External factors mainly refer to the occupation of dealers' funds, including:

  1. Retailers' occupation of dealers' funds With the development of new retail formats, especially the rapid rise of chain retail enterprises, these terminal retail enterprises have gained increasing bargaining power and firmly control suppliers. Foreign retail giants like Carrefour and Walmart have gradually increased their stores in China, while local retail giants are also expanding rapidly, such as Shanghai's Nonggongshang and Lianhua, and Wuhan's Zhongshang Group and Zhongbei Group. Even in some second-tier cities, there are leading chain commercial enterprises. These retail enterprises are expanding rapidly, and where does the expansion capital come from? To a large extent, it comes from occupying suppliers' funds. Retailers typically occupy funds through methods such as long payment terms (Carrefour generally has 60 or even 90 days), sponsorship fees for new store openings, delayed normal settlement periods for new stores, entry fees for new stores, and initial stock for new stores (Walmart's first order is completely free). Retailers keep opening new stores, and if you want to continue doing business with them, you have to keep "supporting" them. If you don't support them, there are plenty of other suppliers waiting to "support" them. So, to maintain market share, you have to keep "supporting" retailers. Some retail enterprises simply mandate that if you do business with them, you must support their new store openings. This "support" essentially means paying fees and having payments delayed, with cash flowing into the retailers' hands. The more stores a retailer has, the greater the capital pressure on dealers. Currently, as retail enterprises are in a period of rapid expansion, suppliers' funds are being occupied without hesitation, and dealers' cash inflows are decreasing. On the other hand, due to the increase in retail outlets in various regions, single-store sales performance is deteriorating, and the return on capital is also declining. Although a lot of capital is occupied, profits are meager, and it is difficult to do business well without strong financial strength.
  2. Manufacturers' seizure of dealers' funds Dealers often say: "In previous years, as long as you opened a storefront, manufacturers would give you goods for free, and you could pay after selling. It didn't tie up capital, and profits were high." Nowadays, due to the lack of commercial credit, companies are no longer willing to sell on credit. Even small enterprises in the industry generally require cash on delivery, preferring to give up profits rather than sell on credit. Dealers must pay cash to purchase goods. Some well-known large enterprises provide credit limits, but they usually have purchase tasks far exceeding the market's actual digestion capacity, and they are very strict about capital requirements. Payment must be made by the credit period, regardless of whether inventory is digested. After payment, a large amount of goods remains piled up in the dealer's warehouse. To obtain rebates and support, dealers must complete monthly purchase tasks. In this way, inventory keeps rising, cash keeps decreasing, and cash turns into goods. This is basically the case with well-known brands. Some strong brands not only do not provide credit terms but also require a minimum purchase amount per order. In this way, different manufacturers, in order to suppress competitors, try every means to seize dealers' cash and warehouse space, turning dealers' cash into warehouse goods. Simply put, on one hand, dealers need to use cash to purchase goods; on the other hand, during the sales process, they are squeezed by terminal retailers for fees and delayed payments, occupying as much capital as possible. This leads to the problem of reduced cash inflow for dealers. From the perspective of the enterprise's actual situation, there are often problems such as excessive inventory, accumulation of slow-moving products, long capital recovery cycles, and even bad debts. These can actually be gradually improved during operations. However, neglecting cash management and overloading the enterprise are fatal, often trapping the enterprise in a vicious cycle of operations, unable to escape the trouble of cash shortage for a long time, and even destroying the enterprise. Many dealers happen to neglect the analysis of cash flow.
  3. Capital occupation from distributing other products Every dealer does not want to let their funds idle and hopes to use these funds to create more profits. Therefore, when funds are idle during the off-season, they will think about using these funds to represent a new product to create more profits. Especially when entering the peak season, it is easy for funds to be diverted and occupied due to distributing other products, making it difficult to stock up for the peak season. Reasons from the dealer's own side
  4. Too many product categories This situation is the most common and is least noticed by dealers themselves. For dealers, every product they distribute must be profitable; otherwise, they wouldn't distribute it. The idea is correct, but the practice is very unadvisable. Take a county-level dealer as an example: He started with 100,000 yuan in working capital. Because the brand he operated had fast capital turnover and did not occupy much capital, even with 100,000 yuan in rolling funds, he did not feel a capital crunch. Because of the relaxed capital, he felt that the money should not be idle. Half a year later, he took on a beer brand. Beer requires hotel sales, especially for a mid-to-high-end beer brand like his, which suddenly made capital tight. But because our brand occupied little capital and goods turned over quickly, profits were visible month by month. After struggling for a few months, he finally recovered and immediately took on a peanut milk brand from Hubei. Later, he took on an apple cider vinegar brand, a instant noodle brand, and a baijiu brand. The more he did, the more difficult it became, and the more he felt he had no money to pay for goods. Eventually, he couldn't even raise money to pay for the fast-moving bestsellers. Why? Because the funds were all tied up in the inventory of these brands and the delayed payments from hotels. Were these brands profitable? Definitely! As long as the goods are sold, they become money. But the turnover speed of goods is always limited, and if goods do not turn over, how much profit can they make even if they are profitable? The market situation is not like the planned economy era when goods could be sold as soon as they were unloaded without even unloading. Now, you need to spend money and distribute goods to operate the market. He pinned his hopes on the beautiful wish of selling the goods, ignoring the basic concept of turnover speed and the basic risks of market operations. This is a utopian idea.
  5. Greedy for promotional policies When promotions are mentioned, many dealers are eager to borrow money from all sides to bring back goods with promotional policies, especially for best-selling brands. There is a limit to everything, and one should learn to stop at the right point. Manufacturers naturally want more payments when doing promotions, but manufacturers who truly understand the market also know the limits of promotions. If you really bring back so many goods and it takes three or four months to sell them without placing a second order, the manufacturer's sales staff and senior management will mark your market as a non-healthy market, and future support will decrease. Moreover, those goods with promotional policies lying in your warehouse for three or four months not only affect capital occupation, but the interest on borrowed funds also offsets your profits, so you still don't make money! Of course, for those unscrupulous brands with ulterior motives, they never intended to stay in your market for long. Even if you stock up for two years, they would welcome it, but if you want them to accept returns or exchanges or solve the problem of slow sales, you won't find them anymore.
  6. Liking to sell on credit Selling on credit to hotels is sometimes unavoidable. But selling on credit to hotels also requires knowledge; it is not an unlimited bottomless pit. Generally, dealers with some influence in the market are also among the major creditors in their markets. Supermarkets delaying payments and hotels delaying payments are normal; selling on credit to key accounts in the distribution channel is normal; selling on credit to government departments is unavoidable; in short, there are a thousand reasons for selling on credit. From the dealer's inner heart, besides market needs, the fact that selling on credit can make money is also a private thought deep inside. Isn't it said that dealers are somewhat profit-seeking? As long as they see money to be made, dealers often involuntarily fall into it, until they realize it's a trap and it's too late to withdraw. High-profit credit sales are often accompanied by high risks! If dealers do not estimate this well and fall into the trap of credit sales, how can capital not be tight?
  7. Overestimating oneself Do things according to your capabilities. But some dealers often overestimate their abilities and do things beyond their limits, leading to poor capital chain operation. A dealer who represented a certain dry red wine brand initially took over the agency rights in his market because he was familiar with the market. Within less than two years, the brand became the number one red wine brand in his agency area, and he made some money. Seeing his market operation ability, the manufacturer gave him the supply rights for all supermarkets in the entire province (mainly chain stores or local large supermarkets). He thought it was a "sweet deal," but within less than a year, the dealer experienced a serious capital chain shortage. The capital occupation by supermarkets (especially during the Spring Festival peak season) far exceeded his capital limit. Finally, he had to terminate the provincial supermarket supply agreement with the red wine company and retreat to his home market. Dealers must estimate their limits well. Some small dealers often fall into this trap. With limited funds, they insist on directly supplying all supermarkets in their area and covering the entire network, not focusing on their strengths and not understanding the importance of the "food chain." Now that the causes of dealers' capital shortage have been identified, we have a clue to solve the problem. The following points are the "prescriptions":
  8. Focus on product categories "A mountain doesn't need to be high; it is famous if there is an immortal." Goods don't need to be many; it's enough if they make money. Dealers must resist temptation, especially those who have made money from a certain brand. Although there are many profitable brands on the market, not every business can be done by you. Trying to catch everything will end up catching nothing and even trap yourself. Generally speaking, when choosing new products, dealers should focus on similar or related channel products, and try to avoid brands with similar positioning or even direct competition. Unless you are particularly wealthy, dealers should not distribute more than three brands. It is also important to remind dealers that each brand should not have more than three product varieties, unless they are replacement products. Nowadays, manufacturers often develop brands with a series of products, which seems to be a trick to tie up dealers' funds. If dealers think they must distribute all products under a brand, they will inevitably fall into the dilemma of capital shortage. 80% of sales come from 20% of products; this is the golden rule.
  9. Avoid excessive "greed" Dealers who are greedy for promotional policies often do not calculate carefully and do not understand the basic business principle of "goods turning like a wheel." According to our usual experience, no matter how strong the promotion, your stock should be no more than 1.5 times the normal sales, and at most no more than twice. You should understand that with strong promotions, you want to stock up more, and other dealers also want to stock up more. What is the result of everyone overstocking? It is price reduction! Once prices are reduced, your hope of making money by overstocking will vanish, and you will fall into the dilemma of capital occupation.
  10. Plan ahead and prepare goods plans early to seize dealers' funds first. "Forewarned is forearmed; without preparation, you will fail." Only by considering things in advance can you remain calm in times of crisis. Rushing at the last minute will not help and will only let opportunities slip away. Therefore, as frontline sales personnel, when managing dealers on a daily basis, you should do the following two things: First, pay attention to and observe the dealer's capital issues in daily work. Understand the dealer's capital turnover status and when funds are recovered. Understand how long the dealer's funds are occupied in various channels and the payment terms for goods. Understand the movement of the dealer's inventory and the inventory situation. Understand the dealer's actual capital capacity. And so on. Be clear about these issues, discover problems in time, remind and solve them quickly, avoid the phenomenon of inventory occupying funds, and at the same time, use the understanding of the dealer's fund arrival time to avoid other products occupying funds. Second, track market or industry sales dynamics at any time, understand market conditions, make accurate judgments about expected sales in the peak season, and present a convincing goods distribution plan and market operation plan to the dealer. This can be said to be a test of the basic skills of sales personnel. By negotiating with the dealer in advance or giving advance notice, and formulating and implementing the corresponding shipping plan in advance, you can seize the dealer's funds and prepare goods in advance. When I was doing business in the dairy industry for external markets, for the Spring Festival peak season, in order to help dealers with capital shortages prepare for the peak season, I started three months before the peak season to remind dealers of the quantity of peak season stock every time I met them, and arranged the fund use plan according to the dealer's payment recovery situation, making it impossible for dealers to bypass or avoid the capital issue. At the same time, I cited many examples of dealers who had prepared goods in advance last year and avoided the shortage of goods during the Spring Festival, making a lot of money. I repeatedly strengthened the dealers' memory and aroused their interest, and arranged the goods sales plan and emergency plans in detail. Through this series of work, I finally achieved the timely arrival of funds and the smooth progress of stock preparation.
  11. Formulate a payment collection plan and coordinate the connection between the payment plan and the goods plan. Mainly by adjusting the method of large-scale purchases, according to the dealer's capital situation and arrival time or the settlement time of large supermarkets and medium-sized supermarket channels, arrange the payment time, formulate the stock preparation plan, change the past problem of one-time large capital occupation, and solve the dealer's capital and peak season stock preparation problems by splitting the purchase into batches.
  12. Establish a credit management system and set credit limits. By comprehensively considering market characteristics, market capacity, product characteristics, and market competition, and at the same time assessing the dealer from various aspects, such as the dealer's scale, financial situation, character, personality, work style, cooperation time with the enterprise, payment timeliness, and reputation in the industry, formulate a credit management system for dealers and grant dealers a corresponding amount of credit to alleviate the capital pressure of peak season stock preparation. Generally speaking, enterprises can grant credit limits based on the ratio of annual or monthly sales or the dealer's monthly payment amount to alleviate peak season stock preparation funds.
  13. Use physical collateral to guarantee payment. That is, by mortgaging the dealer's fixed assets such as houses and vehicles to guarantee the payment, solve the problem of insufficient funds for dealers in the peak season and achieve the enterprise's stock preparation work in the market.
  14. Sign contracts with terminals for targeted credit sales. According to the situation that large supermarkets and medium-sized supermarket channels occupy more dealer funds, by changing the supplier in the supply agreement for large supermarkets and medium-sized supermarkets to the enterprise, and adopting an independent operation mode for these channels, solve the dealer's capital problem for peak season stock preparation. For example: Mr. Wang, the regional manager of L Company, learned that before the peak season in C market of K region, due to the dealer's limited financial strength, the dealer could not prepare stock according to the enterprise's requirements. Through communication with the local city manager, he learned that two supermarkets occupied the dealer's funds, causing the dealer to be unable to prepare stock according to the enterprise's expected goals. After understanding the market situation, he found that the two supermarkets were very strong in comprehensive strength and in the entire regional market, and the safety of payment was guaranteed. In response to this situation, to solve the problem of dealer capital occupation during the peak season stock preparation in C market, Mr. Wang adopted the following methods: A. Change the supply agreements for the two supermarkets, signing the supply agreements directly with the company, and the supermarkets were managed by the company. The agreement required that the dealer's early and late payments must be remitted to the company's designated account. B. The dealer, under the condition of unchanged overall market policies, was responsible for the distribution and after-sales service of goods to the two supermarkets, enjoyed the operating profits of the two supermarkets, and bore the return problems of the supermarkets. At the same time, the company signed an agreement with the dealer, and the dealer bore the debt issues of the two supermarkets. C. The company transferred the dealer's previously advanced funds in the supermarkets into usable payment funds when the documents were complete. Later, the dealer's delivery documents for the two supermarkets or the amount of the supermarkets' inspection orders were also supplied with corresponding amounts of goods. D. The company's local sales personnel were responsible for managing the delivery documents and inspection orders of the supermarkets, regularly bringing the documents back to the company's finance department for review and approval of the shipping amount, and responsible for the cleanliness of the payment. E. The dealer was responsible for the peak season stock preparation funds for all terminal markets except the supermarkets, and the funds must arrive at the company's account on time. F. This solution was limited to two months. After the peak season, when the dealer's funds returned to normal, the two supermarkets would be re-signed and all managed by the dealer. Through the implementation of the above methods, Mr. Wang not only solved the problem of insufficient funds for the dealer in C market during the peak season stock preparation, ensuring the healthy development of C market, but also, because this method focused on the dealer's profit distribution, it was recognized by the dealer. The final result was that the market's sales during the peak season achieved a major breakthrough in the company's history, and the payment was also received on time after the peak season. The above methods are only a part. Each enterprise can find different methods suitable for itself according to its own situation, and can also flexibly adjust and combine the above methods to solve the problem of dealer stock preparation funds. As the saying goes, "Marketing is like water, with no fixed form." Similarly, market solutions have no fixed model or solution. Finding the appropriate solution based on actual conditions is the focus of work. 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