A Book Designed to Make Small Distributors More Money

I have been a fan of Al Bates for the past three decades. 

Nobody understands the financial drivers of distribution like Dr. Al Bates.  Those of you who have worked closely with me have probably heard me talk about Al and his efforts on behalf of distributors.  Further, if I ever mentioned the “Whale Chart,” which demonstrates how over half of the typical distributor’s customers subtract from the bottom line, that is a concept I discovered through his work and conversations with him. 

I am currently reading his latest book, and rather than give you a book report, I have asked him to share his thoughts on the book.

Please welcome as a guest blogger, Dr. Al Bates. 

Smaller distribution businesses have three important characteristics:  1) They are fun places to work since they aren’t bureaucracies, 2) they are highly innovative because they have to be to survive, and 3) as a group they don’t make anywhere near the profit that they should.

My work with small distributors (under $20.0 million in sales) suggests they can generate two to three times the profit they now do. The problem is not that management has a lack of intelligence or desire. The problem is that in small businesses, top management must be an expert at everything. There is just not the cadre of MBAs running around like there is in larger firms.

 

The owners/managers of most small distributors have a sales background. That is the reason they have such an entrepreneurial spirit. Accountants, economists, and sociologists don’t start distribution firms. Individuals with a marketing background do.

 

Alas, many strong marketers are lacking in financial skills. Because of this lack of understanding, there is a tendency to avoid financial issues entirely or fall back on old maxims such as “Sales solves all problems” or “We can make it up with volume.”

 

If it were just a lack of understanding, it might be possible to overcome the problem. However, there is another issue. Namely, most of the books on improving profitability are incredibly dull. Great for curing insomnia, but not very good for increasing profitability.

 

I wrote Profit Guide for the Small Distributor to help firms generate higher profit and ensure that managers enjoy understanding how to do so. There is no effort to give owners a debts and credits understanding. That is why accountants were created. The simple goal is to give owners enough financial firepower to be able to say: “This is what we are going to do to increase profit and why!”

 

The book will help readers focus on the things that really drive profit and give benign neglect to those that don’t. The book is full of real-world examples. It also unfolds in a jocular manner. That is, it has lots of humor, some of it even good.

 

Finally, the book shows readers examples for their specific company. It does so with something I call Shadow Exhibits.

 

The book uses examples for a sample company throughout. That company is more or less a typical firm in distribution. However, no company is exactly typical. As only one example, the firms I work with have gross margin percentages that range from 6.0% of sales to 40.0%. They all have the same financial issues, but with very different sets of numbers.

 

Profit Guide provides a link to an Excel file that allows every firm to print out all of the exhibits in the book using their own numbers. When the book examines issues such as raising or lowering prices, readers can see the impact of different pricing actions on their own firm.

 

Finally, the book has two other issues. First, it is short. That is because there is no fluff. Life is too short for fluff. Second, the book is expensive: $39.99 for a paperback edition. I think distributors should make a lot of money. So should authors.

 

Given the numerous examples, the book is only available in printed format. No e-book version. Sorry. It is available at: Profit Guide for the Small Distributor: Bates, Dr. Albert: 9781737237303: Amazon.com: Books.

 

Let’s make more money!

 

Frank’s note: As indicated earlier, I just started reading this book.  My initial thought is that even bigger distributors can benefit from Bates’ wisdom and advice.