---
title: "Eight Awkward Patterns That Trouble the Growth of Small Trading Companies?"
description: "This article outlines eight common challenges faced by small FMCG trading companies, including passive marketing models, arbitrary management, unstable compensation, inefficient hiring, habitual operations, fixed mindsets, difficult capital turnover, and inadequate incentive mechanisms. It illustrates each issue with examples and suggests that successful companies share similar traits while failures have unique causes."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-09-30"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/eight-awkward-patterns-that-trouble-the-growth-of-small-trading-companie-40296ae8/"
markdown: "https://xinjignxiao.com/en/articles/eight-awkward-patterns-that-trouble-the-growth-of-small-trading-companie-40296ae8.md"
original_source: "https://mp.weixin.qq.com/s/aU1vbP0IWe91acCMcRQklg"
translation: "https://xinjignxiao.com/zh/articles/%E5%9B%B0%E6%89%B0%E5%B0%8F%E5%9E%8B%E5%95%86%E8%B4%B8%E5%85%AC%E5%8F%B8%E6%88%90%E9%95%BF%E7%9A%84%E5%85%AB%E4%B8%AA%E5%B0%B4%E5%B0%AC%E6%A8%A1%E5%BC%8F-40296ae8.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/eight-awkward-patterns-that-trouble-the-growth-of-small-trading-companie-40296ae8/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Eight Awkward Patterns That Trouble the Growth of Small Trading Companies?

> This article outlines eight common challenges faced by small FMCG trading companies, including passive marketing models, arbitrary management, unstable compensation, inefficient hiring, habitual operations, fixed mindsets, difficult capital turnover, and inadequate incentive mechanisms. It illustrates each issue with examples and suggests that successful companies share similar traits while failures have unique causes.

Friendly reminder: Click the blue text above “FMCG Distributor Professional Consulting” to learn more about marketing and distributor internal management.

**Awkward Pattern 1: Passive Marketing Model**
Due to intense competition in baijiu marketing, most baijiu distributors after the first tier adopt a credit-sales model. The trading company first spends money to purchase products from the manufacturer, then distributes the products on credit to various channel customers. In other words, before a brand becomes strong, credit sales are an unavoidable hurdle for distributors. Because of credit sales, the distributor's initiative is completely controlled by channel terminals. Additionally, since the credit sales process is carried out by salespeople, they also gain extra control over some resources, bringing various difficulties and unexpected troubles to operations and management.
The phenomenon of difficult management and execution due to the marketing model is common among trading companies. On one hand, trading companies spend money and energy treating customers as gods. On the other hand, they are constrained by salespeople's resentment, arrogance, and dominance. Therefore, trading companies are extremely passive whether facing a difficult customer or dealing with an employee who makes a serious mistake. This passivity is deeply felt only by the managers themselves; others find it hard to understand beneath the company's glossy exterior.

**Awkward Pattern 2: Arbitrary Management Model**
Trading companies generally adopt family-style management, whether sole proprietorship or partnership, especially in the early days when the whole family is mobilized and relatives participate. Even if the company hires professional managers, the boss is unwilling to let go of the company he founded. The manager becomes a senior clerk. Due to the manager's weakness, employees become arrogant, and company management is in chaos. The company certainly has no efficiency, and the manager naturally becomes the scapegoat. The boss never realizes that this result is caused by his own actions.
A healthy enterprise management should be a "pyramid," with the legal person at the top. From the bottom to the top, there are several levels. Adjacent lower levels directly execute the instructions of the upper level, and levels far apart should not directly transmit instructions. However, many trading companies are not like this. Because the boss is strong-willed and habitually bypasses the manager to give orders directly to all levels, the influence of middle management is weakened. The original "pyramid" becomes a "dumbbell," with weak middle and strong ends. At this time, if the boss is energetic and fully devoted to operations, it is acceptable. But if the boss wants to delegate but not give authority, such an enterprise will definitely develop slowly, have low efficiency, and even take two steps back for every step forward.

**Awkward Pattern 3: Unstable Compensation**
Story 1: After retiring from a government position, Mr. Zhang was hired by his sister to manage her liquor company. Mr. Zhang took office with enthusiasm, but soon lamented: "I have decades of work experience and am a national cadre, but my salary is only over 2,000 yuan, while the salespeople here can earn five to six thousand a month." So, among his drastic reforms, one was to cut salaries...
Story 2: Retired teacher Lao Wang was invited by his son to be the accountant at his beer company. During the summer peak of beer sales, salespeople's wages reached over 5,000. Lao Wang had the same lament as Ms. Zhang. So, from the day Lao Wang became accountant, he began to delay wages...
Story 3: Young Xiao Yu became the boss with his father's funding. Privately, Xiao Yu often told the manager: "Employees' high income is a satire on our task setting." So, in Xiao Yu's company, changing orders in the morning and reversing them in the evening is common...
Unstable treatment causes employees to lack a sense of security and belonging, leading to an unstable workforce. Many new employees resign before they are fully trained. Additionally, with few benefits and no "three insurances," employees just go through the motions. They leave at the slightest dissatisfaction, often without notice, taking large amounts of payment with them, leaving many difficult problems in the market.
Moreover, due to the limited control capabilities of trading companies, many employees find ways to exploit company loopholes, intercepting policies for personal gain. In fact, employees who stay long-term are mostly mediocre in performance and ability.

**Awkward Pattern 4: Inefficient Hiring Model**
Most bosses of trading companies started as small vendors and accumulated initial capital through one or two decades of hard work. Their money is hard-earned, so they are conservative in selecting and employing people. One characteristic is that everything is for cost saving, hiring the "best" talent at the lowest wages.
Company S has been established for three years with 8 employees, including 2 each over 60, 50, 40, and 30 years old. Among them, 2 are housewives and 6 are retirees from enterprises. They come mainly to earn extra pocket money. Over three years, Company S not only developed slowly but also faced many problems: the finance department operated alone with numerous loopholes, the warehouse manager changed several times resulting in a cumulative loss of hundreds of thousands of yuan in goods, market orders were severely lost, and nearly 200,000 yuan in payments could not be accounted for. Due to the single compensation structure, employees did not exert effort, and the whole company was stagnant and lifeless.

**Awkward Pattern 5: Habitual Operations**
Story 1: Manager Hu is both a shareholder and manages the company. He sells to consumers at inconsistent prices, especially to regular customers, often below the introduction price. However, Hu requires salespeople to supply channel customers at the introduction price. Because Hu is arbitrary with prices, consumers sometimes enjoy more favorable prices than channel customers.
Story 2: Company B's product prices are divided into three levels: retail price, basic introduction price, and second-tier price. Generally, channel customers enjoy the basic introduction price, while regional distributors enjoy the second-tier price. These two prices are handled solely by salespeople without effective supervision. Salespeople hold both prices and operate freely, making management difficult and loopholes larger. Salespeople at Company B routinely "sell high and report low."
Due to managers' habitual operations and lack of overall awareness, they do not systematically consider plans or implementation, acting arbitrarily. This not only damages the product image but also brings immeasurable losses to the company's interests.

**Awkward Pattern 6: Fixed Mindset**
The Shanxi merchants, who dominated business across Europe and Asia for 500 years, implemented the separation of ownership and management as early as 300 years ago. The "zhanggui" (shop manager) at that time was equivalent to today's professional manager. Shareholders pooled capital but did not participate in the management of the firm. Instead, the zhanggui and clerks, as trustees of the owner, actually controlled the process and results of economic activities and were responsible to the owner. There was also a rule in the firm: the "three lords"—the owner's son-in-law, young master, and brother-in-law—were not allowed to enter the firm. Therefore, many century-old Shanxi merchant shops could maintain long-term success because they achieved "separation of powers" and avoided family-style management.
Nowadays, most trading companies are still filled with family members. Few bosses can respect professional managers like Qiao Zhiyong of Huitong Tianxia respected Yan Weifan. The boss expects the manager to handle both business and delivery, to strategize and also be willing to "block bullets" for the company's interests at all times. At the same time, the salary and dignity do not reflect the treatment and respect appropriate to the position. Hire but not trust, trust but not delegate, delegate but not respect—this fixed mindset ensures that trading companies cannot recruit excellent talents for their own use. Even if they have talents, they cannot inspire their work passion or utilize their wisdom.

**Awkward Pattern 7: Difficult Capital Turnover**
Capital difficulty is one of the challenges troubling trading companies. Whenever they need to pay the factory to secure policies, trading companies temporarily find ways to borrow money, even resorting to high-interest loans. When large quantities of goods arrive, they do not market them diligently, and over time, inventory expands indefinitely. Astronomical receivables, piled-up warehouses, and lagging marketing are like three mountains pressing down on trading companies, making it hard to breathe. Comprehensive analysis shows three reasons for the capital pressure on trading companies:
1. Limited marketing ability, lacking the capacity to convert goods into cash. Many trading companies obtain policies from the factory but are unwilling to turn policies into marketing to quickly convert goods into cash. Instead, they treat policies as profit, hoard goods in warehouses, and sell slowly to enjoy ultra-high gross margins.
2. Weak brand influence and market control, lacking the ability to collect debts. Collecting payments means returning goods, and collecting payments means clearing customers.
3. Poor survival and development status, lacking the attractiveness to absorb social investment.

**Awkward Pattern 8: Inadequate Incentive Mechanism**
The most effective and direct way to stimulate team morale is to introduce competition and incentives, set goals, formulate rewards, conduct graded assessments, and fulfill promises. These principles are simple and effective. Unfortunately, many trading companies manage employee income with a single method of base salary plus commission.
Company H has grown to over 80 people in two years. A rapidly growing company naturally relies on an efficient team. What activates this team is not something else but a good incentive and competition mechanism. Company H has a complete structure, including a development department, catering department, circulation department, promotion department, and verification department. The annual tasks are broken down to departments and individuals. According to task size, departments and individuals have two types of high rewards: completing basic tasks and completing excess tasks. At the same time, to promote task completion, there are different rewards or appropriate penalties each month. Such a team has clear goals and naturally shows good work enthusiasm.

In summary, the above may not objectively summarize the success or failure of trading companies, but from a certain perspective, it reflects the operational difficulties, growth challenges, and development hardships of trading companies. To paraphrase Tolstoy: "Happy families are all alike; every unhappy family is unhappy in its own way." Similarly, successful companies are similar, while failed companies each have their own reasons.

--------------------------------------
**Like this article? Feel free to click the top right corner to share to your Moments.**

About us:
WeChat name: FMCG Distributor Professional Consulting Management
Account introduction: 20 years of experience in FMCG distributor operations and management, professionally addressing distributor internal issues:
We understand distributors better than manufacturers, and we understand internal management better than distributors. Senior marketing experts help your enterprise develop.

> Learning and exchange QQ groups:
>
> Group 1: 344257092 (full) ** Group 2: 231512457**
> Click "Read the original" below to enter our micro-community for interactive exchange and questions.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671