Distributors

The value of the independent distributor

By Jack Keough

 

A friend recently asked me why I liked writing about distribution so much.

 

I thought about that question for a while and I guess the best answer is because I respect what so many of these distribution executives, particularly its founders, have accomplished.

 

Many of these distributors, reps, and small manufacturers started their companies with a small amount of cash, a dream to create a business and the drive to succeed.

 

Years ago, the founder of a distribution business may have had product knowledge but no experience in actually running a business. Some had been sales managers or sales representatives.

 

I’ve heard their stories as to how they often sat at their kitchen tables at the end of the week, going over sales figures and wondering if they could make payroll. Many of them didn’t even take salaries, putting everything they had into the business.

 

In fact, that was one of the comments made to me by John Cullinane, founder of the Cullinet Software during an interview many years ago. Cullinet, (later Cullinane Database Systems) was the first software company to be listed on the New York Stock Exchange.

 

Cullinane, a legend in the software business, told me the happiest time of his life was starting his business and detailed some of the obstacles he overcame to eventually have his firm become one of the largest software companies in the country.

 

It’s a story that I’ve heard many times from distribution founders who have kept their companies independent. They’ve managed to survive wars, depressions, recessions, conflicts and economic downturns.

 

Think about what you, a distribution owner and entrepreneur, has had to do to grow your business. You haven’t had the advantage of having a large marketing or PR department to determine whether you should add product lines, expand geographically by opening a branch, whether or not to merge or acquire another business or add workers.

 

Several years ago I was meeting with a distributor owner and his board to offer assistance in deciding whether or not to sell his business, look to acquire, or go in another direction regarding additional product lines. He knew his market, his company’s strengths and weaknesses and decided to expand and add product specialists. It was his knowledge and, yes, even his gut feeling that allowed him to make a decision. He eventually bought another company and continues to be successful today.

 

Being an independent distributor means you have to be agile, mobile, and develop a specific niche that will tie you to your customers, making you an invaluable resource.

 

The biggest change that has occurred in distribution in the past 20 years has been the growth of the mega-distributor. There was a time when even some of the larger distributors in the marketplace were just regional players. That is, of course, no longer the case.

 

But despite all the stories of these giant distributors, industrial and electrical distribution is still a highly fragmented business. In survey after survey buyers still say they prefer to buy from a local or regional business.

 

Being independent, means just that. That isn’t going to change in the future.

 

Sure the bigger companies are getting more than their share of national contracts but it does not mean in any way, shape or form the end of the independent distributor. Not by a long shot.

 

 

Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com

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