Since the subprime mortgage crisis in the United States, 'cash is king' has become a popular phrase, as having cash on hand is the most reassuring. Compared to manufacturers, dealers who face consumers directly are among the first to feel the 'winter' of economic downturn. With persistently weak consumption, dealers find business particularly difficult. The years of high economic growth accustomed dealers to fast turnover, making them unaccustomed to the current cautious approach. But caution is necessary, as one day they might see their warehouses piled high with unsold goods and have to close. Facing consumers' tight wallets, how can dealers withstand pressure and manage their cash flow?
(1) Inventory Check
A dealer's warehouse is like a general store, accumulating a large amount of overstocked products over the years, even dead stock. These products were ignored during good economic times because capital was not tight, and they still showed annual revenue and even profits on the books. In the era of 'cash is king,' these book 'revenues' become worthless if they cannot be converted into cash. How can these 'revenues' that have been dormant in the warehouse for years be turned into real cash?
- For products that can be sold through promotional efforts during the peak season, sell them with aggressive promotions;
- For products that are not particularly easy to sell but can still be sold, use them as free gifts bundled with best-selling products;
- For products that cannot be sold and have no appeal as gifts, even after years of storage, take them out and give them away as customer appreciation items to retail terminals, such as prizes for display contests, rewards for retail terminals' long-term support, gifts for community free giveaways, or even as offsets for newspaper or radio advertising costs. In short, turn these accumulated 'junk' into treasure, making them a 'prop' for dealers to obtain cash.
(2) Product Line Cleanup
Dealers like to operate multiple categories and products. This is not necessarily wrong, but it ties up a lot of capital. In the current difficult business environment, use the peak season to dispose of the distribution rights for those 'chicken rib' products (products that are not profitable but not worth discarding), focus on selling main products to speed up capital turnover, and prevent these products from becoming dead stock. Category cleanup means highlighting main products. For main products, it is recommended that dealers plan for 90% of their estimated sales; for non-main products, plan for 50% of normal sales to avoid new overstock. Here, a reminder to dealers: be extremely cautious when taking on new products at year-end. Cut off categories without hesitation, and do not be swayed by manufacturers' salespeople. Personal favors are personal, business is business, and you must be firm.
(3) Raising Funds
This term sounds uncomfortable, but in reality, dealers have no choice but to do it. First, 'raise funds' from downstream terminal merchants and second-level wholesalers. Dealers usually have one or two best-selling products. Use year-end promotions to collect money from downstream first. To control the market and prevent second-level wholesalers from dumping, underselling, or diverting goods, do not supply all goods at once; provide them in batches and stages. To accelerate the rational use of funds, convert the collected funds from best-selling products into credit sales of less popular products to retail terminals. If retail terminals cannot sell them after the New Year, take them back and replace them with best-selling products. Essentially, this uses the money from best-selling products during the peak season to sell high-margin non-best-selling products, but only by swapping goods and borrowing the cycle of best-selling products to achieve capital recovery and faster goods turnover. Second, 'raise funds' from upstream manufacturers. The credibility formed through years of cooperation allows manufacturers to open a 'green channel' for dealers, effectively alleviating the capital pressure from sales in supermarkets. Generally, supply contracts with large supermarkets are signed by manufacturers, and dealers only handle delivery and customer relationship maintenance. Supermarket payments are also made to the manufacturer's account. Therefore, reputable customers can completely use the manufacturer's funds to do business in supermarkets without spending a penny. Here is another method for dealers: supermarkets generally do not like to stock up; they only need the goods on the shelves. But during the peak season, supermarkets still need dealers to supply goods. If dealers are short on funds and do not want to bear the overstock, they can cooperate with supermarkets to submit a one-time order for the peak season to the manufacturer. Based on this order, dealers can apply for the manufacturer to ship the goods to their warehouse first, then gradually supply the supermarket until the peak season ends. In this way, dealers obtain peak-season turnover goods for free without using their own funds, easing their capital pressure. Third, 'raise funds' from employees. The difficulty of business reveals employees' loyalty and confidence in the company. At this time, dealers can set up share sales for certain products and encourage employees to invest. This can: 1) alleviate the shortage of funds for these products; 2) increase employee motivation and foster a sense of ownership; 3) test which employees are worth cultivating. No matter how you raise funds, it is all based on your credibility. You only need temporary capital turnover. If you misuse these methods, you will lose your long-term business.
(4) Debt Collection
This is easier to understand. Intensify efforts to collect overdue debts from terminals, be cautious with credit sales, and do not be greedy for small gains. It is better to deliver goods more often or do less business than to easily sell on credit. You may be trustworthy, but not all terminal owners are. A few defaults could wipe out your entire peak-season profit. Be cautious when supplying supermarkets. Some supermarkets do not like to stock up, but others like to occupy warehouse space to use others' funds for their own benefit, especially during the peak season. Try every means to collect old debts that have been outstanding for years, even if you lose a percentage of them. The longer they remain, the more likely they become bad debts. When I was collecting a nearly 300,000 yuan old bad debt from a dealer in Northeast China, the company had already given up hope. The salesperson had gone many times without success. The debtor acknowledged the debt but refused to pay. If I failed again, the company planned to write it off as a bad debt. I put a lot of thought into the collection, which I won't detail here due to space, but in the end, I only recovered 50%. Still, the company was satisfied because they had planned to write it off, which would have meant zero recovery. Do such debts exist at terminals now? Certainly. For some professional liquor dealers, there may be many. This requires dealers to have a strong awareness of debt collection. Of course, for simple terminal debts, dealers should also learn to involve manufacturers, as most manufacturers have budgets for defaults. If the manufacturer bears the loss from defaults, and you can recover some through collection, you profit.
(5) Integration
A dealer is a resource integrator, integrating external social resources and upstream manufacturer resources, and internally integrating employees and the extended resources of downstream second-level wholesalers and retail outlets. If both internal and external resources are integrated well, the dealer's business will be easy. But this is easier said than done, which is why many dealers cannot truly grow. I know a dealer whose business is very easy, and he doesn't seem tired, but his business keeps growing. Through contact, I found he is a master of resource integration. He co-founded a sales company with the manufacturer in the local area to sell products together. His famous liquor store is co-owned with a person with deep local connections. He controls the core terminal outlets by jointly buying them out with two other large local dealers. His ability to integrate resources has won the trust of many manufacturers and second-level wholesalers, and of course, brought him wealth. Integration helps dealers solve capital problems and product movement issues. Once these fundamental problems are solved, the dealer's cash flow is safe and guaranteed. Isn't it said that there is no winter in the eyes of marketers? The greater the crisis, the greater the opportunity. Like wars launched by humans, some always gain excess profits, even though many pay with blood and life. Is it necessary to discount promotions or straight price cuts to quickly recover funds? Not necessarily! In November, we held a housing fair. While all real estate developers were shouting that prices had dropped to the bottom and offering various discounts, one property went against the trend and raised prices. In fact, this property sold the best at the fair, basically leading the market. I visited the site and found that both the location and the community environment were first-class. What does this show? It shows that whether it is a financial crisis or shrinking consumption, as long as the product truly meets consumer needs, consumers will not be stingy with their money. Speaking of which, I recall the recent price cuts in cooking oil. Because of the price cuts, retail terminals seem to have suddenly become clear-headed. No matter how big the promotion, they refuse to stock up in large quantities; they sell one and buy one, because their confidence has been shaken. In an era when everyone needs cash, besides conventional ways to recover funds, we should also examine our business from a strategic height, because tactics are just an extension and exercise of strategy.