Click to read the original text for details This article explains how distributors can implement the business partner model - strategy chapter, totaling 7,200 words, about 20 minutes to read, recommended for careful reading. In the distributor business, there are two key sources of success or failure: salespeople and stores. When the scale is small, with three to five employees and a hundred or so outlets, the boss can handle everything personally. At this time, the company's operational efficiency is highest, and growth is fastest. The boss works for himself, 12 hours a day, and can control all employees. At this stage, the distributor boss is almost a trinity, a quintet, or even a septet, acting as general manager, regional supervisor, salesperson, loader, driver, etc. Because the distributor boss works for himself, he goes all out. As the scale of operations expands, with more employees and more outlets, due to limited time and energy, the distributor cannot effectively manage everything, so he has to add staff and hire professional managers. But at this point, the efficiency of the trading business will be discounted compared to before. Spending other people's money and doing things for others is never as reliable as doing it yourself. At this time, internal organizational management capability is a real test for the distributor; a slight mistake can lead to chaos. Whether hiring salespeople or recruiting experts, it's not a simple addition. The allocation of responsibilities, rights, and interests, and the reward and punishment mechanisms, present many management difficulties. In addition, changes in the external environment and the competition for talent are also evident. Take food delivery riders as an example: food delivery has become a part of modern life. Riders earning 7,000-8,000 yuan a month, compared to traditional salespeople who start at 7 a.m., load goods, unload at stores, work until 6-7 p.m., and then return to the office to count inventory and settle accounts. Riders not only earn more but also have less difficult work and more flexible hours. More and more traditional FMCG personnel are choosing to become riders. Looking at the entire distributor community, the weakest areas are insufficient organizational drive, the loss of young talent, and a lack of management thinking, which have become key obstacles to further development. Facing similar challenges, New Distribution has reported on many cases of distributor organizational transformation and has been advocating that distributors achieve platform-based operations, turning employees into partners, turning workers into small shareholders, and enhancing organizational drive. It's not enough to just clarify the direction and form of organizational transformation. For distributors, what kind of distributor can upgrade to a partner organization? How should the model be built? What is the implementation path for partner operations? What key matters should be focused on? In New Distribution's view, this is the core need for distributors in organizational transformation and upgrading. This article hopes to analyze the implementation strategies for the business partner model for FMCG distributors, based on past case reports and the thinking of the New Distribution team. Core content: 1. What is the business partner model? 2. What kind of distributors is the partner model suitable for? 3. Architecture design of the business partner model 4. Implementation path of the business partner model 5. Investment and dividend design of the business partner model 6. Key considerations for the business partner model What is the business partner model? Regarding the business partner model, many consulting firms have their own professional definitions, and the partner mechanism is indeed a science. But for this article, we mainly target the distributor community. For ease of understanding and practical operation, we will define some scope and reduce irrelevant content. The business partner mechanism is simply understood as: Originally, the distributor was the only one worrying about the market and business. Now, several "bosses" are added, allowing capable employees to participate and become entrepreneurs who also worry about the market. For the company or a specific business, they invest money and work together. The distributor's business partner model usually does not involve equity structure, equity incentives, or equity distribution. The ownership of the company remains with the legal person or distributor. The key to partnership is for a specific distribution business, sharing risks and benefits, and the responsible entity for the business changes. Returning to the underlying thinking, the purpose of the business partner model is to help trading companies solve operational problems and address the series of organizational and management issues brought about by sustained growth. Zhang Wenfeng, vice president of Huaxia Jishi, once explained the partner mechanism: Enterprises have no pure management problems, only operational problems. Management measures that address operational problems are effective. If the partner mechanism cannot solve operational problems for the enterprise, it is a failure. Mr. Nie Biquan, general manager of Shaanxi Baihui Trading, told New Distribution that many distributors treat the partner model as an incentive, hoping to enhance organizational drive by giving employees more dividends, but in practice, it often backfires. The key to the partner model is that the responsible entity changes, with the operator becoming an employee, not just the distributor alone. Implementing the business partner mechanism essentially requires completing seven transformations at the organizational and cultural levels:
First Transform the distributor boss's individual struggle into a team's collective struggle;
Second Transform individual independent operations into collective operations;
Third Share the distributor's capital, warehousing, and distribution resources, turning 1+1+1 into 111;
Fourth Turn employees into bosses;
Fifth Turn workers into entrepreneurs;
Sixth Turn a community of interests into a community of business and a community of shared destiny;
Seventh Turn passengers into strivers. What kind of distributors is the partner model suitable for? After understanding the partner model clearly, we ask: Is the business partner model suitable for all distributors? New Distribution believes that not all distributors are suitable. The most suitable are those that distribute multiple brands, multiple categories, or multiple channels. Why? Return to the purpose of the partner mechanism: to solve the operational problems of trading companies. Trading companies are agents that distribute goods, completing market occupation through distribution, shelf placement, and sales promotion. There are three core points here: First, distribution. The distribution logic for different products varies, especially in outlet selection. For example, beverages typically pursue maximum outlet coverage, but condiments, daily chemicals, and snacks do not simply pursue coverage rate; matching suitable products to suitable outlets is key. Second, sales promotion. The sales promotion logic for different categories varies, such as dairy products, daily chemicals, and condiments. The design of terminal promotions and terminal visualization is completely different. Third, competition. In the FMCG field, no brand is without competition. As the last mile of purchase, competition is often most intense at the terminal level. In short, different categories and brands have different strategies and tactics at the terminal level. The establishment of the partner mechanism is expected to bring in middle-level cadres and managers of the business organization, making them partners. They have demonstrated a certain professional ability in market operations and strategic tactics, allowing partners to command operations and manage the market. If it is a single-brand or single-category distributor, the terminal distribution, sales promotion, and competitive strategies are basically relatively fixed. The distributor personally formulates terminal operation strategies, middle-level cadres manage and coordinate, and front-line business executes. At this time, the success of the business depends on execution, that is, the execution ability of front-line business employees. For multi-brand or multi-category distributors, different brands or categories have different terminal distribution, sales promotion, and competitive strategies. At this time, turning middle-level cadres into partners can maximize their professional ability in market operations. For example, dividing partners by product category, letting partners focus on a specific category's business, making them professional category distributors in that category. Suitable categories include general merchandise, washing and care, oral care, condiments, paper products, snacks, etc. Note: What should single-brand or single-category distributors do if they are not suitable for the business partner model? The key to organizational drive for such distributors lies in front-line business. They can consider a "quasi-partner model," commonly known as the "small boss project." How to do it specifically will be detailed in the next article. In summary, the business partner model solves the enthusiasm of middle-level managers, not the enthusiasm of front-line salespeople. Single-brand, single-category distributors have poor compatibility, and the partner model cannot maximize operational efficiency. Architecture design of the partner model The left diagram is the organizational structure of 99% of trading companies, and the right diagram is the organizational structure applying the partner model. The bureaucratic management structure emphasizes single output and execution. The top or boss is the commander, the middle level is the coordinator and supervisor, and the grassroots is the executor. The business partner model emphasizes autonomous operation. The top or boss is the resource allocator, and the middle level is an autonomous operating unit, always considering how to build relationships with terminal customers, maximize distribution and sales promotion, occupy the terminal market, and compete with rivals. Take Shaanxi Baihui Trading's business partner model as an example. Shaanxi Baihui is a typical practitioner of the "platform + small organization" (autonomous operating unit) business partner model. (Note: Shaanxi Baihui Trading is a comprehensive trading company with 6 branches, mainly dealing in daily chemicals, oral care, general merchandise, alcoholic beverages, etc., with over 3,000 SKUs.) Division of labor and collaboration between the platform and small organizations: 1. Platform Personnel: Distributor/senior management, financial personnel, logistics personnel, administrative personnel, etc.; Functions: Resource scheduling, capital support, financial management, logistics and warehousing, administrative support, etc.; Characteristics: The platform provides resources, processes, information, and management support to small organizations, granting full authorization and empowering small organizations. Regarding the platform, Mr. Nie Biquan, general manager of Shaanxi Baihui, once expressed that in addition to the above resource-based support, the key functions of the platform for small organizations in terms of division of labor are: monitor strategy; monitor money; monitor contracts. Let's focus on "monitor strategy." Shaanxi Baihui divides business partners by category, dividing daily chemicals, oral care, general merchandise, and alcoholic beverages into four business divisions or some into independent companies. For each category, at the business assessment level, Nie Biquan proposed the "805010" plan. 80: Core business must account for 80%. For example, in the oral care business division, partners are allowed to distribute other categories, but oral care must account for more than 80%. This ensures that the front-line business team, including managers, maintains sufficient focus and professionalism in that category. 50: The category business must account for 50% of the local market share. Because of focusing on a specific category, the goal is to capture market share. 10: Core business annual growth must not be less than 10%. In "monitor money," it mainly involves cash control. For daily expenditures, set a cap, such as 5,000 yuan, which the business head can approve on their own; above 5,000 yuan requires the general manager's approval. Other matters such as market expense investments and payments to upstream brand owners are generally not controlled. In "monitor contracts," it mainly involves contract terms, two types: first, with upstream, signing contracts for distribution agency brands; second, with downstream, signing cooperation agreements with chain retailers and large supermarket customers. The final approval of these two types of contract terms must be approved by the general manager. 2. Small organization Personnel: 1+N (N cannot be less than 3 people). 1 is the key business partner, core backbone, and leader, i.e., the boss of the small organization; N is the founding team; Functions: Operate a specific category business. From distribution agency to terminal operations, to expense investment, to personnel recruitment and retention. All matters related to market operations are the responsibility of the small organization; Characteristics: The 1+N small organization must invest capital. The small organization operates autonomously under the platform's overall strategic framework, with the core work at the terminal operation level, bearing its own profits and losses. For the category partner model, some distributors may wonder: if a single category operates independently, although more focused, the overall "input-output ratio" may not be high. For example, oral care has low turnover and limited sales, and may not support an independent team in terms of revenue and costs. On this point, Nie Biquan told the author that although oral care is a low-frequency product, our business goal is to be a supplier in the oral care category. Originally, the business did paper products, oral care, and alcoholic beverages. When visiting stores, we gave whatever the small shop wanted; now we only do oral care, and salespeople focus on oral care, visiting stores and promoting new products. Business partners will study daily how to do well in the oral care category, distribute more brands, grab more shelf space, design targeted policies to seize competitor share, etc., and through focus, increase the category small organization's market share. In addition, in the past, the business team usually only sold big single products in the category; now, focusing on a single category, they will actively sell high-margin long-tail products. Originally, it was task-oriented; now it is operation-oriented. Being operation-oriented will force the business partner leader to think about how to increase revenue and gross profit. Add brands, or add outlets, or increase single-store output, while the business partner also comprehensively considers the balance between costs and revenue. Implementation path of the partner model For the implementation of the business partner model, many distributors may think, "The existing business is already mature and stable, so I can find a more capable person and use the partner model to add new product categories. Is this feasible?" It is feasible, but from the employee's perspective, if he can do a new category well or distribute a new brand well, why would he do it with you instead of doing it himself? If you divide the business into two stages: first, the entrepreneurial stage, the process from 0 to 1; second, the development stage, the process from 1 to 10. For new business partnerships, you must first pass the 0 to 1 stage, and at this time the risk is greatest, and few people are willing to face such challenges. Therefore, the most appropriate business partner model is: the platform completes the 0 to 1 process, sets up the stage, and determines the direction and tactics. To judge whether it has reached 1, the core is whether the business is profitable. When profitability is achieved, it is then handed over to the small organization. At this time, the small organization, through effort and attention, makes management more detailed, makes the market more solid, and achieves the process to 10. At this point, it tests the distributor's personal pattern: new business cannot be partnered, and old business is already formed, stable and profitable, so they are reluctant to partner. On this point, Nie Biquan told New Distribution that many distributor bosses have not thought it through. They think that since the business is already done well and 100% of the profit is theirs, why should they share 20%? But in fact, a person's energy is limited. After completing the 0 to 1 stage, reaching 10 requires more time. When multiple businesses coexist and the distributor worries alone, efficiency will definitely decline. Time and efficiency are also operating costs. Therefore, the distributor boss must open his mind. The starting point for sharing 20% is investment, not cost. Today you share 200,000, tomorrow you have the opportunity to earn 400,000. After understanding the prerequisites for implementing the business partner model, look at the implementation path: Step 1: Financial standardization Financial standardization is the foundation of any operation, but for distributors, due to the past trinity, quintet, where the distributor held multiple positions, the meat is rotten in the pot, and although they verbally emphasize it, in actual operation, the financial accounts are often a mess. To implement the business partner model, the prerequisite is financial standardization. If the accounts cannot be calculated clearly, no one will trust you, so how can you talk about partnership? Financial standardization has two dimensions: first, revenue indicators, broken down to individual/person/product/store; second, cost indicators, broken down to individual/person/vehicle/product. Step 2: Operational transparency Financial standardization is about data clarity, but that's not enough; operational transparency must be achieved. Hold monthly business analysis meetings, breaking down costs, gross profit, net profit, etc., to each brand. Which brand is rising, which is declining, how much each person contributes, how much each region contributes, all clear at a glance. When problems arise, even if the distributor is far away, he can clearly know where the problem is through data reports, whether it's expenses, prices, personnel, or other, rather than only knowing the operation situation when the boss is on site. Of course, this must also be transparent to future partners. As a functional support department, the platform, besides providing equipment and ammunition, does the core work of making partners clearly understand the data-level operating status of each business. The core of the platform is service, treating business small organizations as users, and assisting business departments with the best experience in business analysis and decision-making. Step 3: Setting mechanisms The setting mechanisms here refer to the design of specific mechanisms for the business partner model. Especially in the division of labor and income aspects, the dividend aspect can refer to the "architecture design of partners" above; the income aspect refers to the "dividend mechanism design of partners" in the next section. Step 4: Selecting targets The two dimensions for selecting targets are ability and values. How to find capable employees generally depends on the boss's judgment; there is no standard formula. But many distributors worry about employees' abilities when preparing to implement the business partner model. Nie Biquan has a viewpoint: when employees turn into bosses, their ability can improve by at least 30%. For example, a person standing on the 19th floor and standing on the 1st floor sees completely different problems. Position determines the people and things you encounter. Bosses are not born capable; they encounter different difficulties every day, and through the process of solving difficulties, they gradually develop ability. Nie Biquan told the author that for Ankang Baihui Trading, I have not been there for nearly a month and a half. It's not that the operation is so good, but I deliberately did not go, even if it loses a little. Only when these partners encounter problems do they know how to solve them. If they don't think of ways to solve them themselves, their ability will never improve. Only when the boss is liberated can he come into contact with more business opportunities. In terms of values, whether they are consistent with the boss's three views (worldview, outlook on life, and values). This is very critical. If the three views are inconsistent, later communication will become difficult, and it is also easy to form different opinions on handling some matters. It is hard to see at work, but once interests are involved, their true colors will be revealed immediately. Selecting people is a great learning. For example, buying a printer for the office, and at the end of the year sharing the cost, some partners might say, "I haven't used the printer for half a year, I don't want to share"; for example, warehouse rental fees, measuring the warehouse area used by each small organization monthly, assuming regular measurement on the 25th of each month, but some partners move goods out of the warehouse on the 20th or 23rd, and move them back after the 25th. Similar small things have no right or wrong, but they involve values. If inconsistent with the distributor's three views, it can easily lead to unpleasant cooperation, or even disputes. Step 5: Determining the business When employees have certain abilities, consistent values, and with the guarantee of mechanisms, it can basically be implemented, handing over a certain business or category to the partner for operation. Investment and dividend design of the business partner model Although employees change roles to become entrepreneurs, business personnel are still relatively short-term oriented, which is why we consider handing over the business to the small organization after it is profitable. The following is an example of the investment design of a certain A department of Shaanxi Baihui. Department A (small organization), founding team of 5 people (1+4), the supervisor invests 600,000 yuan, the other 4 invest 300,000 yuan each; the platform invests 2.1 million yuan. The platform then lends 7 million yuan to the small organization in the form of a loan, totaling 10 million yuan as the company's initial capital. It is stipulated that after one year, regardless of profit or loss, the interest on the 7 million loan is first repaid to the platform, and the remaining profit is then distributed proportionally. (The specific loan amount can be based on actual needs.) Dividend regulations: In the first 3 years of the business partnership, the specific dividend amount and ratio are decided by the small organization. Nie Biquan explained that this is based on two considerations: on the one hand, the founding team itself has limited funds, and may even borrow money to start the business; on the other hand, the founding team needs to improve and enhance their lives, buy houses and cars, and solve the sense of life satisfaction, so in the first 3 years, business partners must see "money" and see prospects. After 3 years, the dividend ratio will be controlled within 30-40% to ensure the sustainable development of the business. To avoid some employees in the small organization "contributing money but not effort," or the occurrence of business decline, Baihui Trading has established an "exit and downgrade" mechanism: First, set assessment indicators: To avoid the situation of "contributing money but not effort" and "eating from the same big pot," set achievement indicators based on annual/quarterly market planning standards. Such as sales volume, profit, key store development, and other dimensions, multiply the dividend amount by the completion coefficient of each dimension to determine the final dividend amount. Suppose the proportional dividend is 100,000 yuan, then multiply by other corresponding coefficients. Second, reduce the dividend ratio: If business partner A experiences negative growth, lower than 10% annual growth, the leader reduces the dividend ratio, or exits the leader's distribution ratio, and receives dividends in the form of pure capital investment, participating as a capital contributor. Key considerations for the business partner model The above is the overall structural framework of the business partner model. Finally, combined with the exchange with Mr. Nie Biquan of Shaanxi Baihui, let's discuss the key considerations for distributors to carry out the business partner model. 1. When implementing business partners, the boss must not have a "shirking responsibility" mentality. For example, handing over unprofitable businesses to partners; implementing a contract system where 5% of the "partnership fee" is paid to the distributor, and the rest depends on the partner's own efforts. 2. Treat the relevant functions provided by the platform to small organizations as a core source of profit. For example, charging warehousing fees far exceeding the local average level. 3. Turn the partner's responsibility mechanism into a reward mechanism. The essence of the partner model is the transformation of the responsible entity. The reward mechanism is still the distributor; the partner model is about earning more money through self-operation and self-management. 4. Incremental distribution principle. The dividend ratio can be designed according to the actual business, such as setting different ratios for different category scales, or designing ratios based on growth rates. The business partner model expects to do incremental business; the existing business is done by the boss and the past team, not created by the partners. Through the partners' efforts, increasing the original 10 million business to 30 million, and distributing the incremental 20 million, is the key to the operation of the partner mechanism. 5. Distribute profits, not rights. The organizational structure of most distributors is relatively simple, far from reaching the scale and size of a group company. The original intention of establishing business partners is to drive business growth through internal entrepreneurship. Focus on profit distribution and reduce the distribution of rights (ownership/equity, etc.). 6. Being the "boss" means you have to suffer losses. Distributors should establish the concept of "seeking common ground while reserving differences." Don't be petty; everything should be oriented towards operational growth. 7. Each business partner must have independent accounting, unified account distribution, and establish a clear and transparent accounting system. 8. The development of the business partner model is best carried out with the category as the unit. Especially for non-beverage categories, the more brands distributed under a category, the stronger the voice with both downstream terminals and upstream manufacturers, and corresponding resources will also be focused. 9. In the early stage of implementing the business partner model, let employees see "money." It may not necessarily be the increment created by employees, but let them see some to increase enthusiasm. Relatively speaking, employees still look at short-term returns. 10. The business partner model is expected to improve subjective initiative in market operations, especially at the terminal layout and strategy level, flexibly respond to policy investments, and seize competitor markets. At the overall business strategy level of the trading company, the distributor still needs to make good plans.