Before the New Year, I had a phone call with Mr. Luo Kai, and in nearly two hours, we deeply exchanged views on his entrepreneurial journey in trading, business growth methods, and future plans. The content was rich, and I believe the business path of Hecai Trading is worth learning from for many distributors. "Calculated" Business Growth First, let me briefly introduce Hecai Trading. Hecai Trading is located in Luoyang, Henan, founded in 2006. It distributes nearly 70 brands including Strong, Perfetti, Lay's, Wrigley, Wuqiong, Orion, and Xiaolangjiu, with 1,700 SKUs. Annual sales exceed 100 million, warehouse area is 6,000 square meters, with a team of nearly 150 people, 40 vehicles, and full-channel coverage. Before founding Hecai Trading, Luo Kai worked at Strong and later ran a supermarket. According to Luo Kai, when he ran the supermarket, he waited for customers to come, which was passive. 365 days a year, even during the Spring Festival, he was reluctant to close, feeling tied down. He hoped for a state of having both work and life, and also liked to actively control the business. Therefore, when he founded Hecai Trading, he did not enter the wholesale market but directly operated as a formal company, resting every Sunday, and starting the business with a rhythm. Luo Kai told New Distribution that frankly, the distributor business is not a "mainstream" industry; there are no textbooks, no development templates, and no place to learn. Whenever he saw distributors with sales over 100 million, his eyes lit up, and whenever he had the chance, he would ask for advice on how they did business. On one hand, he sought methods from outside; on the other hand, because he came from a manufacturer background, he was considered a semi-professional. When the business reached 30 million, he began to plan business goals. At that time, Luo Kai told his team, "We need to formulate a 20 plan, with an annual growth of 20%. When it grows to 60 million, we will formulate a plan to exceed 100 million." Luo Kai recalled that distributors before 2000 were in a situation of oversupply; their business logic was basically to pick up a product, and a 10 million business would come rushing in. Business growth was driven by picking up products; first the product, then people, then scale. But Hecai was not like that. Since 2010, after the initial period, Hecai's business has always been budgeted. First set the overall goal, then build the organizational framework, then find products to fill it. This has been the direction Hecai Trading has always adhered to. Specifically, how to calculate? Take 100 million as an example. First, there must be a brand with over 30 million, a brand with over 20 million, and two brands with over 10 million. These brands can basically support a plate of 60-70 million. Add the remaining combination of brands, and you can have a plate of over 100 million. With such top-level design, then look from the snack food field: which brands can achieve tens of millions in business. Of course, finding brands is not as simple as wanting them to come; on one hand, pay attention to brand changes; on the other hand, build a nest to attract phoenixes, and persist in doing the market well. In daily management, because of the "professional" background, there have been monthly and weekly meeting systems since the establishment. Luo Kai recalled that at that time, clerks and managers didn't even know how to use computers, so they were forced to switch to computers, and then to smartphones. Every week and month, data analysis was done: from which channels and which brands the business came from. Running at Full Speed, Seeking Growth Again Although the business kept growing, Luo Kai always had a sense of crisis: because if you do well in Luoyang, but due to various factors, the brand no longer allows you to do it, and the business drops by 10 million, what then? What if the company builds its own team and does it themselves, losing 20 million in business, where to find it? Although it is possible to make up for it through other brands, once in such a situation, it will fall into a vicious cycle of stagnant business. Luo Kai said, "Doing sales business is like going to war; momentum and state are very important. Once the company enters a stable period, or stops moving forward, it is easy to breed laziness and enter a comfort zone." To avoid such a vicious circle, it is necessary to find a second growth curve. In this way, even if one brand is lost, the business from the second growth curve comes up, and overall growth can still be achieved. For Hecai, finding a second growth curve is not only for business but also for the company's upward development momentum. Because only with growth can there be scale; with scale can more high-level talents be attracted. Therefore, starting in 2015, Luo Kai began his second entrepreneurial journey, doing baijiu. Of course, the way of doing liquor is different from other trading companies: the original snack food business team was completely untouched, only bringing one clerk, and all others were newly recruited. In 2018, Hecai Trading also did the Joyoung commercial soymilk machine business. Luo Kai explained that if one day the company only has single-digit growth, it will be very dangerous. I must continuously lead the team to find the feeling of fighting. By 2020, Hecai Trading began to cooperate with Chengdu Rongcheng Yigou, establishing Luoyang Rongcheng Yigou, focusing on one-stop shopping for local mom-and-pop stores. Only by Getting Bigger Can You Have People; Only with People Can You Have a Platform I believe that for many distributors, people are the most headache problem: can't recruit, can't retain. Many distributors' businesses stay at 30-50 million; the core is a lack of understanding of people. On this point, the insights and experience of Mr. Luo Kai of Hecai Trading are also worth learning. Luo Kai talked about that at the beginning of the venture, the brothers who followed dedicated their youth to the company. From their early 20s, they are now in their 30s. How to keep these people? What gives you lasting charm to keep people? The answer is only one: scale. Everyone follows you to grow together; without positions, they can only leave. Only by rapidly expanding the scale, with each person controlling enough business, can talents be retained. The best reward a company can give to each person is the trend of upward development. If there are only 20 or 30 people, the temple is too small; how can you use good people? Along the way, Luo Kai also realized that "annual sales of 30 million mean the boss does it himself; annual sales of 60 million mean the boss manages affairs and people; annual sales of 100 million mean the boss manages people and finds people." In addition, Hecai Trading is also continuously cultivating people, training employees to become operators. How to cultivate? Only by being willing to bear the losses in employees' growth can it be called true cultivation. At an annual meeting, Luo Kai gave an example to the attending employees: a manager lost 100,000 in product selection. What should be done? If using Amoeba or dividend system, should this manager bear the loss? No matter how much, they should bear it. But if they bear it now, they will definitely not dare to choose in the future. What to do? Only "cold mix" (i.e., let it go)! This is a necessary process to cultivate them as operators. Without such experience, with over 70 brands, can the boss manage all of them alone? Now Hecai Trading has a team of 150 people and has certain financial strength. With such a plate, it can incubate more people internally and attract more talents. PS: On July 8-9, at the upcoming 8th Distributor Practical Growth Course - Luoyang Station, New Distribution is honored to invite Mr. Luo Kai, General Manager of Luoyang Hecai Trading, to give a keynote speech. At that time, we will also organize participants to visit Hecai Trading Company for study tours, to get a close look at Hecai Trading's business methodology! Review: Asher -END- Are you "watching" me?