Channels of distribution are some of the most important parts of your business. If you have positive momentum in distribution, your product/service is constantly in demand and you are making money. If you cannot get distribution, finding customers is difficult and costly and your business is overwhelming.
Fans of The Profit are familiar with the 3P’s of business: People, Process and Product. Many business owners and managers do not know how to improve distribution with a focus on these three key components of the business.
The product is the easiest of the three to define. Understanding product positioning is foundational toward building distribution alliances and creating momentum in your distribution and supply chain. Product is important for one main reason: WIIFM (What’s In It For Me?). Why do distribution partners want your product (what do you offer them)? What product or service are you receiving in return (what do they offer you)?
Many people think of a product as something you buy at the store. When you try to increase distribution through alliances, you have to analyze the products (goods and services) that are changing hands each step of the way. When you know what is being offered, you can begin to look at the next two aspects of the three Ps.
Do the processes you currently have in place work well with your distributors? Although every manufacturer wants to be in Wal-Mart, the processes for a distribution partnership with Wal-Mart are extremely limited and can be inconvenient or impossible for small business owners. The Chinese have a saying that you can be “killed with kindness.” If you had Wal-Mart ordering millions of your product at a very low margin, could you survive?
To find the right distribution partnership, you need to understand your processes and make certain that the processes of your distribution channels match up. Niche markets, complementary products, advertising packages and more are all part of the distribution process and matching them up gives you great tools to build a positive distribution network.
If you have the foundation laid, the final act of strengthening and increasing your channels of distribution is developing the people. Although The Profit’s Marcus Lemonis invests in businesses solely for the people, when you are looking for a positive distribution alliance, this is the crowning aspect. If the people are a match, you have a great opportunity to expand you distribution, if not; there still might be room to grow your business.
Great people create fabulous products and develop superior processes.
For more information regarding distribution alliances, and how to determine whether they are positive from the start, contact George Tyler today!