetheless, large stock and bigger volumes are often not the same things. While you may be buying and selling greater stock volumes, it is still important not to stock more than you need. Inventory calculations such as ushering time, reorder level, and safety stock appeal to distribution business as well. Ensuring you have no deadstock can in itself help you turn a profit.
Don’t Use Price To Compete
As a retailer, you can provide good discounts on products that make your offering more flourishing. Rather than reducing your price offering, compete on customer service and customer satisfaction. Aim to deliver earlier than the promised timeline. Keep your order history on the track and send alerts to your buyers periodically to make repeat purchases from you.