A recap of our 2011 Wholesale/Distribution Annual Seminar, by Barnes Dennig Senior Accountant Tyler Duff:
A successful distributor should plan for profit, take it off the top and maintain a net profit before taxes of at least 30 percent. To get there, Dr. Don A. Rice said, it is important to measure every business activity, train employees to generate profit and reward them for doing so.
Dr. Rice, an experienced executive and educator in the distribution industry, highlighted five practices of successful distributors:
- Make a healthy profit.
- Offer a level of customer service that makes them ecstatic, not simply satisfied.
- Train all employees how to serve customers and generate profit.
- Measure every business activity.
- Take the necessary actions to meet your goals.
It was the focus of Dr. Rice’s recent presentation – “Planning and Managing the Distributorship for Greater Profit” – at the 15th Annual Wholesale/Distribution Seminar, sponsored by Barnes Dennig, Key Bank and Martin & Associates.
Dr. Rice recommended the DuPont Model of financial analysis, which calculates return on investment and allows a business to easily measure the profitability of each area of the company. He challenged all attendees to “run” the numbers and enter their company’s financial data into the ROI calculator to determine what areas they must improve. He suggested designating one individual at the executive level to constantly monitor profitability.
The next step, Dr. Rice said, is to use that information to educate and incentivize employees. Whatever their role, they should understand precisely how they can improve the company’s profit, and they should be rewarded when they succeed.
“Your managers need to think like owners,” he said.
Sixty eight executives from local companies attended the seminar at the Cintas Center, and 89 percent of survey respondents rated the content “very good” or “excellent.”
“It was great to receive some practical tools to help evaluate our business,” one attendee wrote. “It was also good to get a different perspective. Now the challenge will be to convince others in the organization to look at life differently.”