Recently, the author was asked by a distributor friend to analyze the current situation of family-style distributors and provide an in-depth diagnosis and recommendations for his company's operational issues, aiming to break through the current development bottleneck and undergo a comprehensive overhaul for his second entrepreneurial venture. (Due to certain reasons, the specific case of this friend cannot be described in text here; this is an opportunity to analyze some common problems of family-style distributors.) It is often said that the market is like a battlefield; one must not only constantly monitor market changes but also keep an eye on internal developments. Only by balancing both internal and external factors and responding swiftly can one retain market share and navigate the vast market with ease. Background Description Most family-style distributors started their businesses out of necessity, aiming to support their families. Many were laid-off workers who, after being 'abandoned' by their enterprises, reluctantly turned to small trading. Others came from farming backgrounds, hoping to escape rural life through business. Their common trait is that they started from scratch, often scraping together their first 'business capital' from various sources, and with their 'dreams' in mind, they plunged into the market without hesitation. Initially, these businesses were mostly mom-and-pop shops or run by siblings. Working from dawn to dusk, often going hungry, was the best portrayal of their early entrepreneurial days. They drank plain water and sweated profusely; by day they were busy sourcing and delivering goods, and by night they were cleaning and repairing. They seized every minute and second, earning only pennies and dimes. Fortunately, they caught the wave of reform and opening-up. Most of them had developed a strong work ethic and endurance from the Mao Zedong era, and with the reform policies of Deng Xiaoping and Jiang Zemin, they went all out despite their difficult circumstances. Through relentless effort, many have become millionaires, and some even possess assets worth tens of millions or hundreds of millions. For their achievements and glory today, besides thanking the policies and external environment, they should also be grateful to the relatives and friends—uncles, brothers, and other kin—who struggled alongside them. When their companies (or shops) were still small, these people unhesitatingly followed them to conquer the market, braving wind and rain. Whether the business did well or poorly, they shared the same pot of rice and slept under the same roof. Whether profits were made or losses incurred, they received only a meager salary earned through hard work. So they should thank these relatives and friends who shared their hardships. Today, these distributors suddenly realize that their shop assistants, salespeople, accountants, cashiers, and even cleaners and warehouse managers are all relatives—perhaps a niece from the aunt's side, a cousin from the uncle's side, or even a gathering of uncles, aunts, brothers, sisters, nephews, nieces, grandchildren, and cousins. They might not have thought about it before, but when they do, it's startling. Having so many relatives and friends working together means not only taking care of them but also ensuring no one is 'favored' unfairly. In the early days of entrepreneurship, as bosses, they would paint a rosy picture of the future and say encouraging words like 'I won't forget everyone when we get rich.' But now that the company (or shop) has grown and money has been made, how can they balance the interests of so many relatives? These relatives often complain that someone isn't doing their fair share, or that another person gets the same salary despite doing less, and they even grumble about the boss. When the boss sees and hears all this, how can they not shudder? Let alone think about faster and better development for the company (or shop). Money has been made, the company has grown, and the number of employees has increased. Managing things the old way will surely lead to chaos! The relatives helped conquer the market and endured hardships; you can't just cross the river and burn the bridge. But if you keep them around, they'll throw their weight around and affect the company's atmosphere. Outsiders hired will feel uncomfortable, and even if they don't, you won't be able to manage fairly, leading to grievances. Moreover, to make the company bigger and stronger, you need to bring in more capable people. If you can't manage these relatives yourself, how can outsiders manage them? If you perform the surgery, you risk hurting the company and facing the wrath of your hometown folks. If you don't, the company can't develop and break through its current state. These problems torment these moderately successful distributors day and night. Distributors with such issues are numerous nationwide, even constituting a large portion of the distributor camp. Problem Diagnosis

  1. How should these relatives who helped conquer the market be handled, and where should they go?

  2. How should the company structure be built to adapt to the fiercely competitive market environment?

  3. How can fair management be implemented without affecting the company's condition?

  4. How can the transition from a mom-and-pop shop to a formal company be achieved? Implementation Approach Indeed, for those who shared hardships and helped conquer the market, even if they were strangers, it's hard for a boss to let them go. On one hand, the boss can't be ruthless; on the other, these relatives and friends won't leave willingly. Surgery is necessary; all distributors who have experienced this pain know that without reform, they'll die. The market is cruel, and these distributors, having struggled in the market for years, understand this well. But how to do it in a way that allows the company to develop well while minimizing 'public outrage'? That's the most headache-inducing problem for these bosses. Step One: Make a firm decision and rectify the 'relatives group.'

  1. After years of working together, the boss knows which relatives have management skills, which are hardworking, which have potential, which are dispensable, and which are even redundant. So for bosses preparing for a second venture, rectifying the 'relatives group' is imperative.
  2. Among the 'relatives group' who helped conquer the market, promote one or two reliable individuals with some management ability (who can control others) to department heads. These promoted supervisors will surely go all out to quell 'public outrage' and do their utmost to help the boss solve problems. As the saying goes, 'A new broom sweeps clean.' Moreover, being the 'elite' among many relatives, they'll be even more eager to fan the flames.
  3. For those who are 'redundant,' the boss should not be lenient. Do ideological work and find ways to send them home or encourage them to find other jobs. This demonstrates the boss's determination and serves as a warning to others: those who stay must work hard, or they'll be firmly dismissed. Initially, it's advisable not to dismiss too many people at once, as it could demoralize the troops. Step Two: Recruit 'fresh blood' externally to strengthen internal competition
  4. Hire experienced personnel to join the company, letting outsiders influence the remaining relatives. This serves as a wake-up call and makes them realize that there are capable people beyond their circle.
  5. Gradually refine management by creating more departments and assigning important positions to external hires, giving them room to showcase their skills. The boss should pay extra attention to such personnel; this is also a crucial step in the reform.
  6. Continue to send away some less critical relatives and friends, or assign them to insignificant positions, preparing for their eventual departure. Step Three: Integrate manufacturer resources and optimize company structure
  7. Upstream suppliers (manufacturers) are actually very useful partners who are willing to help distributors. For a distributor who is eager to improve and determined to reform, manufacturers will be happy to continue cooperation and will spare no effort to assist in solving problems during the reform.
  8. Manufacturer-appointed office managers and marketing personnel are usually trained and experienced in the market, with rich experience in market, training, and problem-solving. Many manufacturers also cultivate their marketing staff to be consultant-style or nanny-style marketers. Such personnel are definitely a free and powerful force that distributors can utilize in their reform.
  9. Use the successful experiences of other distributors nationwide or the manufacturers themselves to help the distributor reform, leveraging strengths and avoiding weaknesses, and avoiding detours.
  10. Integrate the capabilities of various manufacturers' marketing personnel, work with the distributor to re-plan the company structure, optimize human resources, provide training for company staff, and guide the distributor in product integration, promotional activities, and other practical operations to improve the quality and cultural literacy of company personnel, moving both external hires and relatives toward formalization. From August 22 to 24, the '2018 China Digital Innovation Conference (2018FDIC)' with the theme 'Finding New Growth Engines' will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution. This three-day conference will focus on two main themes: marketing and supply chain, with six parallel forums on brand, channel, communication, B2B, same-city logistics, and innovative retail. We will invite industry leaders, CEOs, and senior brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry. We will invite over 500 executives from FMCG companies, more than 200 CEOs from the B2B industry, and over 1,000 major FMCG distributors to gather and discuss how the FMCG industry can leverage digital tools to achieve renewed high-speed growth in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers and distributors obtain the latest information, understand best practices, and master more practical transformation skills. Proposed Invited Companies Conference Time August 22-24, 2018 Conference Venue Shanghai Baohua Marriott Hotel Conference Content August 22: Full-day registration Afternoon 14:00-17:30: Distributor same-city logistics parallel forum Evening 18:30-21:00: New Distribution Night Gala Dinner August 23: Theme: Marketing Digital Innovation Morning 9:00-12:00: Marketing Digital Innovation Main Forum Afternoon 14:00-17:30: Brand, Channel, Communication Parallel Forums August 24: Theme: FMCG Supply Chain Digital Upgrade All day: FMCG Supply Chain Conference Registration Method Registration is now open. Long press the QR code below or click 'Read Original' to register. Early bird tickets are on sale for only 2 more days, with a 50% discount. Prices will return to normal on July 1st! Registration Consultation Ticket inquiries: Media cooperation inquiries: New Distribution Previous Conference Highlights Click the links below to review the highlights of the 1st, 2nd, 3rd, and 4th FMCG + Internet Conferences: -END-