Distributors are the link between the end customers and the manufacturers of a product. As an authorized distributor you’ll usually receive direct training from the manufacturer on how to use its product, and have contractual authorization to sell its products — sometimes with exclusive rights to sell the product in a particular region. This gives your customers the peace of mind knowing that they are working with a company with direct access to the manufacturer.
Defining Your Customers
When becoming a distributor, you will generally sell to three main sources.
◾ Retail businesses: This includes grocery stores, department stores and retail stores.
◾ Retail distributors
◾ Wholesale distributors: There will be times that your customer wants a product that you cannot buy directly from the manufacturer because of already established business agreements with other wholesalers. Selling between wholesale distributors is a common practice.
Starting Your Business
There are three main ways to become an authorized distributor.
◾ Buy an existing business. Do thorough research before buying a company. For example, why does management want to sell? You do not want to buy a company that is selling because it is failing. The big advantage of buying an existing distributor is that you can inherit its current customer base. Furthermore, it helps to get new authorized distribution opportunities.
Start from scratch. You do not have to rely on an existing owner’s reputation. However, it may take time to build up your customer base.
◾ Buy into an existing opportunity. You need to check into the company you are becoming a partner with, as you will be tying your reputation onto its already established reputation, good or bad. However, the right company can mean that you will have a lot of support, training and an already established customer base.
Success Requires Planning
Most companies offering authorized distributor opportunities will require a written business plan as part of the approval process. To write a good plan in general, you need it to be the following five things:
◾ Functional. Ask yourself if it is something that you will actually use to guide your business.
◾ Measurable. Measurable goals such as revenue and cash flow, will help you to keep track of your progress.
◾ Flexible. It needs to be up to date. Consider setting up annual and quarterly meetings to determine how your company is performing in comparison to the goals you have set. If your goals have changed due to the business climate, update them in your business plan.
◾ Reasonable. It is important to put a budget in your business plan. Take into account all of your operating expenses and predicted revenue. Be reasonable when doing so, as it can be difficult to get a large sum of money in a short period of time, especially if you didn’t anticipate it.
◾ Anticipatory. You need to perform a thorough research of your target market and be ready to answer any questions or foresee potential difficulties.
Authorizing Your Business
One of the most important licenses you will need to get is a wholesale license. This will allow you to act as a middleman and buy products wholesale from manufacturers without paying sales tax. Also, you will need to contact the manufacturers and work out deals to distribute their products. Many times this begins with an filling out an online application form on their website or contacting their local sales office.
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Sales & Marketing Team