There’s a saying that goes, “If you can’t beat them, join ’em”.

It sounds cliche but its true especially in the world of entrepreneurship.

Imagine all those interesting innovations that one could work through…

All those cutting edge technologies in solar energy, waste management, water treatment,  biogas to name but a few.

Truth is we have at our disposal the ability to innovate and tailor make products that meet our local market needs.

But to succeed business wise, it will take more than just technical knowledge and the urge to succeed.

COST OF PRODUCTION

One might have found the best business model to start manufacturing

And it’s not a must for it to be large scale…

There are start ups that do cosmetics, lotions, peanut butter and detergent making in the kitchen, garage or balcony.

Some of them have sterling products but which don’t seem to see light of day simply because the big players are able to ghost them.

How?

They’ve used economies of scale to their advantage.

CASE IN POINT

Take for instance a small manufacturer who uses USD 100 to make a product in order to sell it at USD 150.

Assume that this is a fast moving consumer good (FMCG).

Now picture a big player who makes the same product for USD 50 due to the amount of money he can use to bargain supplies and inputs.

The small player stands no chance in the market however good their product seems.

Now enter other factors: cost of electricity, increased taxation, lack of access to credit, business registration requirements and you have a whole set of hurdles for the small player to cross.

On the other hand, the big players are capable of crossing these hurdled because they have cash on their side.

Working capital works for them.

So how can an aspiring small player still make a living in such world with cut-throat competition?

DISTRIBUTION CHANNELS

Imagine the same small player using their product knowledge to study the products on offer in the market.

But instead of choosing to manufacture, they choose to approach the big players producing these products and proposes to purchase them in bulk.

And in this case, bulk might mean 50 pieces and above (depending on the product).

Wholesale purchasing may expose one to discounts allowing a small scale trader to make a margin once they enter the retail market.

Several companies open to such distributorships are building a brand of SME traders who seem to be commanding their space.

WAY FORWARD

You might have that innovative mind to build a product to treat water, generate energy, fertilise crops etc.

Take time to understand related products in the market that are in your line.

Get to know how they work and understand the market needs in relation to these products.

Once you have these in place, partner with the manufacturers and take advantage of the wholesale offers they have.

If none exist, boldly approach their management with your proposal to distribute their products after establishing an existing market.

Many companies will be willing to listen to you in this regard.

Once you secure the deal, move onto the next stage of seeking funds to make your first purchase.

Also ensure that the product has a long shelf-life.

Finally, register a business and start marketing the product.

If the market responds positively, some big players might officially offer you official recognition as a distributorship or might even be willing to offer you a franchise.

This model works well in the distribution of LPG gas by small scale traders who a deal in products from the big players – oil companies.

Another example is distributors who market and sell Davis & Shirtliff products.

There are also many SMEs in the spare part, electricals and electronic sectors who thrive in this space.

IN CONCLUSION

Opportunities are ripe for all who wish to venture into manufacturing. 

But also, distribution channels are a low-lying fruit for anyone.

Besides, another advantage of distribution channels is that the manufacturer has done most of the work – manufacturing.

All we are doing is partnering with them to market and distribute.