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When a distributor's business is just starting, it is common to face the situation of "three shortages and two smalls": few products, few customers, little manufacturer investment, weak company brand influence, and small own strength.

Enterprise development is achieved by breaking through bottlenecks one by one. These "three shortages and two smalls" often constitute the first bottleneck for distributors, and it is essential to find ways to break through to have a future. However, some distributors, when facing this first bottleneck, begin to fall into cognitive misconceptions, leading to many erroneous thinking patterns and practices that make the business increasingly difficult. So, what misconceptions appear during the startup period?

Misconception 1: Relaxing Cooperation Terms

New distributors, during the startup period, have few downstream customers. To develop and win more customers, or due to a lack of management experience with downstream customers, they may relax many cooperation terms, such as extending payment periods, providing trial shipments on credit, not supplying other customers, accepting more returns and exchanges, etc. The apparent benefit of this is attracting downstream customers.

However, the consequences are worse. Businesspeople always seek to maximize profits. No matter what terms the upstream supplier offers, customers always want further concessions. They will not be grateful to the distributor for this, nor will it solidify their cooperation. Experienced distributors know how to strike a balance, offering terms that are just right, and never over-relaxing conditions to win customers. Moreover, excessive relaxation of terms can disrupt market order, causing complaints and jealousy from peers, and deteriorating peer relationships. Furthermore, once such rules are established, they are quickly solidified by downstream customers. These preferential terms must be maintained; otherwise, customers will not accept it. It becomes very difficult to cancel them later, and these excessive concessions will continue to affect the distributor's profitability.

Misconception 2: Waiting for Manufacturer Support

Many new distributors, due to limited strength, feel inadequate during market development and place hopes on upstream manufacturers. They believe that since they are just starting, the upstream partner manufacturer should support them and help them through this stage. As a result, new distributors frequently ask manufacturers for expenses, policies, and support. What is the outcome of such requests?

Manufacturers will not provide much support; instead, they begin to have a negative view of the distributor. From the manufacturer's perspective, this is a new distributor in a new market, and it is difficult to see a return on investment. There is no need to spend money on such an uncertain market. Therefore, manufacturers adopt a safe strategy: do as much as possible, but generally do not invest many resources in new markets with unclear prospects. Manufacturers also fear that these investments will be like throwing meat buns at a dog—never to return. In fact, regarding the manufacturer's market investment, distributors can refer to bank lending standards: they do not provide help in times of need, but they rush to add flowers to brocade (i.e., help when things are already going well).

So, what should new distributors do? At this initial stage, new distributors cannot attract manufacturers by volume, nor can they attract them by future market prospects. Actually, at this stage, to attract manufacturer investment, the key is two words: "obedience." To put it more positively, it is strong execution. Distributors generally have poor execution of manufacturer instructions, which is a common problem for most manufacturers. From a management perspective, manufacturers need positive examples—obedient models. As a new distributor, you can consider taking this path: position yourself as a highly cooperative distributor that follows the manufacturer's commands. This way, it is easier to gain manufacturer support.

Misconception 3: Developing Customers by Yourself

When a new distributor is just starting, the number of customers is generally small, and developing customers is the main task at this stage. Many distributors believe that customers must be developed directly by themselves. So, distributor bosses tirelessly visit downstream customers, spending a lot of energy. However, because the new distributor has low visibility and the company's brand image is not established, even if the boss personally visits each customer to communicate, the actual effect is limited. Additionally, since the business is just starting, there is no trust relationship yet, and the cost of explanation and communication is high.

In fact, new distributors can consider another path: let customers develop customers. That is, concentrate energy and resources on serving existing customers well, gaining their recognition and trust, and then entrust existing customers to develop new customers horizontally. After all, there is a certain degree of trust among peers, and such recommendations are far better than the distributor knocking on doors themselves. It eliminates the sense of unfamiliarity and reduces doubts. That is, concentrate limited resources on one or two points, achieve results, and then expand horizontally, rather than spreading limited resources and energy across many new customers at once, which is like light rain that yields little.

The above three misconceptions are the most common for new distributor bosses in the early stages. If they can be discovered early and adjusted early, much unnecessary investment and waste can be avoided, accelerating the company's development.

(Source: Channel Network)

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