The 5 Biggest Challenges Distributors Must Overcome To Succeed

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No one goes into business thinking that they'll fail, but the truth of the matter is that 99% of new distributors fail. Most distributors don't fail for lack of effort or lack of commitment. They fail because they encounter the following challenges.

1. Competition - If you distribute the same product as a big distributor, you are going to get squeezed out of the marketplace. This is because they have economies of scale and can afford to operate at slimmer margins.

2. Building a route - Every major distributor that I know had the founder go out and build a route to get the business of the ground. They did this by meeting people in the street, making relationships, and selling. Don't be afraid of sales.

3. Start up costs - To start a distributor there are some big startup costs. You need a warehouse, a truck, accounting system, LLC, bookkeeper. Most distributors don't understand the cost of the startup prior to starting up.

4. Unique Product Line - Finding a unique product line is difficult. Sometimes you have to introduce a new product to an old market. If you find product-market fit, your distribution business will explode.

5. Small Profit Margins - Most distributors that I know operate on 10-20% gross margins. This means that if your route is 100K, you will only make ~20K in profit. If you don't scale out routes, and build a sales team, you will find yourself exchanging time for money and living at a near-subsistence level.
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