Your executive summary is the first part of your business plan, but you usually write it last because it is a summary of all the important parts.
The point of your executive summary is to get the reader’s attention quickly. Tell them what kind of distribution business you have and how things are going. For instance, are you a new business, do you have a distribution company that you want to grow, or do you run a chain of distribution businesses?
Next, give an overview of each part of your plan that follows.
- Briefly describe the industry of distribution.
- Talk about the kind of distribution business you run.
- Detail your direct competitors. Tell us about your ideal customers.
- Give a quick summary of your marketing plan. Find the important people on your team.
- Give an overview of how you plan to handle your money.
In your business summary, you’ll explain what kind of distribution business you run.
For instance, you could focus on one of the following types of distribution businesses:
- Exclusive Distribution Business: This type of business acts as the only distributor for its client in a certain area.
- Business with direct distribution: Sells products directly to retail stores.
- Businesses that use selective distribution usually work in niche industries with few retailers.
- Intensive Distribution Business: Provides distribution services to a large number of retailers.
In the company overview, you need to say what kind of distribution business you will run and give some background on the business.
Include answers to things like:
- When did you start your business, and why?
- What important steps have you taken so far? Milestones could include the number of clients served, the number of retailers signed up, reaching $X in sales, and so on.
- Your business’s legal structure. Are you set up as an S-Corporation? An LLC? A single-person business? Tell us about your legal structure.
In your industry or market analysis, you should describe the distribution industry as a whole.
Even though this may seem pointless, it has more than one use.
First, learning about the distribution business will teach you about it. It gives you a better idea of the market you are in.
Second, market research can help you make a better marketing plan, especially if you use it to find market trends.
The third reason is to show readers that you know what you’re talking about. You do just that by doing the research and putting it in your plan.
In the industry analysis section of your distribution company’s business plan, you should answer the following questions:
- How much money does the distribution industry make?
- Is the market going down or up?
- Who are your main rivals in the market?
- Who are the main market suppliers?
- What changes are happening in the field?
- How fast is the industry expected to grow in the next 5–10 years?
- How big is the market that matters? That is, how big is the market your distribution business could serve? You can figure out such a number by figuring out how big the market is in the whole country and then applying that number to the population in your area.
In the customer analysis section of your distribution company’s business plan, you should explain who you serve and/or who you hope to serve.
Individuals, schools, organizations, the government, and corporations are all examples of customer segments.
As you might guess, the type of distribution business you run will depend a lot on the customer segment(s) you choose. Schools and corporations, for example, would respond differently to marketing campaigns.
Try to figure out who your ideal customers are based on how they look and how they think. In terms of demographics, you should talk about the ages, genders, locations, and levels of income of the people you want to serve.
Psychographic profiles explain what your target customers want and need. The better you can understand and define these needs, the easier it will be to find and keep customers.
In your competitive analysis, you should list your business’s direct and indirect competitors and then focus on the direct ones.
Distribution businesses are their main competitors.
Indirect competitors are other things that customers can buy besides your product or service that aren’t in direct competition with it. This also includes other kinds of sellers. You should also talk about this competition.
Give an overview of each competitor’s business and list their strengths and weaknesses. Unless you’ve worked at one of your competitors’ companies, you won’t know everything about them. But you should be able to find out important facts about them, like
- What kind of clients do they work with?
- What kind of business are they in terms of distribution?
- How much do they charge (high, low, etc.)?
- What can they do well?
- What do they do wrong?
For the last two questions, try to answer them from the customers’ point of view. And don’t be afraid to ask the customers of your competitors what they like and dislike about them.
The last part of your competitive analysis section is to list the ways you are better than your competitors. As an example:
- Will you sell or provide things that your competitors don’t?
- Will you treat your customers better?
- Will you price things better?
Think about how you will do better than your competitors and write them down in this part of your plan.
Usually, a marketing plan has four parts: the product, the price, the place, and the promotion. Your marketing plan for a distribution company business plan should include the following:
Product: In the product section, you should repeat the type of distribution company you described in your company overview. Then, explain what products or services you will be selling. For example, will you offer services like exclusive distribution, selective distribution, intensive distribution, or direct distribution?
Price: Write down the prices you’ll be charging and how they compare to those of your competitors. In the product and price sections of your plan, you show what products or services you offer and how much they cost.
Place is where your distribution company is located. Write down where your business is and how the location will affect your success. For example, is your distribution business located in a busy shopping area, a business district, or in a stand-alone office or warehouse? Talk about why your site may be the best place for your customers.
Promotions: The last part of your distribution company’s marketing plan is where you write down how you will get potential customers to your location (s). Here are some ways you could promote your business:
- Advertise in the local newspapers, radio stations, and/or magazines
- Get in touch with websites
- Put out flyers
- Email marketing is a good idea.
- Place ads on social media sites
- Improve your website’s SEO (search engine optimization) for specific keywords
In the other parts of your business plan, you talked about your goals. In your operations plan, you talk about how you will reach those goals. Your plan for operations should have two separate parts.
Everyday short-term processes include everything you need to do to run your distribution business, such as answering calls, scheduling shipments, billing clients and collecting payments, etc.
Long-term goals are the goals you want to reach in the future. These could be the dates when you think you’ll get your Xth client or when you hope to make $X. It could also be when you plan to add a new city to your distribution business.
To show how successful your distribution company can be, you need a strong management team. Showcase the backgrounds of your key players, focusing on the skills and experiences that prove they can help a company grow.
You and/or your team members should have managed distribution businesses before. If so, talk about your experience and skills. But also highlight any experience you think will help your business succeed.
If your team is missing something, you might want to put together an advisory board. A two-to-eight-person advisory board would help your business by giving advice. They would help answer questions and give advice on how to plan. If you need to, try to find advisory board members who have run a distribution company before.
Your 5-year financial plan should include a monthly or quarterly breakdown for the first year, then an annual breakdown after that. Your income statement, balance sheet, and cash flow statement are all parts of your financial statements.
A more common name for an income statement is a Profit and Loss statement, or P&L. It shows your income and then takes away your expenses to show if you made a profit.
You need to make assumptions in order to make your income statement. For example, will you send out 5–10 packages a day? And will sales grow by 2% or 10% every year? As you might expect, the financial forecasts for your business will be greatly affected by the assumptions you choose. Do as much research as you can to try to make sure your assumptions are true.
The Balance Sheets
Balance sheets list what you own and what you owe. Balance sheets can have a lot of information, but try to boil them down to the most important parts. For example, if you spend $50,000 expanding your distribution business, you won’t make money right away. Instead, it is an asset that you can use to make money for years to come. Also, if someone gives you a check for $50,000, you don’t have to pay it back right away. Instead, you will have to pay that back over time.
Statement of Cash Flow
Your cash flow statement will help you figure out how much money you need to start or grow your business and make sure you never run out of cash. Most business owners and entrepreneurs don’t realize that you can make money but still go bankrupt if you run out of money.
When making your Income Statement and Balance Sheet, be sure to include some of the most important costs of starting or growing a distribution company.
- Cost of office supplies and equipment
- The cost of renting or buying a building
- Cost of buying and keeping trucks and trailers in good shape
- Payroll or salaries given to employees
- Insurance for businesses
- If you’re starting a new business, you’ll also have to pay for legal fees, permits, computer software, and equipment.