Entrepreneurship is, by its very nature, a complex and risky undertaking. There is the difficulty of developing a new product, creating efficient systems for making it, sourcing the raw inputs, and training workers. That’s on top of all the other work it takes to start a business, and it’s all compounded with the risk that your product just might not catch on.
In certain cases, your desire to start your own enterprise might best be directed into something that serves other businesses. Operating a distribution business can be that type of solution.
While certain markets are covered up with such firms, still others are sorely lacking. As you begin to research your opportunities, consider your own specialized interests – hobbies, sports, and so forth – and dig deeper with the products you use yourself. Like any good market research, this process can help you locate companies with unmet needs.
Once you have some ideas of who you want to work with, you’ll begin to see the value in operating a distribution business. The up side: You won’t be locked in forever. You can still eventually get into your own product or service, and the knowledge you’ve gained will help you in several key areas.
Recession Resistance
When you’re just starting out, the last thing you need is a 2008-like economic implosion. While many new firms can’t withstand such an extreme event regardless of the nature of their business, it’s clear that distributorships are better able to hedge against recessions because they can diversify fairly easily. They not only start out with a variety of clients, they can also quickly add new ones if existing customer bases encounter financial struggles.
Sales, warehousing, and shipping are flexible functions that can easily evolve from one product to another, so as long as consumers are putting something on their shopping list, you’ll have the chance to be part of the process. This leaves you in a far more secure position when other firms begin to struggle.
Market Reconnaissance
It can be very time-consuming to do market research. All the statistics and data in the world can be helpful to an extent, but at some point, it takes talking with customers and other companies to see what’s really needed. When smartphones hit the market, the first people to realize the need for durable cases were probably the customer service reps who were dealing with irate customers who’d cracked their screens.
When you’re a distributor, you are privy to a lot of information well in advance of when other budding entrepreneurs hear it. As you sell, pack, and ship, you are hearing from both manufacturers and customers about what’s lacking in the market, and you have the opportunity to pounce on that shortfall to make it your niche.
Startup Savings
Somewhere along the way, your inventive spirit may demand to be fed. There’s nothing wrong with that! What you have done during your time as a distributor – serving as the hands and feet of someone else’s products – is to establish nearly everything your own production will need. Get your manufacturing or other processes online and then use your existing distributorship to get them into the hands of customers.
Once again, we are looking at flexibility here. Conveyors, shelving, forklifts, and packing tape can be used on any product you handle. Sales staff can quickly learn new items and possibly make sales from existing customer lists. So while you’ve gotten everything underway handling what others have made, you can quickly add in your own goods and let them ride the coattails.
It’s the entrepreneur’s dream to create something new, build a market for it, and then sell it to every consumer in the market. And while certain people may continue to succeed with that route, the more pragmatic businessperson can approach from a different direction and still reach the same destination.
