You have dependents

An open letter to manufacturers, wholesalers, trade show producers, trade association and trade magazines

A person completes their tax return with one of the questions asking how many dependents you have; how many people are depending on you for their well-being. The IRS sees you as being the responsible person for the care of these individuals which are considered as your family; biological, adopted and through marriage.

Though not on the tax return, we could ask about others depending on you. Within the industry there are a lot of people depending on you. It does not matter if your business is manufacturer, WD, or sales agency. It does not matter if you are an owner, officer, sales person, support person, or any other job; There are a lot of people depending on you.

Perhaps you have not considered your importance, but with the massive change within the industry because of Internet distribution of products, all those people working in businesses that sell to the installers and DIY customers, are very dependent on you.

We could also, very appropriately, look at the situation and say you are dependent on these customers being successful for your having a job.

What are you doing to help them? And, why should you help them? The second question is very easy to answer. If the industry were to shift to selling direct to installers and DIY customers, there would be thousands of people out of a job. Some may think this would streamline the distribution and lower prices of products, but when the National Retail Federation states that 15% to 30% of everything sold through the Internet is returned, we would surely find many jobs being created just to handle the returns.

It is not that dealers today know less, but that the Internet shift is attempting to eliminate them. Fortunately, dealers have many advantages, but they have never had to concentrate on the business side of the trade. Staying on top of product knowledge has long been their strong point. With the Internet providing so much product knowledge, that advantage diminishes.

Our “dependents” need help in learning how to be more adaptive business owners. We need to help them expand their passion for the trade into a passion for being a profitable business owner.

Let’s look at nine key components we can use as starter points in helping. With some of these components you may not currently know how to do them; you need to learn. Just like the dealer, that product knowledge is great but today you need to know how to operate a profitable dealership. You cannot be of help unless you know how to, and can do the things we are talking about.

Key #1. Even without a walk-in trade, the appearance of the building creates an important image. Use your camera to take pictures of attractive dealer’s buildings instead of showing stock photos. Doing so demonstrates you investing time and having a direct interest in what would look best in your part of the country.

Key #2. Teach them how to advertise/talk to their customers. If their primary customer is an installer, they need to be able to help that installer grow their business profitably. This may be writing a blog, creating a newsletter, or making You Tube videos. Definitely what their advertising should not be is a weekly email containing “item and discounted price” specials. All that does is create installers who shop by price.

Key#3. Help them in determining who their target customer is. They can’t be everything to every installer or DIY customer. They don’t have the space or money for all the necessary inventory. We illustrated that Wal-Mart competes with Target and Home Depot competes with Lowes. Each compete successfully because they do not target the same customer. We need to teach how to find and exploit their niche.

Key#4. This is one of the more important items; Education. Help them create an ongoing school for their employees. More than some online series of videos they can watch, every business should have staff meetings held every other week. Meetings in which the staff practices how to answer the phone, how to sell, and how to interact with customers. The important part is practice. People get better with practice; not having someone tell them to get better.

Key #5. There are two kinds of people out there; “stick people” and “carrot people”. With carrot people, they respond to incentives which guide them to do the things the business needs for sales and profits. Incentives can simply be recognition or as small as a baseball cap from some manufacturer. Stick people? They are the ones a dealer is constantly giving orders to. The stick people need to go away.

Key #6. How do we help someone develop a passion for business? Start by sharing business management articles that are appropriate to their individual business. Make sure you have read the article first; understand it; and can help the dealer make the suggested improvements to their business. Graduate to books on business management. Just make sure you read the book first.

Key #7. Hopefully, every business today has a point of sale system. Utilizing that technology is most often the challenge. Just as someone is taught to use Word or Excel, it requires one knowledgeable person teaching and interaction with the person learning. However, we need to show a dealer how to get the information from their system and how to make a decision with what they get. Information is useless unless it is utilized.

Key #8. We do not need our dealers to get a degree in accounting, but that relationship with the accountant has got to improve. Just like the key of technology, financial understanding to make decisions is crucial. Too many are getting a monthly financial statement that is too quickly put into a filing cabinet.

A financial statement that is only used to file taxes is such a waste. Of course, this means that you need to know how to read a business financial statement and be able to share insight to what can be learned to plan the future from this information.

Key #9. The last key is long term planning and business focus. We refer to this as having a business plan. The written plan requires looking into the future for the next five to ten years. It requires a written commitment to knowing the target customer and what kind of person is to work in the business. The business plan keeps the owner of the business on target. And like the other keys, this requires your understanding how to write a business plan.

All the keys require a different thought process and new areas of expertise on your part. We call this thought process and expertise, “job security”.

What a horrible forest it would be if only the best birds sang. It would be a horrible forest if all the birds sang the same song. Without the network of dealers, be it someone with one location or one with one hundred locations, the industry would become this forest. And with that diminished number of birds, there will be little need for bird feeders and bird food. Change the birds in this example to dealers, and change the bird feeders and bird food, to those in the trade.

This is not a story about being nice to dealers. It is a reality of what the industry could become if we do not act to help our dealers.

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