Guide to starting a distribution business

A wholesale distributor’s initial steps when starting a distribution business include defining a customer base and locating reliable sources of product. But even after you manage to figure all this out successfully, there is still the matter of choosing where to start your distribution business. For entrepreneurs looking to start their own logistics companies in Bahrain, there are basically three avenues to choose from: buy an existing business, start from scratch or buy into a business opportunity.

Coins and a jar
When you are building a reputation from scratch, you’ll have to make lots of investments for at least the first two years until your client base reaches critical mass

There are three approaches to starting a distribution business

When it comes to getting the right approach to starting a distribution business, you want to choose from:

  1. Buying an existing business is costly and risky. The positive side is inheriting an existing client base. Which could prove extremely valuable? This is very beneficial when it comes to air freight cargo to Bahrain.
  2. The second option is starting a distribution business from scratch. It can also be costly, but it allows for a true “make or break it yourself” scenario.
  3. The last option is perhaps the riskiest because you must explore all business opportunities before you invest any money. However, the right opportunity can mean quick success if the originating company has already built a profitable, reputable, and durable base.

Starting Operations

When you’re starting a distribution business, your position in the supply chain will involve matching up the freight forwarder and customer and providing quality vehicles, vessels, and services. All at a reasonable price. All of this may sound a bit overwhelming. However, these steps don’t have to be expensive during the startup phase.

For Instance, Keith Schwartz, owner of On Target Promotions, started his distributorship with only his phone, fax machine, and computer. He then grew his company into a shared space that cuts on warehouse expenses. Today, his business operates from a 50,000 square-foot center in Warrensville Heights, Ohio. The message here is – just start.

Do you know who your customers are?

Because every company relies on a pool of customers to sell its products and/or services to, the next logical step when starting a distribution business involves defining exactly who will be included in that pool. Defining this early on will allow you to develop business strategies and define your mission.

If you are a wholesale distributor, your choice of customers includes:

  • Retail businesses: This includes establishments like grocery stores, independent retail stores, large department stores, and power retailers.
  • Retail distributors: This includes the distributors who sell to those retailers that you may find impenetrable on your own.
  • Exporters: These are companies that ship goods overseas.
Business meeting about starting a distribution business
This is one of the purest examples of business-to-business functions.

Finding a profitable niche is key when starting a distribution business

Once you have done thorough research on who are your consumers and competitors, you should have a clear idea of what type of niche your new company can fill. What matters here is not what you sell, but how you sell it. There are profitable opportunities in every industry, so no matter what you’re selling, you can always discover a way to your suppliers and customers if you have superior service. The whole trick is just to find that niche and make it work for you.

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