Build The Profit Engine, Then Grow With It.
The graphic on the left of the image are the three things you need to build into a distribution business to really make money. I call it the Profit Triad. Put the three elements of the triad together and you have a business that is in perfect tune.
Then you put it to work in the exact sequence of growth strategies described on the right. See the spinning engine inside the Growth Strategies model?
Many companies have tried to grow without first making their company scalable by automating as many processes as possible, only to REDUCE their rate of profit. Other, far fewer companies, make their companies as efficient as possible first, and raise their standard 2-3% rate of profit to over 6%, up to 10.5% EBITDA.
How The Most Successful Distributors Grow
- They figure out a core business which they enjoy, can be the best at in the territory or region, and they know they can be efficient at so they can make money at arate of profit that leads the industry.
- They automate as many functions as possible and create a logistics model that is extremely efficient with inventory and logistics costs.
- They apply the growth model in the exact sequence described here:
The Sound Growth Progression:
1.Maximize Core Customer Retention
2.Get More Business from Core Customers
3.Take Share from Competitors Customers
5.Get High Early Share of The Fastest Growing Segments
6.Expand into Adjacent Markets
1.New Customer Types
2.New Product Lines
4.New Store Formats
5.New Channels of Distribution
6.Different Value Chain Position
7. After adding Adjacencies, They Step back, Redefine the Core, and Redefine Opportunities