---
title: "Distributors: Run a Controllable Business and Keep the Money in Your Own Pocket"
description: "Often, a company's sudden collapse is not due to accidents or major business mistakes, but rather the accumulation of small problems that are usually overlooked. If managing a business is like driving a car, do you, as the boss, truly have control over every aspect from the accelerator to the brakes? In the third episode of the 'Growth Amid the Epidemic' live stream series on May 17, New Distribution invited Mr. Pan Wenfu, who has years of experience in guiding distributors' internal management optimization, to discuss how to manage a company well. The core insight he shared was the importance of running a controllable business, which involves control over upstream brand relationships, internal sales staff, and downstream customer relationships."
author: "郑一鸣"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-05-25"
language: "en"
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# Distributors: Run a Controllable Business and Keep the Money in Your Own Pocket

> Often, a company's sudden collapse is not due to accidents or major business mistakes, but rather the accumulation of small problems that are usually overlooked. If managing a business is like driving a car, do you, as the boss, truly have control over every aspect from the accelerator to the brakes? In the third episode of the 'Growth Amid the Epidemic' live stream series on May 17, New Distribution invited Mr. Pan Wenfu, who has years of experience in guiding distributors' internal management optimization, to discuss how to manage a company well. The core insight he shared was the importance of running a controllable business, which involves control over upstream brand relationships, internal sales staff, and downstream customer relationships.

Often, a company's sudden collapse is not due to accidents or major business mistakes, but rather the accumulation of small problems that are usually overlooked.
A thousand-mile dike can be destroyed by an ant hole. If managing a business is like driving a car, then for the boss, do you really have control over every aspect from the accelerator to the brakes?
In the third episode of the 'Growth Amid the Epidemic' live stream series on May 17, New Distribution invited Mr. Pan Wenfu, who has years of experience in guiding distributors' internal management optimization, to discuss how to manage a company well. During the live stream, Mr. Pan shared in detail his practical insights on corporate transformation, innovative business strategies, operational cost savings, and optimizing manufacturer-distributor relationships.
The most core point is to run a controllable business. Here, controllability covers three levels: **1. Control over upstream brand relationships; 2. Control over internal sales staff; 3. Control over downstream customer relationships.**
"Goods become simpler to sell, but people become more complex to manage." Over the years, Mr. Pan Wenfu has seen many distributors who are excellent at selling goods but struggle with management. More critically, many bosses are unaware that their business has problems, and this is precisely the root of hidden dangers.
**How should distributors handle upstream brand relationships?**
Distributors who only work with a single major brand easily become followers of the manufacturer, leading to the following situations:
The manufacturer demands increased sales targets, and they comply; the manufacturer introduces new products and requires them to stock up, even if it's forced bundling; the manufacturer requires them to advance market expenses and prohibits selling competing products... etc. The distributor is completely controlled by the manufacturer, becoming a sales tool and capital pool for the manufacturer.
This is because a single brand accounts for too large a share of the distributor's revenue, and without it, they cannot do business.
Pan Wenfu believes that profitability ultimately comes from product mix, not from every product making money. Each product has a different function: there are 'cash cow' products that generate profit with high margins and quick capital recovery; 'star' products with high sales volume and strong brand effect that open channels, spread costs, and leverage the manufacturer's personnel; and products that enhance professionalism, etc.
Ultimately, profitability is achieved through a combination of products with different functions, not by requiring every product to be profitable.
You cannot let your revenue be controlled by a single brand. In this regard, you can divide the proportion according to the 'three-thirds' principle: 30% from major manufacturers, 30% from second- and third-tier manufacturers, and 30% from new manufacturers.
**1. 30% from major brand manufacturers:** Fully utilize the influence, sales traffic, technical capabilities, and market planning abilities that major brands bring. But keep total sales volume to one-third, so even if the partnership is terminated, it won't be a devastating blow to the company.
**2. 30% from second- and third-tier brand manufacturers:** Compared to first-tier manufacturers, these manufacturers have lower market positions, limited brand and product strength, so there is room for negotiation on sales volume, growth rates, and cost sharing.
**3. 30% from new manufacturers:** Contacting new manufacturers also means contacting new products. Although they may not last long, the purpose of introducing new products is to create a淘汰 cycle in the tier system. If a new product can succeed, it can be moved to the middle tier, or even to the first tier.
Besides revenue share, distributors being held hostage by manufacturers also involves mindset and perception factors. Mr. Pan Wenfu gave an example: "[XXX Trading Company distributes XXX products] and [XXX brand, distributed by XXXX Trading Company] are two different things."
Business teams, sales capabilities, management levels—distributors who think these are their own value—have they considered that if the manufacturer sets up a direct-sales branch, they would definitely do these things better than you? In Mr. Pan Wenfu's view, the greatest value of a distributor lies in the local social relationships accumulated over many years.
Using your social relationships to nurture the manufacturer's brand, placing your company brand in the shadow of the manufacturer's brand—isn't that like not raising your own son but raising someone else's? Use the manufacturer's brand to bring out and promote your own company brand, forming a dual-brand operation of the manufacturer's brand and the distributor's company brand, ultimately evolving into the distributor's company brand leading the various manufacturer brands.
**Control over internal sales staff**
Sales staff face the stores directly and play a pivotal role, but as the boss, do you know the tricks sales staff use?
After working for a while, a salesperson might use their own funds and network to build their own business network, channel company resources into private channels, accumulate clients for two years, and then become their own boss. Or sales staff might sell private goods, embezzle expenses, misappropriate payments, slack off, or divert goods... These phenomena are all possible.
To prevent this, it is necessary to adopt corresponding countermeasures at the top-level design.
**1. Visualize customer resources.** The simplest way is to buy a large map and mark the locations of stores. With just one map, the boss can clearly understand the company's business operations.
**2. Sales staff submit basic customer relationships**—with addresses, names, positions, phone numbers, etc. **The boss** also needs to **call to verify**. The phone call not only verifies the authenticity of the information but also allows the boss to receive feedback about the salesperson from the store. If the boss calls and the store owner curses the salesperson, it clearly indicates deep-seated grievances, and the salesperson has problems at work.
**3. Set up a communication platform at the company level.** The simplest is to establish a customer service position or a WeChat public platform. Customer service is not responsible for sales but only for maintaining contact with customers via phone and WeChat, rather than leaving all communication up to the sales staff. Customer complaints and feedback no longer need to go through the salesperson.
**4. Corporate communication tools.** Customer information must not be stored on personal devices; this prevents sales staff from appropriating company customer resources.
**5. Create customer files.** These files are not for old employees but for new employees, so that even if an old salesperson leaves for various reasons, the area they were responsible for will not lose support.
**Having stable downstream customer relationships**
Quantity determines performance; quality determines profit.
Quantity determines performance: if you have 500 terminals versus 1000 terminals, the performance you bring will definitely be different. But performance does not equal profit; quality determines profit. Quantity does not mean higher profit.
Here, quality refers to the quality of customers, including their sales capability, product mix, payment collection, and cooperation, which determine the profit margin. Customer quality needs to be maintained and cultivated. Only on the basis of stable customer relationships can you possibly improve customer quality.
Use ten questions to self-test whether your customer relationships are stable:
_1. Quantity: How many customers do you have in total?_ _2. Location: Where are these customers distributed?_ _3. Form: Are these customers tobacco and liquor stores? Large supermarkets? Or special channels?_ _4. Relationship: How are your relationships with these customers?_ _5. Sales volume: Which customers have high volume? Which have low volume?_ _6. Sales characteristics: Which customers like to sell new products? Which prefer discounted goods?_ _7. Business orientation: Why do customers open stores? Not everyone has the same purpose; maybe a boss opens a small tobacco and liquor store simply because their child studies at the school across the street, making it convenient for pick-up and drop-off._ _8. Settlement characteristics: Who do you settle accounts with? The boss, the boss's wife, or the clerk? What time? What method?_ _9. Are there any historical issues? Here, historical issues mainly refer to small problems, such as casual promises made by sales staff or credit purchases made by sales staff at small stores._ _10. Can you arrange job rotation for your sales staff? If the salesperson responsible for the eastern district is transferred to the western district and the eastern district immediately collapses, it shows that control over customers is actually in the hands of the salesperson._
As mentioned earlier, the boss should strengthen control over the company's sales staff, which is essentially **strengthening control over downstream customers. Stable customer relationships enhance the distributor company's influence.** If relationships are unstable, it will lead to a series of problems such as distribution, new products, and payment collection.
Recall the distributor value mentioned at the beginning of the article: locals doing local business, stable social relationships, and the small store owner's trust in you, which gives you influence over them.
Controllability means order, and order means stability. When risks do not appear, most people rely on luck to make money; business is booming, and everyone is happy. But when risks appear, the only thing you can rely on is the control you have accumulated in daily life. Although it cannot make the business continue to grow rapidly, it can at least ensure that you are not the first to collapse.
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