Many distributor owners find it hard to grow once their business reaches a certain scale, often due to limited personal energy, market conditions, or lack of management. At this point, some owners start looking for partners or professional managers, hoping to leverage their help to take the business to the next level. However, in practice, many distributors fail to find reliable and suitable professional managers. Many are desperate and lack a proper selection strategy.
To address this challenge, New Distribution invited Mr. Li Feng, Executive President of Anshan Hongye Hengda Trading, to share from his personal practical experience how distributors can find reliable partners or professional managers.
-01- Under what circumstances should distributor owners look for partners?
I believe that when a distributor's sales volume reaches around 80 million yuan, and they are considering long-term development, aiming to expand to 100 million or 150 million, it is advisable to hire a professional manager. If the scale is around 20-30 million, typically the existing scale cannot meet the income expectations of a professional manager.
Sales scale is a hard indicator. Under this premise, if the second generation is not taking over the business, the owner is older, lacks a core team, has limited energy, and cannot manage everything, then considering a professional manager is also an option. If the distributor has a clear plan, a 3-5 year layout, determines the main distribution direction of the trading company, and expects the business to reach 300-500 million, the owner may decide to let go and go all out.
Additionally, there is another indicator distributors must pay attention to: annual net profit must reach at least 2 million yuan. Only with sufficient profit can you have the confidence to recruit talent.
Here, I remind distributors: if the budget for recruiting is around 100,000-200,000 yuan, it is advisable to cultivate existing outstanding employees internally. The recommended method is practice plus learning, such as professional team management, regional market operations courses or books. External recruitment requires an income of over 300,000 yuan to attract talent.
Once the hardware conditions are met, let's talk about the "software." Before hiring a professional manager, the owner must be mentally prepared to "let go."
Once the professional manager arrives, the owner's core job is to review data or communicate with the manager, and to divide responsibilities, such as the manager handling external affairs and the owner handling internal affairs. Delegate authority to the professional manager. If you manage everything, question everything, refuse to delegate, and don't trust the manager, problems are inevitable.
Another point, which I think is a common issue among many distributors: family-style management is severe. As the company grows, the problems of family management become more prominent. Everyone is family, talent is scarce, and formal development is needed. At this point, a professional manager is also necessary.
-02- Why do 80% of distributors fail with professional managers?
Let me start with a case:
I once communicated with a baijiu distributor friend. He hired a professional manager, but the manager left shortly after. His compensation method was to first take out the profit and operating costs of the baijiu, and then let the professional manager operate the remaining part, essentially giving the manager a "base price."
Obviously, this approach is wrong. When a distributor works hard to recruit a professional manager, trust is paramount. A professional manager is equivalent to a partner. Even without shares, once hired as general manager, all company affairs must be open and transparent. If there is mutual concealment, distrust, or defensiveness, cooperation will not last long.
I have listed 5 common mistakes distributors make, as a warning:
1. Can't let go, too much interference
After having a professional manager, they occasionally skip levels to manage, check on business supervisors' work, or even get involved in frontline salespeople's tasks. This is typical of not letting go and interfering too much. Additionally, when communicating with the professional manager, they don't use data but angrily ask, "Do you actually have the ability to be the general manager?"
Such dialogue cannot solve problems effectively. For communication between distributor and professional manager, I suggest phrasing like this: "Last month, the company's overall achievement rate was 110%, but one department only achieved 95%, while others met their targets. This indicates a problem in that department. You need to identify which link is problematic. Look at Lao Wang's sales, which fell short by 300,000 yuan. Compare with the same period last year. Where is the problem? How should we solve it?"
Remind distributors: when communicating with professional managers, never discuss issues vaguely. Using data is the correct way to explore problems.
2. Too much delegation, hindsight
Some distributors think that once the professional manager arrives, everything is fine. They not only delegate but also abdicate, not caring at all. I think this is also wrong.
You can delegate, but you must always pay attention to the company's operating data. You cannot discover after six months that net profit has dropped by 10% while expenses have increased by 10%. Track and communicate in a timely manner, at least once a week.
3. No division of labor, unclear responsibilities
After hiring a professional manager, clear division of labor is key. You cannot have department general managers, business personnel, and financial directors still reporting to you, as this creates unclear organizational structure and unclear authority and responsibility.
4. Opaque data, defensive mindset
The above case faces this issue. For example, a box of baijiu costs 200 yuan, but you tell the professional manager it's 220. Unexpectedly, the professional manager discovers the problem when communicating with the manufacturer.
The professional manager will feel that the boss doesn't trust them. After working hard for so long, the boss keeps saying they haven't brought profit to the company. Use people without doubt, doubt people without using them. Otherwise, it's easy to create irreconcilable conflicts.
5. Shaky stance after hearing rumors
A professional manager has just been in office for a month or two, but hearing from subordinates that the manager is not good at this or that, the owner's stance begins to waver. Even worse, they may not honor the promised salary due to reduced profits, or pay less.
-03- How to find partners or professional managers?
1. Recruit regional managers from upstream manufacturers
Distributors can recruit the manager responsible for your region to become general manager or partner. From my understanding, many distributors now find professional managers from upstream manufacturers, and the success rate is relatively high.
Some distributors, after many years in business and getting older, recruit regional managers from manufacturers. For example, those distributing alcohol recruit regional managers from alcohol companies. This is a relatively good path because you know their character and abilities. They have also been trained by large enterprises. Although they may lack practical experience, after adapting to the market, they can usually get into the role within 3 months.
2. Promote from within, give opportunities
Trust your team and give them opportunities to develop. Take Hongye Hengda Trading as an example: when I came to Hongye Hengda, I didn't bring any department general managers from outside; all were promoted from within. Many times, because employees have been working under you for a long time, you fail to notice their strengths and abilities.
But if you boldly try them, you'll find it's not the case. Internal employees are familiar with the company and recognize it. They only need a short period of adjustment and training to get up to speed quickly.
I once promoted a business person who had worked diligently for eight years, with good character and a willingness to work hard. After being promoted to branch general manager, despite the pressure, after two years of adjustment, they have grown very quickly.
3. Recruit talent from the same industry
When recruiting from the same industry, the bargaining chip is crucial. If the distributor owner has identified the right person, the key is how much the owner is willing to offer. Since human nature is mostly driven by interests, if the chip is enough, there's no need to worry about not being able to recruit.
4. Introductions from friends
People introduced by friends can be clearly understood in terms of work ability and interpersonal skills, making it a good channel.
5. Headhunting companies
Generally, headhunting companies are more suitable for large enterprises. Small trading companies usually don't need to recruit from headhunters. Moreover, if you are not familiar with the headhunter, and the hired person is found unsuitable after three months and needs to be dismissed, it's not only irresponsible to the person but also to the company.
-04- What should the owner do before the professional manager joins?
1. Persuade direct relatives to leave
When a professional manager arrives and finds direct relatives in the company, should they manage them? If a relative makes a mistake and clashes with the professional manager, how should the owner handle it? The owner may be in a difficult position, so it's recommended to persuade direct relatives to leave before hiring the professional manager.
2. Improve internal management tools and ensure data accuracy
A trading company with sales of 80 million yuan will give a certain dividend to the professional manager. If our company data is inaccurate and management tools are incomplete, it will easily lead to disputes.
Case:
A branch general manager was once poached by a peer company with a high salary. Having trained for many years in the previous company, they thought they could do great things there. But after entering the new company, problems emerged. First, the people cleaning the house were relatives of the boss; second, warehouse management was chaotic, let alone batch management; third, there was no data, so even if they did well, it couldn't be reflected; fourth, there was also a general manager who had been with the boss for over ten years. In the end, they left after one year.
3. Hold an advance briefing meeting to clarify rights and responsibilities
Before the professional manager joins, hold a company-wide meeting to clearly communicate the company's strategic layout and plans. To achieve better development, we have brought in someone from a certain industry, and introduce their resume, background, and abilities, hoping they will lead everyone to progress, develop, and get rich together.
On the first day after the professional manager joins, also hold a meeting with all employees so they understand the owner's emphasis on the professional manager. Of course, this also respects employees and resolves any speculation or doubts between employees and the professional manager before they get to know each other.
4. Arrange personal life for the professional manager before arrival
If the professional manager is from out of town, arrange housing, personal vehicle, daily meals, and other aspects in advance, so they feel the warmth of home and can work with peace of mind.
-05- How to design compensation and performance for professional managers?
Based on whether they invest in shares, there are two forms of compensation design: First: base salary + dividend (net profit commission) + sales growth commission; Second: capital investment in shares.
1. How to design base salary + dividend + sales growth commission?
Assume in 2019, a trading company has sales of 80 million yuan and net profit of 2 million yuan. If the owner's budget for hiring a professional manager is 500,000 yuan per year, it can be designed using the reverse calculation method as follows:
Base salary: 10,000 yuan/month * 12 months = 120,000 yuan/year; Dividend (net profit commission 10%): if net profit does not grow that year, dividend income is 200,000 yuan/year; if net profit grows by 20%, dividend income is 240,000 yuan/year; sales growth calculated at 25%: 80 million + 80 million * 25% = 100 million, excess of 20 million with a commission of 0.7%, excess commission is 140,000 yuan/year.
This design has two advantages: First, dual assessment of net profit and sales volume prevents blindly increasing sales by investing more in expenses, doing special promotions, and sacrificing net profit;
Second, the company's core focus is still net profit, so the proportion of net profit is relatively large. Additionally, even if net profit does not increase in 2020, the professional manager can still receive 200,000 yuan in dividends, providing a basic guarantee.
Here, I remind distributor owners: the logic of this method is the "reverse calculation method." First estimate how much you intend to pay the professional manager, then allocate it across base salary, net profit commission, and excess sales commission.
The specific proportions are set by the owner, but follow a principle: Base salary, generally 5,000-10,000 yuan, not recommended to exceed 10,000, to cover basic expenses, accounting for about 20% of income; net profit commission, a key indicator, about 50% of income; excess sales commission, about 25% of income.
2. Calculate company assets and invest in shares
Some distributors, to deeply bind partners or professional managers, let them invest in shares. But before this, I suggest distributors must calculate their assets clearly, including accounts receivable, external debts, upstream manufacturer account balances, warehouse inventory, etc., which together constitute assets.
Assume the company's current assets are 10 million yuan. The professional manager's shareholding is generally controlled within 30%, and the manager invests 3 million yuan in cash for shares.
-06- Summary
Finally, I suggest that distributors should not let professional managers bring their own teams. Before joining, sign a confidentiality agreement and labor contract, and include "not engaging in other related businesses locally" in the contract.
If the company develops quickly and brings significant benefits, the owner should proactively increase the professional manager's income or give appropriate shares; otherwise, problems may arise. Human needs are endless. The effect of proactively giving versus being asked for is vastly different!
The above are some methods I have summarized from years of practical experience on how distributor owners can select partners or professional managers. I hope these can provide some help to confused distributor owners.