Recently, Wang Jiaming, general manager of Longcheng Jiaming Trading Co., Ltd., has been troubled. Longcheng Jiaming Trading is the exclusive distributor in Longcheng for Brand A, one of the largest food companies in China. Fifteen years ago, with his "forward-looking vision," he chose Brand A, which was then fledgling and not widely recognized, embarking on a truly "leapfrog" development: in 15 years, he grew from a one-man operation delivering goods by tricycle to the largest leading trading company in the local area, with annual sales exceeding 40 million yuan and nearly 70 employees. Amid the envious glances of peers, Wang Jiaming revealed his dilemma: although sales continue to rise, profits are not as good as before; although the workforce has grown exponentially, employee motivation is not as high; although he has cultivated many managers and professional teams, he feels he no longer knows how to manage. "In summary, how should we develop in the next 15 years?" Wang Jiaming's case is by no means unique. Having hitched a ride on the fast-developing train of manufacturers, trading companies that achieved rapid growth through "dependency-driven" development have now fallen into confusion in the next stage of development, which has become a common ailment among most large trading companies at this stage. In fact, we should be happy for Wang Jiaming, because as the saying goes, "Identifying the problem is half the solution." What we fear are those who "don't realize until death is imminent" or those who are "complacent and stagnant" about their achievements today. Organic Growth for Trading Companies What Wang Jiaming is troubled about now is how to solve his own "organic growth" and maintain sustainable development. So, what is organic growth? Organic growth refers to growth that focuses on enhancing customer satisfaction, employee engagement, and profitability of core businesses. It is growth brought about by the company's core business expansion through innovation, new products and services, and customer growth. For trading companies, we can also understand it simply as "how to tap internal potential and how to seek benefits from management." For the past 15 years, successful trading companies in China have all been "relying on big trees to enjoy the shade"—the result of cooperating with successful brands. But is "reliance" and "dependency" a long-term strategy for corporate development? Obviously not. Only by honing internal skills and strengthening the company's continuous internal improvement function can they cope with the ever-changing market, develop together with manufacturers that still maintain rapid growth, and become an indispensable part of the entire business value chain. Compared with large listed companies, the organic growth of trading companies must first solve the "thought and awareness" problem of "Wang Jiamings"—this is called the "spiritual level" of organic growth; after solving the "spiritual level" problem, then solve the "technical level" problem. The Spiritual Level of Organic Growth The spiritual level of organic growth is the engine of a company's organic growth. Only when the company leader (decision-making layer) fully recognizes the direction and goals of corporate development can other "technical level" organic growth play a role. If the spiritual level cannot grow organically, but the technical level continues to grow organically, there will be a phenomenon where "the company is constantly standardizing and expanding, but because the development direction and goals are not found, employees will be confused or complain," just like a person with "simple mind and strong limbs," no matter how developed the limbs are, they will not become a wise person. The spiritual level of organic growth mainly refers to the boss of a trading company, who should establish a sense of crisis and urgency through learning and thinking, because "preparing umbrellas while others are sunbathing" is always a wise move. Regardless of the current size or scale of the company, one should not lose the desire and vision for growth and expansion—because only then will the "technical level" growth below be meaningful. For example, Genghis Khan had great ambitions at the spiritual level: when he was pursued by other tribes, he still did not abandon his goal and direction of "making all places covered by green grass my pasture, with the goal of becoming the king of the grasslands who unifies the Mongol tribes." Although not everyone can become a "king," everyone should have their own ideals and goals. The spiritual level of organic growth mainly includes leaders' self-improvement and self-breakthrough, such as attending CEO training courses, going out for visits and study tours, participating in special training, and learning from successful entrepreneurs. [Case] Zhang Xuefeng, general manager of Qinzhou Baida Trading Co., Ltd., just returned from a market visit to Wuxi to study an excellent local trading company. He didn't go specifically for that; he went with a business study tour of classmates from his CEO training class at Peking University. After returning, Zhang Xuefeng admitted that theoretical learning and business visits greatly broadened his previously almost imprisoned thinking, giving him a completely new perspective on the next step of development. The Technical Level of Organic Growth The technical level of organic growth includes six aspects: standardizing organizational management, establishing a human resources management system, strengthening financial management, professionalizing marketing functions, logistics and warehousing management, and strengthening team building.

  1. Standardizing Organizational Management Standardizing organizational management, simply put, means understanding what work exists in the organization, who does what, what responsibilities and authorities workers have, and what the relationships are with superiors, subordinates, and peers in the organizational structure. Only in this way can obstacles in execution caused by unclear responsibilities be avoided, enabling the organization to operate coordinately and ensuring the achievement of organizational goals. For Jiaming Trading, which has developed for 15 years, the first thing to do is to conduct a thorough review and inventory of its organizational management, clarifying person-post matching, clear responsibilities, and clear hierarchy. Specifically, it is necessary to divide work departments according to the company's characteristics, external environment, and target needs, re-examine the company's organizational structure, adjust suitable departments and positions according to the requirements of the next stage of development, set up various positions or posts, clarify their responsibilities, and grant corresponding authority; formulate rules and regulations, and establish and improve the mutual relationships in all aspects of the organizational structure. The trading companies the author has come into contact with mostly have chaotic organizational structures, with many cases of one person holding multiple positions: for example, the person responsible for market planning and the person responsible for supermarket business are the same person, and even the accountant and cashier are the same person. There are also unclear reporting relationships between superiors and subordinates, employees not knowing which department they belong to, not knowing their supervisors, and serious cross-management... etc. This inevitably affects organizational efficiency, unclear responsibilities or different focuses affecting work efficiency, and seriously affecting the company's next step of development. General Manager Deputy General Manager Text box: Finance Department Text box: Distribution Department Text box: Administration Department Text box: Marketing Department [Figure 1: General Organizational Structure of Trading Companies]
  2. Establishing a Human Resources Management System The human resources management system is about how to recruit people (from where), how to retain the recruited people (training and providing platforms), and how to make the retained people maximize their effectiveness. As the head of a trading company, when you reflect like Wang Jiaming, have you noticed that you haven't had a relatively (not very) complete recruitment, training, and incentive system and institution for so many years? Do you still personally interview salespeople? Is your training for employees nothing more than occasionally telling them your glorious entrepreneurial history when you have time, and nothing else? Are you troubled by the high turnover rate that you can't solve? Your salaries are not lower than others, but you can't retain people...? Then when sorting out the organizational structure, add a dedicated human resources management position in the administration department: whether called HR supervisor or HR director, it is mainly responsible for recruitment, onboarding training, and the establishment of performance appraisal systems. When a company is small, it's the boss's competition (including courage, resource integration, etc.), but as the company grows, it becomes competition of systematic human resources.
  3. Strengthening Financial Management When it comes to financial management, Wang Jiaming's head aches. Regarding "whether it is profitable," Wang Jiaming's financial director (his wife) has a simple formula—this is how he has calculated for the past 15 years: for example, at the beginning of the year, there is 1 million yuan in bank cash and 300,000 yuan in inventory value. At the end of the year, when inventory is taken, bank cash becomes 1.2 million yuan and inventory value becomes 700,000 yuan. "It seems we made 600,000 yuan this year" is the view of most "Wang Jiamings." Such financial management awareness obviously needs to be changed urgently: many distributors' financial management only stays at simple bookkeeping of daily income and expenses, with arbitrary operating expenses and incomplete procedures, not reflected in the financial accounts, and financial management cannot play a warning and control role in coordination with other functional departments. Financial management plays a crucial role in the operation of trading companies, and operators must have a full and complete understanding: in the stage of purchasing products from manufacturers, finance plays the role of fund raising and customer account maintenance; in logistics and warehousing, finance plays the role of storage control and inventory management; in the circulation of products, finance plays the role of risk control and price control; and in value exchange, finance plays the role of capital recovery and value preservation and appreciation. Otherwise, many distributors will inevitably wonder: "I earn a lot of money usually, but after deducting those miscellaneous expenses, why is there so little left at the end of the year?" When facing the need to compete in capital strength, business scale, and profit, if the financial management function cannot effectively play a greater role, it will be terrible. Therefore, distributors must first improve the organizational guarantee of finance—improve the structure, equip necessary positions—and then establish a sound financial management system, truly enabling financial management to play its due role. [Case] Yueyang Caiyuansheng Trading Co., Ltd. is a distributor of a well-known domestic leisure food brand. The couple started with 5,000 yuan and after 10 years of development has become a trading company with annual sales of 40 million yuan. When they felt the business was weakening, in 2008, following the advice of a consulting company, they sorted out and inventoried their financial system. Finally, they "made a painful decision" to subdivide the wife's authority of "managing everything except sales": in addition to serving as cashier, they hired a professional financial director with an annual salary of 120,000 yuan, and established a complete organizational guarantee, strengthening the company's budgeting and accounting functions, putting it on a standardized track.
  4. Professionalizing Marketing Functions Although distributors are channel operation organizations that embody value through marketing, apart from the sales function (salespeople), distributors generally have no concept of a "marketing department"—especially for distributors of big brands and big manufacturers: advertising is done by the manufacturer, activities are planned by the manufacturer, promotional materials are provided by the manufacturer, personnel are trained by the manufacturer... In short, it's "nanny-style service," and distributors just need to execute everything with peace of mind. But have you ever thought that sometimes the manufacturer's national strategy may not be very suitable for a certain region, or when the manufacturer's strategy is not timely, what should you do if you need to carry out targeted market activities? This requires trading companies to also have their own marketing department (or marketing function). But when it comes to the marketing department, it seems like a function that only large companies can have, but that's not the case. Although the marketing department has many functions, for regional trading companies, it is enough to have the responsibilities of a trading company's marketing department. Marketing Department Market information analysis: including competitor, terminal, and consumer information Independent promotion strategy: mainly promotional activities combined with the local region Activity execution control: efficient execution capability through inter-departmental collaboration [Figure 2: Marketing Department Functions of Trading Companies] Strong sales execution is certainly important, but from a long-term development perspective, trading companies should attach importance to and strengthen the marketing department's function. After all, as the "think tank," the marketing department's role in future market competition will become increasingly prominent. [Case] Qingdao Guokai Trading Co., Ltd. is a distributor of a well-known domestic edible oil brand. In fierce competition, to maintain its advantage, in addition to cooperating with the manufacturer's activities, its dedicated planning department fully utilized its market planning function and cooperated with the local "Culture Three Enters" activity's "Film into Community" event. Specifically, based on the film company's schedule for entering communities, they formulated product promotion activities. Every weekend when films entered the community, they provided sun umbrellas and leisure chairs to residents, displayed edible oil promotional materials on site, and held a "buy edible oil, get a summer mat" activity, which was very popular with residents. The activity was also praised by the manufacturer, which not only promoted it to other regions but also provided financial support.
  5. Logistics and Warehousing Management If the logistics and warehousing function is lost or becomes a short board, the value of a trading company will also be lost. Therefore, how to control costs and improve the efficiency of warehousing and distribution is a problem that every distributor thinks about day and night. In large enterprises, logistics and warehousing management has risen to the strategy of "supply chain management." But for distributors, logistics and warehousing management is nothing more than "vehicle management" and "warehouse management." "Vehicle management" is about how to increase speed and reduce "storage and transportation rates" (from manufacturer to distributor warehouse and from distributor warehouse to terminal stores); "warehouse management" is about on-site management (including product safety and practical principles) based on ensuring "unit storage efficiency" of the warehouse. In reducing storage and transportation costs, according to the area under jurisdiction, two models can be adopted: "direct distribution" or "outsourced distribution." Of course, whichever distribution model is adopted needs to be analyzed from a financial management perspective. In management, it is also divided into hardware management (warehouse area, protective facilities, etc.) and software management. In software management, the main thing is to establish a reasonable inbound and outbound process (including using computer software) under the principle of ensuring minimum safe inventory, so that the smallest investment yields the highest efficiency. [Case] A distributor of a beverage brand in City A, starting from 2008, divided its jurisdiction into 12 districts based on an average of 320 terminal stores per district, and outsourced each district to 12 distributors, while it almost did not configure its own vehicles and distribution personnel. The district distributors are also independent individuals. The distributor's salespeople visit terminals, responsible for shelf stocking, order taking, and maintaining customer relationships, while the distributors only pick up goods from the distributor's warehouse according to business orders and deliver to terminals according to the distribution schedule. According to the three years of operation, this distributor's product distribution cost decreased by 3% year-on-year, effectively alleviating the trouble of capital occupation and personnel and vehicle management.
  6. Strengthening Team Building When the organization scale gradually expands, the company should consider strengthening team building. Hearing "team building" seems like a very vague and empty concept. In fact, for trading companies, so-called team building is about how to make employees like the company and work with full enthusiasm. On a larger scale, it is also about introducing or cultivating a company culture suitable for oneself. Because only culture is a sharp tool that can be felt at all times and can inspire and guide employees. If an employee works in a company and feels depressed every day and everything goes wrong, they certainly cannot work efficiently. Therefore, the important prerequisite for team building is respect—respect every employee, let them have dignity and feel "valued." Respect for employees starts from the boss, from the boss's family and relatives, and should form an atmosphere—that is culture. This respect is tangible, visible, and felt, for example: being punctual and trustworthy with employees, and humbly listening to the opinions of grassroots employees. Of course, trusting employees is the most obvious form of respect. Establish a "seamless communication" atmosphere. What is seamless communication? It means that anyone can communicate with anyone without obstacles. Now many distributor bosses have not become entrepreneurs but have contracted "big company disease": they follow the principle of no cross-level management and no longer contact grassroots employees, and they adopt no cross-level reporting and no longer listen to opinions from below, thinking this is the formalization and standardization of the enterprise. Of course, these things that need to form a cultural atmosphere are not achieved overnight; they must be instilled from top to bottom, and leaders must lead by example and persist over time. However, there are actually many strategies that can help team building in the short term: that is to formulate a system for team activities and schedule them regularly. This includes team learning activities, team travel activities, team dining activities, team meeting activities, etc. In short, the principle is "everyone is equal, everyone participates," so that everyone always feels that this is a collective that cares about everyone, and everyone is happy in this collective. No matter how perfect the management systems are, no matter how sound the rules and regulations are, if the team has no morale, nothing will be accomplished—because people are the main body after all. [Case 1] The general distributor of Inner Mongolia Mongolian King Wine often organizes team outdoor activities, regular team learning, and encourages everyone to brainstorm, use their creativity, and write reflections, which is deeply recognized by employees, and the team maintains high combat effectiveness and stability. Concluding Remarks People say that China's reform and opening-up has completed the 200-year journey of Western countries and achieved remarkable achievements that have attracted worldwide attention. When people cast envious and admiring glances at the successful entrepreneur group, the distributor group that has gradually grown and matured in this value chain also "has worked hard even if without merit." If in the past 20 years, the past 10 years, China's distributor group (the Wang Jiamings) relied on market blowout, the robust growth of manufacturers, and personal hard work to grow and develop, then in the next 10 years, the next 20 years, our distributors need to "practice internal skills and tap internal potential," truly achieve "organic growth," and continue to play a more important role in the enterprise value chain. Starting from the six aspects of "standardizing organizational management, establishing a human resources management system, strengthening financial management, professionalizing marketing functions, logistics and warehousing management, and strengthening team building" is an urgent task. Editor's PS: The editor has selected 1,067 articles from nearly 1,900 articles published on this official account, divided them into 14 major categories and 57 knowledge points, and systematically compiled frontline marketing management content into a library for everyone to learn. From market to customers, focusing on practical combat and management, all are dry goods. After following the official account, reply with the number "1" to browse and view related content.