Are You a Better or Stronger Distributor

June 1, 2011
As a Result of the Recession?

Friedrich Nietzsche, the 19th Century philosopher coined the phrase, “What doesn't kill us, makes us stronger.” I think we have all unfortunately seen the kill side of the phrase with the number of distributors out of business as a result of these stressful times. However, at the same time, a number of companies have used the recession to look at their operations and make themselves better and more prepared to succeed and gain market share as the business climate improves in their region.

This improvement is occurring at an uneven pace depending on where you are, but the principles still apply. The stories I have heard vary, but a common theme is that the recession was kind of a cold slap in the face that reminded us to look within our companies for inefficiencies that we had overlooked in the past. Many tough decisions were made that, in the long term, will make us healthier distributors and better business partners for our customers and vendors. Following are some examples of what distributors have done to improve.

  • The recession was a reminder of lessons we have learned before; lean and efficient are the ways to run a distribution business. Focus on results and customer satisfaction. It is easy to lose our way when things are booming. It generally takes a recession or other crisis to remind us of that.

  • Take the opportunity to really look at inefficiencies within the company. Right sizing or making necessary but difficult employee decisions is paramount to future success. When everything is going well, it is easy to be “fat and happy” and absorb these inefficiencies, but economic stress puts an exclamation point on looking within and making the tough decisions.

  • Avoid the easy fix of decreasing marketing programs (short-term fix), and instead refocus on what the customer wants and increase both customer and internal training (long-term gain).

  • Look for increased internal efficiencies and watch metrics closely. Fit experienced, well-trained people into growth opportunities and allow them to do what they do best. It's a combination of growth and specialization. One leads to the other.

  • Make those difficult but necessary personnel changes that you have been avoiding. Several distributors noted that not only did changes produce the initial cost savings, they actually improved on the company's culture and work environment. These changes can be long-lasting and make a permanent improvement in company morale.

  • The recession has highlighted some opportunities in the field of sustainability and green technology that were coming of age, but now look to be long-term opportunities for the controls distributors. The complete system-energy-retrofit market is an area that has great potential.

The economy has posed many challenges for all of us, and we need to make some tough decisions. At the same time, those challenges give us the opportunity to become better and healthier distributors.

Paul Neustadt is president of Downers Grove, IL-based Neuco Inc. and chair of HARDI's Controls Council. Contact Paul at 800/323-7394 or [email protected].