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Distribution Company Business Plan Template

Written by Dave Lavinsky

Distribution Company Business Plan

You’ve come to the right place to create your Distribution Company business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Distribution Companies.

Below is a template to help you create each section of your Distribution Company business plan.

Executive Summary

Business overview.

KitchenWare Distributors is a startup distribution company located in Long Beach, California. The company was founded by Nelson Fuller, a former senior executive in a kitchenware company based in Chicago, Illinois. Nelson made over ten million dollars in kitchenware sales during the past two years for his former company, and felt the time was now right to start his own company in California. Because Long Beach is a leading port for ships bringing goods into the U.S. from China and other Asian countries, Nelson believes the greatest kitchen product range and highest dollar value can be amassed via the Long Beach import area.

KitchenWare Distributors specializes in selling kitchen products, including tabletop, tableware, cookware, and cutlery, to independent retailers, retail chains, and e-commerce platforms. Nelson recruited his wife, Jamie Fuller, to join him in the new startup, as her former position was a marketing manager for a small kitchen appliance company. Her new role will be as the Executive Manager of tabletop and cookware products.

Product Offering

The following are the services that KitchenWare Distributors will provide:

  • Large-volume sales to kitchen product companies, including brick-and-mortar and ecommerce
  • 24/7 customer service representative support
  • Competitive pricing
  • Diverse product selection
  • Free transport from Long Beach to customer location
  • Package pricing based on company loyalty programs
  • Tiered products based on customer’s target audience

Customer Focus

KitchenWare Distributors will target retail companies, retail chains, and kitchenware stores. KitchenWare Distributors will also target e-commerce platform companies that specialize in kitchen product sales. KitchenWare Distributors will target industrial restaurant and kitchen supply companies. KitchenWare Distributors will target state and federal government cooking and kitchen supply sites.

Success Factors

KitchenWare Distributors will be able to achieve success by offering the following competitive advantages:

  • Friendly, knowledgeable, and highly-qualified team at KitchenWare Distributors.
  • Customer service representatives with 24/7 service for clients.
  • Free transport from Long Beach to customer distribution centers or retail stores.
  • Unique logistical software program designed for kitchen product retailers.
  • KitchenWare Distributors offers reasonable pricing with free transportation included; both excellent savings.

Financial Highlights

KitchenWare Distributors is seeking $200,000 in debt financing to launch its kitchen product line of goods. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the marketing costs. The breakout of the funding is below:

  • Office space build-out: $20,000
  • Office equipment, supplies, and materials: $10,000
  • Three months of overhead expenses (payroll, rent, utilities): $150,000
  • Marketing costs: $10,000
  • Working capital: $10,000

The following graph outlines the financial projections for KitchenWare Distributors.

KitchenWare Distributors Pro Forma Projections

Company Overview

Who is kitchenware distributors.

KitchenWare Distributors is a newly established full-service distribution company based in Long Beach, California. KitchenWare Distributors is committed to becoming the most reliable, cost-effective, and efficient choice for retail chains, retailers and kitchenware supply stores in the U.S. KitchenWare Distributors will provide a comprehensive menu of customer support services for any client to utilize. Their full-service approach includes free transportation from the dock at Long Beach to the city of the client distribution center or retail store.

  KitchenWare Distributors will present and sell through a vast array of kitchen products, including tabletop, kitchenware, cookware, serveware, and cutlery. The team of professionals are highly qualified and experienced in distribution and negotiations. KitchenWare Distributors removes all headaches and issues of the process of buying and transporting inventory for retail stores by taking excellent care of the inventory items and stock and ensuring that all issues are taken care of expeditiously while delivering the best customer service.

KitchenWare Distributors History

KitchenWare Distributors is owned and operated by Nelson and Jamie Fuller, both former executives working within the kitchen products industry in a kitchenware company based in Chicago, Illinois. Nelson made over ten million dollars in kitchenware sales during the past two years for his former company, and felt the time was now right to start his own company in California. Because Long Beach is a leading port for ships bringing goods into the U.S. from China and other Asian countries, Nelson believes the greatest kitchen product range and highest dollar value can be amassed via the Long Beach import area.

Since incorporation, KitchenWare Distributors has achieved the following milestones:

  • Registered KitchenWare Distributors, LLC to transact business in the state of California.
  • Has a contract in place at one of the office buildings, where the marketing department and administrative group will set up their 10,000 square foot office space.
  • Reached out to numerous former clients and contacts to include KitchenWare Distributors as a distribution vendor.
  • Began recruiting a staff of fifteen customer service representatives and five office personnel to work at KitchenWare Distributors.

KitchenWare Distributors Services

The following will be the services KitchenWare Distributors will provide:

Industry Analysis

The kitchen products industry is expected to grow during the next five years to over $44 billion. The growth will be driven by the consumer interest in premium kitchen countertop appliances that perform with precision. The growth will also be driven by smart kitchen appliances (remote turn on/turn off capabilities). The growth will be driven by color palette changes in 2027-28. Technological advances will drive the U.S. market growth. The growth will also be driven by eco-friendly, and sustainable tableware products. Costs will likely be reduced as kitchenware categories within lifestyle choices are discounted. Costs will likely be reduced as consumers turn to e-commerce for tableware and cookware choices, which reduces shipping costs overall.

Customer Analysis

Demographic profile of target market.

KitchenWare Distributors will target retail chains, retail stores, kitchenware stores, and government contract customers within California and the U.S. population. .

Customer Segmentation

KitchenWare Distributors will primarily target the following customer profiles:

  • Retail chains
  • Retail stores, specifically kitchen product stores
  • Ecommerce kitchen product companies
  • State and government contractors for kitchen products

Competitive Analysis

Direct and indirect competitors.

KitchenWare Distributors will face competition from other companies with similar business profiles. A description of each competitor company is below.

Strategic Distribution Group

The Strategic Distribution Group is located in New Jersey, near Ports America, Inc. The company receives goods via ship transport initiated in Shenzhen, China and directed to retail chains and kitchen stores throughout the U.S. The company was started by a partnership between Hershel Barts and Mark Tokien, formerly kitchen product managers for a major kitchen appliance manufacturer.

The Strategic Distribution Group offers limited discounts on product assortment groups or packages; however, shipping from the port to the retail chain market is provided at no cost. The strength of the company lies in the experience of the partners and the sales history in this industry sector they represent.

Cooking & Eating, Inc.

Cooking & Eating, Inc., headquartered in Scottsdale, Arizona, is a large retail chain that offers a distribution service to clients and guests who want shipment and associated logistics packaged together by Cooking & Eating, Inc. The company was founded in 2014 by Eddy Walker, who found the distribution ties were weak in the Southwest portion of the U.S. and wanted to improve the strength of the industry while also owning a cooking video company that could capitalize on the location and new product introduction.

Currently, Cooking & Eating, Inc. is focused on cooking videos for a YouTube audience of 1.5 million viewers and video reels for TikTok which demonstrate cooking and eating in comedic fashion. The owner of the company, Eddy, enjoys appearing and leading the conversational topics on the show, as well as introducing his company once again to the final outcomes of this year.

Retread Distributors & More

Retread Distributors & More specializes in closeout lots, damaged inventory, returned products and “scratch & dent” appliance units. Their clients include major resellers, such as Overstock.com, and other secondary markets who purchase lots at greatly discounted prices and then hope to sell those lots at a miniscule profit. Retread Distributors & More is owned by Dottie Masters, a woman who has been a leader in the reselling industry for over forty years. The company is one of several owned by Dottie, and as such, it presents a “bargain basement” type of atmosphere, albeit one with excellent pricing and values that can be very profitable for retailers should they choose to sell such inventory items.

Competitive Advantage

KitchenWare Distributors will be able to offer the following advantages over their competition:

  • KitchenWare Distributors offers reasonable pricing with free transportation included; both advantageous savings.

Marketing Plan

Brand & value proposition.

KitchenWare Distributors will offer the unique value proposition to its clientele:

  • Highly-qualified team of skilled employees who are able to provide comprehensive customer service support.
  • Free shipping from Long Beach port to client retail location.
  • Unbeatable 24/7 customer service for clients.
  • Tiered discounts geared to assist all clients in savings
  • Pricing packages that are advantageous for clients

Promotions Strategy

The promotions strategy for KitchenWare Distributors is as follows:

Word of Mouth/Referrals

KitchenWare Distributors has built up an extensive list of contacts over the years by providing exceptional service and expertise to the former clients of Jamie Miller. Former clients have already committed to follow both new co-owners to the KitchenWare Distributors company and refer the new company to their associates.

Professional Associations and Networking

Both Nelson and Jamie Miller are members of national trade associations and both will continue to network and offer services to other members. The company may also choose to sponsor activities during trade shows that will highlight the new company.

Website/SEO Marketing

KitchenWare Distributors will extensively utilize their website. The website will be well organized, informative, and list all the services that KitchenWare Distributors provides. The website will also direct interested buyers to several pages of product inventory, including pricing and available quantities of each. Customers can buy online using the “Buy” page on the website. The website will list the contact number of their customer service representative and introduce them both via the Chat Box on the website. KitchenWare Distributors’s website presence will focus on SEO marketing tactics so that anytime someone types in the Google or Bing search engine “kitchen products company” or “kitchen supplies near me”, KitchenWare Distributors will be listed at the top of the search results.

The pricing of KitchenWare Distributors will be moderate and on par with competitors so customers feel they receive excellent value when purchasing their services.

Operations Plan

The following will be the operations plan for KitchenWare Distributors. Operation Functions:

  • Nelson Miller will be the co-owner and president of the company. He will oversee all staff and manage client relations.
  • Jamie Miller will be the Executive Manager of the tabletop and cookware divisions.
  • Ken Stevens will be the Marketing Manager who will provide all marketing for KitchenWare Distributors.

Milestones:

KitchenWare Distributors will have the following milestones completed in the next six months.

  • 5/1/202X – Finalize contract to lease office space
  • 5/15/202X – Finalize personnel and staff employment contracts for the KitchenWare Distributors
  • 6/1/202X – Finalize contracts for KitchenWare Distributors clients
  • 6/15/202X – Begin networking at industry events
  • 6/22/202X – Begin moving into KitchenWare Distributors office
  • 7/1/202X – KitchenWare Distributors opens its office for business

Management Team

Financial plan, key revenue & costs.

The revenue drivers for KitchenWare Distributors are the fees they will charge to the clients for their products and services.

The cost drivers will be the overhead costs required in order to staff KitchenWare Distributors. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.

Funding Requirements and Use of Funds

KitchenWare Distributors is seeking $200,000 in debt financing to launch its distribution company. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and association memberships. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

  • Number of Client Purchases Per Month: 63
  • Average Revenue per Month: $616,000
  • Office Lease per Year: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, distribution company business plan faqs, what is a distribution company business plan.

A distribution company business plan is a plan to start and/or grow your distribution company business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Distribution Company business plan using our Distribution Company Business Plan Template here .

What are the Main Types of Distribution Company Businesses? 

There are a number of different kinds of distribution company businesses , some examples include: Exclusive Distribution Business, Direct Distribution Business, Selective Distribution Business, and Intensive Distribution Business.

How Do You Get Funding for Your Distribution Company Business Plan?

Distribution Company businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Distribution Company Business?

Starting a distribution company business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Distribution Company Business Plan - The first step in starting a business is to create a detailed distribution company business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your distribution company business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your distribution company business is in compliance with local laws.

3. Register Your Distribution Company Business - Once you have chosen a legal structure, the next step is to register your distribution company business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your distribution company business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Distribution Company Equipment & Supplies - In order to start your distribution company business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your distribution company business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

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How to Start a Wholesale Distribution Business Buy low, sell high: A background in sales and a keen eye for popular merchandise are the keys to success as a wholesale distributor.

Editor's note: This article was excerpted from our Wholesale Business Distribution start-up guide , available from Entrepreneur Bookstore.

So you want to start a wholesale distributorship. Whether you're currently a white-collar professional, a manager worried about being downsized, or bored with your current job, this may be the right business for you. Much like the merchant traders of the 18th century, you'll be trading goods for profit. And while the romantic notion of standing on a dock in the dead of night haggling over a tea shipment may be a bit far-fetched, the modern-day wholesale distributor evolved from those hardy traders who bought and sold goods hundreds of years ago.

The Distributor's Role

According to U.S. Industry and Trade Outlook, published by The McGraw-Hill Companies and the U.S. Department of Commerce/International Trade Administration, wholesale trade includes establishments that sell products to retailers, merchants, contractors and/or industrial, institutional and commercial users. Wholesale distribution firms, which sell both durable goods (furniture, office equipment, industrial supplies and other goods that can be used repeatedly) and nondurable goods (printing and writing paper, groceries, chemicals and periodicals), don't sell to ultimate household consumers.

Three types of operations can perform the functions of wholesale trade: wholesale distributors; manufacturers' sales branches and offices; and agents, brokers and commission agents. As a wholesale distributor, you will probably run an independently owned and operated firm that buys and sells products of which you have taken ownership. Generally, such operations are run from one or more warehouses where inventory goods are received and later shipped to customers.

Put simply, as the owner of a wholesale distributorship, you will be buying goods to sell at a profit, much like a retailer would. The only difference is that you'll be working in a business-to-business realm by selling to retail companies and other wholesale firms like your own, and not to the buying public. This is, however, somewhat of a traditional definition. For example, companies like Sam's Club and BJ's Warehouse have been using warehouse membership clubs, where consumers are able to buy at what appear to be wholesale prices, for some time now, thus blurring the lines. However, the traditional wholesale distributor is still the one who buys "from the source" and sells to a reseller.

Getting Into the Game

The field of wholesale distribution is a true buying and selling game-one that requires good negotiation skills, a nose for sniffing out the next "hot" item in your particular category, and keen salesmanship. The idea is to buy the product at a low price, then make a profit by tacking on a dollar amount that still makes the deal attractive to your customer.

Experts agree that to succeed in the wholesale distribution business, an individual should possess a varied job background. Most experts feel a sales background is necessary, as are the "people skills" that go with being an outside salesperson who hits the streets and/or picks up the phone and goes on a cold-calling spree to search for new customers.

In addition to sales skills, the owner of a new wholesale distribution company will need the operational skills necessary for running such a company. For example, finance and business management skills and experience are necessary, as is the ability to handle the "back end" (those activities that go on behind the scenes, like warehouse setup and organization, shipping and receiving, customer service, etc.). Of course, these back-end functions can also be handled by employees with experience in these areas if your budget allows.

"Operating very efficiently and turning your inventory over quickly are the keys to making money," says Adam Fein, president of Pembroke Consulting Inc., a Philadelphia strategic consulting firm. "It's a service business that deals with business customers, as opposed to general consumers. The startup entrepreneur must be able to understand customer needs and learn how to serve them well."

According to Fein, hundreds of new wholesale distribution businesses are started every year, typically by ex-salespeople from larger distributors who break out on their own with a few clients in tow. "Whether they can grow the firm and really become a long-term entity is the much more difficult guess," says Fein. "Success in wholesale distribution involves moving from a customer service/sales orientation to the operational process of managing a very complex business."

Setting Up Shop

According to Fein, wholesale distribution companies are frequently started in areas where land is not too expensive and where buying or renting warehouse space is affordable. "Generally, wholesale distributors are not located in downtown shopping areas, but off the beaten path," says Fein. "If, for example, you're serving building or electrical contractors, you'll need to choose a location in close proximity to them in order to be accessible as they go about their jobs."

State of the Industry

And that's not all: Every year, U.S. retail cash registers and online merchants ring up about $3.6 trillion in sales, and of that, about a quarter comes from general merchandise, apparel and furniture sales (GAF). This is a positive for wholesale distributors, who rely heavily on retailers as customers. To measure the scope of GAF, try to imagine every consumer item sold, then remove the cars, building materials and food. The rest, including computers, clothing, sports equipment and other items, fall into the GAF total. Such goods come directly from manufacturers or through wholesalers and brokers. Then they are sold in department, high-volume and specialty stores-all of which will make up your client base once you open the doors of your wholesale distribution firm.

All this is good news for the startup entrepreneur looking to launch a wholesale distribution company. However, there are a few dangers that you should be aware of. For starters, consolidation is rampant in this industry. Some sectors are contracting more quickly than others. For example, pharmaceutical wholesaling has consolidated more than just about any other sector, according to Fein. Since 1975, mergers and acquisitions have reduced the number of U.S. companies in that sector from 200 to about 50. And the largest four companies control more than 80 percent of the distribution market.

To combat the consolidation trend, many independent distributors are turning to the specialty market. "Many entrepreneurs are finding success by picking up the golden crumbs that are left on the table by the national companies," Fein says. "As distribution has evolved from a local to a regional to a national business, the national companies [can't or don't want to] cost-effectively service certain types of customers. Often, small customers get left behind or are just not [profitable] for the large distributors to serve."

Starting Out

For entrepreneurs looking to start their own wholesale distributorship, there are basically three avenues to choose from: buy an existing business, start from scratch or buy into a business opportunity. Buying an existing business can be costly and may even be risky, depending on the level of success and reputation of the distributorship you want to buy. The positive side of buying a business is that you can probably tap into the seller's knowledge bank, and you may even inherit his or her existing client base, which could prove extremely valuable.

The second option, starting from scratch, can also be costly, but it allows for a true "make or break it yourself" scenario that is guaranteed not to be preceded by an existing owner's reputation. On the downside, you will be building a reputation from scratch, which means lots of sales and marketing for at least the first two years or until your client base is large enough to reach critical mass.

The last option is perhaps the most risky, as all business opportunities must be thoroughly explored before any money or precious time is invested. However, the right opportunity can mean support, training and quick success if the originating company has already proven itself to be profitable, reputable and durable.

During the startup process, you'll also need to assess your own financial situation and decide if you're going to start your business on a full- or part-time basis. A full-time commitment probably means quicker success, mainly because you will be devoting all your time to the new company's success.

Because the amount of startup capital necessary will be highly dependent on what you choose to sell, the numbers vary. For instance, an Ohio-based wholesale distributor of men's ties and belts started his company with $700 worth of closeout ties bought from the manufacturer and a few basic pieces of office equipment. At the higher end of the spectrum, a Virginia-based distributor of fine wines started with $1.5 million used mainly for inventory, a large warehouse, internal necessities (pallet racking, pallets, forklift), and a few Chevrolet Astro vans for delivery.

Like most startups, the average wholesale distributor will need to be in business two to five years to be profitable. There are exceptions, of course. Take, for example, the ambitious entrepreneur who sets up his garage as a warehouse to stock full of small hand tools. Using his own vehicle and relying on the low overhead that his home provides, he could conceivably start making money within six to 12 months.

"Wholesale distribution is a very large segment of the economy and constitutes about 7 percent of the nation's GDP," says Pembroke Consulting Inc.'s Fein. "That said, there are many different subsegments and industries within the realm of wholesale distribution, and some offer much greater opportunities than others."

Among those subsegments are wholesale distributors that specialize in a unique niche (e.g., the distributor that sells specialty foods to grocery stores), larger distributors that sell everything from soup to nuts (e.g., the distributor with warehouses nationwide and a large stock of various, unrelated closeout items), and midsized distributors who choose an industry (hand tools, for example) and offer a variety of products to myriad customers.

The cornerstone of every distribution cycle, however, is the basic flow of product from manufacturer to distributor to customer. As a wholesale distributor, your position on that supply chain (a supply chain is a set of resources and processes that begins with the sourcing of raw material and extends through the delivery of items to the final consumer) will involve matching up the manufacturer and customer by obtaining quality products at a reasonable price and then selling them to the companies that need them.

In its simplest form, distribution means purchasing a product from a source-usually a manufacturer, but sometimes another distributor-and selling it to your customer. As a wholesale distributor, you will specialize in selling to customers-and even other distributors-who are in the business of selling to end users (usually the general public). It's one of the purest examples of the business-to-business function, as opposed to a business-to-consumer function, in which companies sell to the general public.

Weighing It Out: Operating Costs

Regardless of where a distributor sets up shop, some basic operating costs apply across the board. For starters, necessities like office space, a telephone, fax machine and personal computer will make up the core of your business. This means an office rental fee if you're working from anywhere but home, a telephone bill and ISP fees for getting on the internet.

No matter what type of products you plan to carry, you'll need some type of warehouse or storage space in which to store them; this means a leasing fee. Remember that if you lease a warehouse that has room for office space, you can combine both on one bill. If you're delivering locally, you'll also need an adequate vehicle to get around in. If your customer base is located further than 40 miles from your home base, then you'll also need to set up a working relationship with one or more shipping companies like UPS, FedEx or the U.S. Postal Service. Most distributors serve a mixed client base; some of the merchandise you move can be delivered via truck, while some will require shipping services

While they may sound a bit overwhelming, the above necessities don't always have to be expensive-especially not during the startup phase. For example, Keith Schwartz, owner of On Target Promotions, started his wholesale tie and belt distributorship from the corner of his living room. With no equipment other than a phone, fax machine and computer, he grew his company from the living room to the basement to the garage and then into a shared warehouse space (the entire process took five years). Today, the firm operates from a 50,000-square-foot distribution center in Warrensville Heights, Ohio. According to Schwartz, the firm has grown into a designer and importer of men's ties, belts, socks, wallets, photo frames and more.

To avoid liability early on in his entrepreneurial venture, Schwartz rented pallet space in someone else's warehouse, where he stored his closeout ties and belts. This meant lower overhead for the entrepreneur, along with no utility bills, leases or costly insurance policies in his name. In fact, it wasn't until he penned a deal with a Michigan distributor for a large project that he had to store product and relabel the closeout ties with his firm's own insignia. As a result, he finally rented a 1,000-square-foot warehouse space. But even that was shared, this time with another Ohio distributor. "I don't believe in having any liability if I don't have to have it," he says. "A warehouse is a liability."

The Day-to-Day Routine

"One reason that wholesale distributors have increased their share of total wholesale sales is that they can perform these functions more effectively and efficiently than manufacturers or customers," comments Fein.

To handle all these tasks and whatever else may come their way during the course of the day, most distributors rely on specialized software packages that tackle such functions as inventory control, shipping and receiving, accounting, client management, and bar-coding (the application of computerized UPC codes to track inventory).

And while not every distributor has adopted the high-tech way of doing business, those who have are reaping the rewards of their investments. Redondo Beach, California-based yoga and fitness distributor YogaFit Inc., for example, has been slowly tweaking its automation strategy over the past few years, according to Beth Shaw, founder and president. Shaw says the 25-employee company sells through a website that tracks orders and manages inventory, and the company also makes use of networking among its various computers and a database management program to maintain and update client information. In business since 1994, Shaw says technology has helped increase productivity while cutting down on the amount of time spent on repetitive activities, such as entering addresses used to create mailing labels for catalogs and individual orders. Adds Shaw, "It's imperative that any new distributor realize from day one that technology will make their lives much, much easier."

Who Are Your Customers?

Because every company relies on a pool of customers to sell its products and/or services to, the next logical step in the startup process involves defining exactly who will be included in that pool. Defining this group early on will allow you to develop business strategies, define your mission or answer the question "why am I in business?" and tailor your operations to meet the needs of your customer base.

As 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 like Wal-Mart and Target.

Retail distributors: This includes the distributors who sell to those retailers that you may find impenetrable on your own. For example, if you can't "get in" at a power retailer like Wal-Mart, you may be able to sell to one of its distributors.

Exporters: These are companies that collect United States-manufactured goods and ship them overseas.

Other wholesale distributors: It's always best to buy from the source, but that isn't always possible, due to exclusive contracts and issues like one-time needs (e.g., a distributor who needs 10 hard hats for a customer who is particular about buying one brand). For this reason, wholesale distributors often find themselves selling to other distributors.

The federal government: Uncle Sam is always looking for items that wholesale distributors sell. In fact, for wholesale distributors, selling to the government presents a great opportunity. For the most part, it's a matter of filling out the appropriate forms and getting on a "bid list." After you become an official government supplier, the various buying agencies will either fax or e-mail you requests for bids for materials needed by schools, various agencies, shipyards and other facilities.

For a small wholesale distributor, there are some great advantages to selling to the government, but the process can also be challenging in that such orders often require a lengthy bidding process before any contracts are awarded. Since opening her Redondo Beach, California, distributorship in 1994, Beth Shaw of YogaFit Inc. says she's made several successful sales to the government. Currently, the firm sells its exercise education programs and several styles of yoga mats to Army bases and other entities. Calling government sales "a good avenue" for wholesale distributors, Shaw says it's also one that's often overlooked, "especially by small businesses."

Finding a Profitable Niche

In other words, what matters is not so much what you sell, but how you sell it. There are profitable opportunities in every industry-from beauty supplies to hand tools, beverages to snack foods. No matter what they're selling, wholesale distributors are discovering ways to reaffirm their value to suppliers and customers by revealing the superior service they have to offer, as well as the cost-saving efficiencies created by those services. This mind-set opens up a wealth of opportunities to provide greater attention to the individual needs of customers, a chance to develop margin growth, and greater flexibility in product offerings and diversification of the business.

The whole trick, of course, is to find that niche and make it work for you. In wholesale distribution, a niche is a particular area where your company can most excel and prosper-be it selling tie-dyed T-shirts, roller bearings or sneakers. While some entrepreneurs may find their niche in a diverse area (for example, closeout goods purchased from manufacturers), others may wish to specialize (unique barstools that will be sold to regional bars and pubs).

On the other side of the coin, too much product and geographical specialization can hamper success. Take the barstool example. Let's say you were going to go with this idea but that in six months you'd already sold as many barstools as you could to the customer base within a 50-mile radius of your location. At that point, you would want to diversify your offerings, perhaps adding other bar-related items like dartboards, pool cues and other types of chairs.

The decision is yours: You can go into the wholesale distribution arena with a full menu of goods or a limited selection. Usually, that decision will be based on your finances, the amount of time you'll be able to devote to the business, and the resources available to you. Regardless of the choices you make, remember that market research provides critical information that enables a business to successfully go to market, and wholesale distributors should do as much as they can-on an ongoing basis. It is better to do simple research routinely than to shell out a lot of money once on a big research information project that may quickly become outdated.

Pinpointing a Startup Number

While entrepreneurs in some industries seem to be able to raise money with a snap of their fingers, most have to take a more detailed approach to the process. Perhaps the best starting point is to figure out just how much you need.

In the wholesale distribution sector, startup numbers vary widely, depending on what type of company you're starting, how much inventory will be necessary and what type of delivery systems you'll be using. For example, Keith Schwartz, who got his start selling belts and ties from his basement in Warrensville Heights, Ohio, started On Target Promotions with $700, while Don Mikovch, president of the wine distributor Borvin Beverage in Alexandria, Virginia, required $1.5 million. While Schwartz worked from a desk and only needed a small area in which to store his goods, Mikovch required a large amount of specialized storage space for his wines-and a safe method of transporting the bottles to his retailers.

The basic equipment needed for your wholesale distributorship will be highly dependent on what you choose to sell. If you plan to stock heavy items, then you should invest in a forklift (some run on fuel or propane, others are man-powered) to save yourself some strain. Pallets are useful for stocking and pallet racking is used to store the pallets and keep them in order for inventory purposes.

For distributors who are sourcing, storing and selling bulky goods (such as floor tile, for example), a warehouse of sufficient size (based on the size of products you're selling and the amount of inventory you'll be stocking) is a necessity. To ensure that the distribution process operates smoothly, select a location that allows you to move around efficiently and that includes the necessary storage equipment (such as pallet racking, on which you can store pallets). Don't forget to leave room for a forklift to be able to maneuver between racks of pallets and shelves stored in the warehouse.

As a startup distributor, your initial inventory investment will depend on what you're selling. Expect to carry some inventory, no matter what the product is, but also understand that your choice of goods will have some effect on how much you'll need to shell out upfront. Schwartz was buying surplus apparel, so $700 gave him plenty to work with for the first few months. When Garth Gordon and Vivienne Bramwell-Gordon, president and vice president, respectively, of Tampa, Florida-based Phones Etc., founded their company, they invested about $2,400 to purchase a shipment of high-end telephones. They quickly turned them around for a 300-percent profit and have been in the business of distributing refurbished Avaya telecom equipment to small companies and nonprofit groups ever since. Today, Phones Etc. carries about $600,000 in inventory at any given time.

Bill Green, managing partner at WSG Partners LLC in Cherry Hill, New Jersey, says the best way to determine inventory needs is to look at your customers' needs. If they're the type who "need everything yesterday" (contractors working on job sites would fall into this category), then your inventory will need to be ample enough to meet those last-minute requests. However, if there's usually a three-to-four-day span between order-taking and delivery, then you may be able to skimp a bit on inventory and instead focus on forming solid, reliable relationships with vendors who can help you meet those timelines.

"The most successful distributorships are the ones [whose owners] are working as close to their customers as possible and who can predict their needs and be there to provide value-along with the products," says Green. "That doesn't necessarily mean you need a huge warehouse and inventory, but you will need to find vendors who will 'hold' that inventory for you until your own customers ask for it."

Inventory Matters

There are caveats to both strategies. For starters, when a company chooses not to stock up, it runs the risk of being out of an item when the customer comes calling. At the same time, the distributors who overstock can find themselves in a real pickle if they can't get rid of merchandise they thought they could unload easily.

Being a distributor is all about "turning" inventory (selling everything you have in stock and then replenishing it)-the more times you can turn your inventory in a year, the more money you will make. Get the most turns by avoiding stocking items that may end up sitting in your warehouse for more than 90 days.

Stocking Up.Or Not?

On the other hand, if you are servicing a varied customer base located in different geographic areas, you may need to stock a little more than the entrepreneur in the previous example. Because you probably won't be visiting those customers at their locations, it may take a few months before you can determine just how much product they will be buying from you on a regular basis. Of course, you must also leave some breathing room for the "occasional" customer-the one who buys from you once a year and who will probably always catch you off guard. The good news is that having relationships with vendors can help fill those occasional needs quickly, even overnight or on the same day, if necessary.

"The biggest mistake companies make is developing an inventory load that is larger than what they really need," says Rich Sloan, co-founder of small-business consultancy StartupNation.com in Birmingham, Michigan. "The investment winds up sitting out in the warehouse when it could be put to much better use." Sloan says companies also jump into inventory purchases too quickly, without factoring in their customers' wants and needs-yet another way to wrap up too much investment in items that will be slow to move. "The trick is to keep it as lean as possible. That's a very smart, lower-risk way to go."

At Keith Schwartz's wholesale belt and tie distributorship in Warrensville Heights, Ohio, all it took was a $700 investment in closeout ties to get started. He resold them to a drugstore, pocketed the profits and reinvested the money in more inventory. It's a simple formula and one that works well for the small startup entrepreneur who is operating with low overhead.

The distributor who has already invested in a location, vehicles and other necessities should also factor product life cycle into the inventory equation. Those with longer life cycles (hand tools, for example) are usually less risky to stock, while those with shorter life cycles (food, for example, usually has a short life cycle) can become a liability if there are too many of them on the shelf. The shorter the life cycle, the less product you'll want to have on hand. Ultimately, your goal will be to sell the product before having to pay for it. In other words, if you are buying computers, and if the manufacturer offers you 30-day payment terms, then you'll want to have less than 30 days' worth of inventory on the shelf. That way, you never end up "owning" the inventory and instead serve as a middleman between the company that's manufacturing and/or selling the product and the one that's buying it.

To sum up the tricks to stocking a wholesale distributorship:

  • Don't overdo it when it comes to buying inventory.
  • Try to get a grasp on your customers' needs before you invest in inventory.
  • If you can get away with doing it cheaply at first (especially those with low overhead), then go for it.
  • Be wary of investing too much in short- life-cycle products, which you may get stuck with if they don't sell right away.
  • Stock up to a level where you can sell the product before you have to pay for it.

For distributors, the biggest challenge is running your business on low operating profit margins. Adam Fein of Philadelphia-based Pembroke Consulting Inc. suggests making your operations as efficient as possible and turning inventory around as quickly as possible. "These are the keys to making money as a wholesale distributor," he says.

And while the operating profit margins may be low for distributors, Fein says the projected growth of the industry is quite optimistic. In 2004, total sales of wholesaler-distributors reached $3.2 trillion, and for 2005 Fein expects revenue growth to continue to outpace the growth of the economy overall, growing an estimated 7.7 percent (vs. projected gross domestic product growth of 3.5 percent).

Playing the Markup Game

Distributors can use the following formula when it comes to markup: If it costs the manufacturer $5 to produce the product and they have a 100 percent markup, then you (the distributor) buy it for $10. Following the same formula, the wholesaler would double the cost and sell it for $20. Thus, there is a 400 percent markup from manufactured price to the wholesaler's customer.

Wholesale Distribution Business Resources Associations and Professional Organizations

  • Alabama Wholesale Distributors Association, (205) 823-8544
  • American Wholesale Marketers Association
  • California Distributors Association, (916) 446-7841
  • Colorado Association of Distributors, (303) 690-8505
  • General Merchandise Distributors Council, (719) 576-4260
  • Idaho Wholesale Marketers Association, (208) 342-8900
  • Industrial Supply Association
  • Mississippi Wholesale Distributors Association, (601) 605-1482
  • National Association of Wholesaler-Distributors
  • North Carolina Wholesalers Association, (919) 271-2140
  • Southern Association of Wholesale Distributors
  • Texas Association of Wholesale Distributors, (512) 346-6912
  • Virginia Wholesalers & Distributor Association, (804) 254-9170
  • West Virginia Wholesalers Association, (304) 342-1081
  • Integrated Distribution Management: Competing on Customer Service, Time and Cost by Christopher Gopal and Harold Cypress (Business One Irwin)
  • Facing the Forces of Change: The Road to Opportunity by Pembroke Consulting ( www.pembroke_consulting.com )
  • Managing Channels of Distribution by Kenneth Rolnicki (Amacom Books)
  • The Complete Distribution Handbook by Timothy Van Mieghem (Prentice Hall)
  • Wholesale Distribution Channels: New Insights and Perspectives by Bert Rosenbloom (Haworth Press)

Publications

  • Electronic Distribution Today
  • Industrial Distribution
  • Modern Distribution Management

How to Start a Wholesale Distribution Business

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Distribution Business

Back to All Business Ideas

How to Start a Distribution Business

Written by: Natalie Fell

Natalie is a business writer with experience in operations, HR, and training & development within the software, healthcare, and financial services sectors.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on June 17, 2022 Updated on February 14, 2024

How to Start a Distribution Business

Investment range

$3,700-$9,800

Revenue potential

$50,000-$150,000 p.a.

Time to build

Profit potential

$43,000-$105,000 p.a.

Industry trend

Retailers all over the world rely on distributors to provide them with high-quality products. From cosmetics to clothing, distribution partners help big companies behind the scenes by procuring goods from manufacturers, and make significant profits from selling those goods at a competitive markup. After years of steady growth, the US wholesale industry is worth trillions, while the global market is expected to expand nearly 10% annually through 2026.

But before you start ordering items in bulk, you’ll need to learn what it takes to launch your distribution business. Luckily, this step-by-step guide contains the entrepreneurial insight and information you’ll need to get your business started and pointed toward success. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Before starting a distribution business, it’s important to consider the pros and cons.

  • Flexibility – Set your own working hours
  • Good Money – Markup prices as much as 30%
  • Provide Value – Help retailers sell great products
  • Stiff Competition – Wholesale distribution is a crowded market
  • Tough Customers – Deal with demanding retail customers

Distribution and wholesale industry trends

Industry size and growth.

  • Industry size and past growth – The US wholesale trade market is worth $10.5 trillion in 2022 after growing 3.8% annually since 2017.(( https://www.ibisworld.com/industry-statistics/market-size/wholesale-trade-united-states/ ))
  • Growth forecast – The global retail and wholesale market is expected to grow 9.5% annually through 2026.(( https://www.globenewswire.com/en/news-release/2022/06/01/2453860/0/en/Retail-And-Wholesale-Global-Market-Report-2022.html ))
  • Number of businesses – In 2022, 716,035 wholesale trade businesses operated in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/wholesale-trade-united-states/ ))
  • Number of people employed – In 2022, US wholesale trade businesses employed 6,705,023 people.(( https://www.ibisworld.com/industry-statistics/employment/wholesale-trade-united-states/ ))

distribution industry size and growth

Trends and challenges

Trends within the distribution industry include:

  • Health and wellness supplements, like ashwagandha and matcha tea, have become some of the most lucrative products for distribution businesses. 
  • Technological advancements have brought increased automation to distribution. Companies are now able to track stock levels and manage logistics in real time.

Challenges within the distribution industry include:

  • Retail customers can be extremely demanding, especially when it comes to shipping. As a distributor, you’re responsible for making sure customers get their products on time, which can be tough to manage when procuring products from overseas.
  • Large, big-box retailers like Costco are removing the middleman completely and buying directly from manufacturers. Offering services that manufacturers do not provide like inventory management can help wholesale distributors stay competitive.

distribution industry trends and challenges

What kind of people work in distribution?

  • Gender – 17% of distribution managers in the US are female, while 83% are male.(( https://www.zippia.com/distribution-manager-jobs/demographics/ ))
  • Average level of education – The average distribution manager has obtained a bachelor’s degree.
  • Average age – The average distribution manager in the US is 46 years old.

distribution industry demographics

How much does it cost to start a distribution business?

Startup costs for a distribution business range from $3,700 to $9,800. Main costs include a computer, a website, distribution software, and marketing expenses. If you decide to purchase or lease a warehouse to store inventory, costs will be much higher. 

Many wholesaler distributors make great money selling products on ecommerce platforms like Amazon. If you’re interested in learning more, sites like Udemy offer online courses for under $100 that can be completed in just a few hours. 

You’ll need a handful of items to successfully launch your distribution business, including:

How much can you earn from a distribution business?

The average markup on wholesale products is 25%, and the pricing of your items will vary greatly depending on which products you sell. After factoring in operating costs, expect a profit margin of around 85%.

If you choose to run a distribution business that sells smartphone accessories, you could purchase them from a supplier at $10 a piece and sell them to retail customers at a 25% markup for $12.50. In your first year or two, you could work out of your home and sell 20,000 units per year, bringing in $50,000 in annual revenue. This would mean $43,000 in profit, assuming that 85% margin. 

As your business grows, sales could climb to 50,000 units a year as you increase your markup to 30%. At this stage, you would hire additional staff, reducing your profit margin to around 70%. With annual revenue of $150,000, you’d make a handsome profit of $105,000.

Use our markup calculator to calculate your sale price and how much revenue and profit you will earn with different markup percentages.

distribution business earnings forecast

What barriers to entry are there?

There are a few barriers to entry when it comes to starting a distribution business. Your biggest hurdles will be:

  • Competition from other distributors
  • Finding reliable, high-quality manufacturers

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Step 2: hone your idea.

Now that you know what’s involved in starting a distribution business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research distribution businesses in your area to examine their products, price points, and what sells best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a wholesale distributor that offers custom branded packaging services.

business plan for an distribution company

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as cosmetics or educational materials.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

Wholesale distributors procure products in bulk from suppliers and then sell them to specialty retailers. The retailers then brand the items and sell them at a higher price point. Your business might also handle the storage of customer inventory, packaging and labeling, and shipping to end buyers.

How much should you charge for wholesale distribution?

Distributors make money by purchasing products in bulk and selling them to retailers at a markup. Pricing can vary greatly depending on which products you sell and the clients you serve. The average price markup is between 20% and 30%.  

If you store inventory out of your home or ship it directly from supplier to retail customer, your ongoing costs will be fairly low. Aim for a profit margin of 85%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be retailers who are looking to purchase products in bulk for resale. You’ll need to tailor your marketing efforts to the specific niche you serve. Advertise your products and services on social media sites like Instagram and Facebook. Consider networking with businesses on LinkedIn to generate additional leads.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office or warehouse. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed

distribution business idea rating

Step 3: Brainstorm a Distribution Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “distributor” or “wholesale distribution”, boosts SEO
  • Name should allow for expansion, for ex: “Reliable Distribution Co.” over “Beverage Distribution Services”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

Powered by GoDaddy.com

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Distribution Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: A brief summary outlining the core aspects of the distribution business, including its mission, objectives, and key highlights.
  • Business Overview: A concise description of the distribution business, detailing its structure, industry, and the value it brings to the market.
  • Product and Services: Clear and specific details about the products or services the distribution business offers, emphasizing their unique selling points.
  • Market Analysis: An examination of the target market, including its size, trends, and potential for growth, to inform business strategies.
  • Competitive Analysis: A thorough evaluation of competitors in the distribution industry, highlighting strengths, weaknesses, opportunities, and threats to the business.
  • Sales and Marketing: A strategic plan outlining how the distribution business will promote and sell its products or services to the target audience.
  • Management Team: Introduction of the key individuals responsible for leading and managing the distribution business, emphasizing their relevant experience and skills.
  • Operations Plan: Detailed information on the day-to-day activities and processes involved in running the distribution business efficiently.
  • Financial Plan: A comprehensive overview of the distribution business’s financial projections, including revenue, expenses, and profitability, to demonstrate its financial viability.
  • Appendix: Supplementary materials, such as additional data, charts, or documents, providing further support and context for the distribution business plan.

what to include in a business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to distribution businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your distribution business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

types of business structures

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

business plan for an distribution company

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

business plan for an distribution company

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a distribution business. You might also try crowdfunding if you have an innovative concept.  

types of business financing

Step 8: Apply for Distribution Business Licenses and Permits

Starting a distribution business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your distribution business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Zoey , Znode , or NetSuite to create quotes, track shipments, and run sales reports. 

  • Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

For your distribution business, the strategy should focus on highlighting your efficiency, reliability, and the breadth of your distribution network. Emphasize your ability to streamline supply chains, your expertise in logistics, and your commitment to timely and accurate delivery.

The goal is to establish your business as a key partner for manufacturers and retailers, offering solutions that optimize their operations and enhance their market reach. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

  • Professional Branding : Your branding should communicate efficiency, reliability, and logistical expertise. This includes everything from your logo and website to your fleet branding and staff uniforms.
  • Direct Outreach : Network with potential clients like manufacturers, wholesalers, and retailers. Attend trade shows, industry conferences, and business networking events to build connections.

Digital Presence and Online Marketing

  • Professional Website and SEO : Develop a comprehensive website that details your services, network reach, and client testimonials. Use SEO best practices to optimize your site for search terms related to distribution services, logistics solutions, and supply chain management.
  • Social Media Engagement : Utilize platforms like LinkedIn for B2B networking and sharing industry insights. Twitter can also be useful for sharing company news and logistics trends.

Content Marketing and Engagement

  • Logistics Blog : Share informative blog posts about supply chain optimization, industry trends, and case studies highlighting how your services have benefited other businesses.
  • Email Newsletters : Regularly send out newsletters to your clients and prospects with updates about your services, new logistics technologies, and market insights.
  • Webinars and Online Workshops : Host webinars or online workshops addressing common challenges in logistics and distribution and how your business offers solutions.

Experiential and In-Person Engagements

  • Facility Tours : Offer tours of your distribution centers to potential clients to showcase your capabilities and the technologies you use.
  • Participation in Industry Events : Be a visible presence at industry events, either through sponsoring, exhibiting, or speaking, to position your company as a thought leader.

Collaborations and Community

  • Partnerships with Complementary Businesses : Establish partnerships with businesses in complementary sectors, such as manufacturing or retail, for mutual client referrals.
  • Community Involvement : Engage in local community projects or sponsor events to enhance brand visibility and build goodwill.

Customer Relationship and Loyalty Programs

  • Customized Service Packages : Offer tailored service packages to meet the unique needs of individual clients, emphasizing the personalized approach of your business.
  • Client Retention Programs : Implement programs aimed at maintaining strong relationships with existing clients, such as regular business reviews or loyalty discounts.

Promotions and Advertising

  • Targeted B2B Advertising : Use digital advertising on industry-specific platforms and LinkedIn to reach businesses that could benefit from your distribution services.
  • Trade Publications and Online Forums : Regularly contribute to trade publications and online forums to demonstrate your expertise and stay top of mind with potential clients.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your distribution business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your distribution business could be:

  • High-quality goods shipped lightning fast!
  • Taking your retail outlet to the next level with top-notch products
  • World-class distribution at budget prices

unique selling proposition

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a wholesale distribution business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in product distribution for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in distribution. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a distribution business include:

  • Administrative Assistant – Track inventory, ship products to customers
  • Marketing Lead – Manage social media accounts, run advertising campaigns 
  • Accountant – Bookkeeping, tax preparation

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Distribution Business – Start Making Money!

Wholesale distribution is a profitable and fast-growing line of work. If you have a passion for product delivery and services, you could get in on the action, help retail businesses and build your own distribution empire!

You’ve done your homework and gained the insights needed for a successful launch, now it’s time to start achieving your distribution dreams.  

  • Distribution Business FAQs

Yes, distribution businesses can be extremely profitable. The key to success is finding the right product niche and using effective pricing strategies to generate the most revenue.

A distributor will likely make more than a wholesaler since they work with higher volume clients. It depends somewhat on the industry.

You have to find your niche, perhaps an underserved niche. Then you need to develop a successful track record that you can market.

You have to be a good sales person and a good negotiator. You also need to develop good relationships to get repeat orders.

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  • Decide if the Business Is Right for You
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  • Create a Distribution Business Plan
  • Register Your Business
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  • Fund your Business
  • Apply for Distribution Business Licenses and Permits
  • Open a Business Bank Account
  • Get Business Insurance
  • Prepare to Launch
  • Build Your Team
  • Run a Distribution Business - Start Making Money!

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How to Build a Distribution Business in 15 Easy Steps (2023)

How to Build a Distribution Business

In this post, I am going to show you how to build a distribution business in 15 easy steps. Distribution is the vital link between producers and retailers of goods. In many cases, a distributor serves as a buffer between the two, so each party can have more control over their respective operations. But to be honest with you, this is not just for businesses. Distributors also make it easier for companies and individuals to have access to a variety of resources that meet their needs. When you look at the whole chain from distributors to producers, you can use many different distribution models in your business. These range from the traditional three-tier model used in most retail companies today, to the two-tiered approach popularized by many franchise businesses.

A distribution business is an excellent way to start your own business. It is one of the most popular ways to start a business because it is easy to set up and manage. This means you can start doing it as soon as possible so that you can earn some money for your family.

However, if you are new in this field, then you should know that the distribution business is not as simple as it seems to be. For this reason, we have prepared this article for you which will guide you through all the steps that you need to follow while starting a distribution business.

Step 1: Write your Distribution Business Plan

The first step in starting your own distribution business is writing a distribution plan or strategy. You should know what kind of products will sell best in your area and how much money people are willing to spend on these items. In addition, you also need to identify specific customers who will buy these products at fair prices and high-quality standards.

Before you can begin building your distribution business, it’s important to understand what you’re getting yourself into. 

If you haven’t already done so, write a business plan for your distribution company. It doesn’t have to be a formal document, but it should contain the following information:

  • A description of the products or services you intend to distribute.
  • The geographic area you intend to service.
  • An estimate of your sales and costs for your first year in business.
  • A description of how you will use working capital (cash) and long-term financing to fund operations until profits begin flowing.
  • A list of resources you will need in order to open for business — including equipment, supplies, and personnel (employees).

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Step 2: Select your product

The first step in building a distribution business is to select your product. There are many different products that you could sell, but you need to make sure that you have enough capital and that the product offers good margins. When it comes to selecting a product, consider what will be the most profitable for your business. If you’re not sure which products offer good margins, check out our guide on how to find profitable products to sell.

Step 3: Form a legal entity+

In order to start selling products, you need to form a legal entity and register it with the government. This is because selling products requires a lot of paperwork and taxes that need to be paid by an individual can be very complicated. By forming an LLC (Limited Liability Company), you can protect yourself from any liability issues since it protects personal assets from creditors if something goes wrong with the company. The good thing about forming an LLC is that you don’t have any limits on how many members there are in your business or how many shareholders you have; however, there are some restrictions on who can form one (only individuals).

Step 4:  Establish your niche

Once you’ve decided on a product, it’s time to decide what kind of distribution model you want to pursue. There are two basic options: retail, wholesale, and drop shipping.

Retail sales

The most obvious option is to open a physical store that sells your products directly to customers. This is probably how you think about starting a business, since it’s the easiest way to get started and see immediate results. The downside is that running a brick-and-mortar store is expensive and time-consuming — and if you don’t have experience running one, it can be difficult to succeed at first (especially if you don’t have any prior ecommerce experience).

Wholesale distribution

Another way to distribute your products is by working with other retailers who already have established customer bases. This means signing up with distributors and wholesalers who will handle order fulfillment for you (i.e., get your products from the manufacturer and ship them directly to customers). This can be an appealing option because it lets you focus on selling rather than logistics or customer service — but it also means getting paid less per sale because there are multiple layers of markup.

Step 5: Decide if you want to be an independent distributor or a direct sales rep

Independent distributors are independent contractors who sell products and services on behalf of the company. Direct sales reps work for themselves, but they represent a specific company and earn income from selling its products or services. Both types of distributors must register with the state and federal governments as self-employed businesses.

Step 6: Register your business name and get your business license if necessary

If you’re going to be selling products directly to consumers, you’ll need a seller’s permit or retail license in most states. If you’re going to be selling products through retail establishments or other wholesale channels, you may not need this registration at all — check with your state government to find out what’s required where you live.

Step 7: Register for taxes

As an independent contractor, you’ll need to pay self-employment taxes on any income from your new business — including any bonuses or commissions that might come along in later years. You may also have to pay income taxes if your monthly income reaches certain thresholds (typically $400/mo for individuals in most states). It’s always best to consult with a tax expert before launching any new enterprise.

Step 8: Obtain necessary permits and licenses

Before you start your distribution business, you’ll need to obtain all the licenses, permits and other documents required by your state. These may include:

Business license. Every state has its own rules for starting a business, but most require a business license issued by your county or city government. You can usually apply online for a business license, although some jurisdictions require you to visit your county clerk’s office in person. Depending on where you live, the cost of a license may range from $25 to $100 for each location in your business.

Sales tax license. Every state requires businesses that make sales within its borders to register with that state’s Department of Revenue and obtain a sales tax identification number (STID). You can register online using an application form available on the website of the department or by calling their customer service center at 800-252-8980. The cost is generally $30-$50 annually per location in your business.

Employee identification number (EIN). Also known as an Employer Identification Number (EIN), this is another type of identification number that’s used when reporting taxes on income generated by self-employment and sole proprietorship

Step 7: Get business insurance

It’s important to have proper insurance coverage in place before opening your doors. This will protect you if someone is injured or there’s damage to property, as well as protect against liability claims if someone gets sick after eating at your restaurant. You’ll also want to make sure that all of your employees are covered by workers’ compensation insurance.

Step 8: Define your brand

The next step is defining what makes your restaurant unique and what sets it apart from other restaurants in the area. A strong brand helps set new restaurants apart from the competition, so take some time to think about how you want to present yourself — and how you want people to perceive you.

Step 9: Set up your online presence

If you’re going to be selling products or services on a website, it’s important that people can find you online. So if you don’t already have a website, now is the time to create one! If you do already have one, make sure it’s up-to-date and easy to navigate.

Step 10: Establish an accounting system/bookkeeping process now – so you’re not scrambling at tax time!

You’re going to need some way of tracking all of your expenses, income, and other financial records so that when tax time comes around each year (and it will!) you can easily file all of those forms and get money back from the government if necessary. The best way to do this is by setting up some sort of accounting software like QuickBooks or Xero so that everything is neatly organized by category and date, with no confusion about where the money went or came from and when it was spent or earned.

Step 11. Develop your business skills

The first step to building a distribution business is to develop your business skills. This means learning about inventory management, customer service, sales, marketing and other areas of the business. Even if you have never worked in the industry before, there are many resources available online that can help you learn what it takes to run a successful distribution company.

Step 12: Contact manufacturers

Once you have learned some basic skills, contact manufacturers directly and ask them if they would like to sell their products through your distribution channel. This may be easier said than done because many manufacturers don’t sell directly to distributors or wholesalers; instead, they prefer to sell directly to retailers or customers who buy direct from their website. However, some manufacturers will be willing to work with a new distributor and might even offer special incentives for new partners. For example, they might give you a discount on their products or allow you access to special promotions that aren’t available elsewhere.

Step 13: Consult with retailers

Consult with local retailers about their needs for new product lines and services. Offer yourself as a consultant by providing them with advice on ways to improve their sales and profits through better merchandising practices or by helping them find new products that will appeal more directly to their customers than what they currently offer in their stores.

Key Takeaway 

Distribution is a field that requires constant growth and renovation for the operating company to compete successfully in the marketplace. From simply adopting new technologies to battling larger companies, entrepreneurs need to stay ahead of their competition. 

The time is nigh for ethical, sustainable, niche-driven business owners from all over the world to assemble, and together we will positively transform our industries. Our businesses will give back in many ways. We are on the precipice of a revolution, a movement that has already begun by some. And you’re cordially invited to join us. Consider this an invitation to start your own distribution business. Here are 15 steps that’ll get you there.

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How to Start a Distribution Business

Last Updated: December 14, 2023 Approved

This article was co-authored by Art Lewin . Art Lewin is an Entrepreneur based in Los Angeles, California. He specializes in business, sales, marketing, and real estate investing. Art is the CEO and Founder of four companies based in Los Angeles: Art Lewin Bespoke, Healthy Choice Labs, SFR Properties, and Professional Business Network (PBN). Art is known globally for his exclusive custom-made and ready-to-wear business wear designs. Some of his notable clients include royal family members, politicians, and Hollywood stars including Hugh Hefner, Sylvester Stallone, Johnny Carson, Steve Allen, and William Shatner. wikiHow marks an article as reader-approved once it receives enough positive feedback. In this case, 94% of readers who voted found the article helpful, earning it our reader-approved status. This article has been viewed 340,929 times.

Getting into product distribution means entering a big industry. For example, there are roughly 300,000 distributors in the United States that produce a combined $3.2 trillion in annual revenue. Despite this large number of participants, the fragmented and competitive nature of the industry allows for plenty of profitable new entrants. [1] X Research source With some planning and entrepreneurial spirit, you too can be on your way to owning a successful distribution business.

Creating a Business Strategy

Step 1 Decide what type of distribution business you will run.

  • While many large companies are served by equally large distributors, these distributors are unwilling or unable to serve smaller, more specialized business. A good idea, especially in a crowded market like beverage distribution, might be to provide niche products to these specialized retailers. [2] X Research source

Step 3 Put together a business plan that lays out the full vision of your new distribution business.

  • Writing a business plan can be the most complicated part of starting a small business. For more information, see how to write a business plan for a small business .

Step 4 Estimate your startup costs.

  • For an example of how much costs can vary, two successful business in different markets started with $700 and $1.5 million, respectively. The first, a tie company, started with such a small amount because the business was run from home, started with low inventory costs, and didn't require any equipment to manage. The second, a fine wine retailer, had expensive product to buy, had to rent a large warehouse, and had high operating expenses like temperature-controlling the warehouse and investing in equipment to transport the product around the warehouse and to customers. [5] X Research source
  • The advent of online distribution has also created new options for distribution businesses. One of these, drop-shipping, allows for distributors to avoid all inventory control and shipping issues by never taking physical possession of the product. Never taking control of inventory means that your initial investment can be much lower. However, this a crowded market that can be difficult to make money in. See how to start a drop shipping business for more information.

Step 5 Figure out how to sell your products.

  • As part of selling, put together a marketing plan so that you can promote your services. This may include the costs of printing brochures, creating catalogues detailing your offerings, and placing ads in trade journals or magazines. As a small business, you can expect to do a lot of marketing for the first few years until you have a good-sized customer base and have established a reputation. See how to create a marketing plan for more information.

Step 6 Determine how you will be funding your business.

Getting Your Business Started

Step 1 Form your company legally.

  • The primary advantage of forming a company is that your finances will be legally separated from those of your company. This minimizes risk to you in the event that your business is sued or goes into bankruptcy.

Step 2 Make your business official by getting it licensed and registered.

  • It is conceivable that a successful distribution business could be built and run from your home. This depends on the physical size of your inventory, however.

Step 4 Contact manufacturers or wholesalers of your products.

  • Don't buy too much inventory, especially at first.
  • Try to estimate your customer's needs before you invest in inventory.
  • If you can get away with low overhead (storing items at home or at a cheap location) at first, go for it.
  • Purchase inventory to a point where you can sell that inventory before you have to pay the manufacturer or distributor for it. [9] X Research source

Step 6 Create a website for your business.

  • You can also invest in search engine optimization (SEO) that directs potential customers directly to your website by placing it higher in search engine results. See how to improve search engine optimization for more information.

Step 7 Design a catalog that lays out your products.

Community Q&A

Wale Adams

  • Distribution is all about covering the spread, or making sure that you charge enough for your products to cover your cost in buying them and your operating expenses with a bit left over for you to keep as profit. A good model in determining your prices is to copy the markup used by the manufacturer. For example, if they produce as a product for $5 and sell it to you for $10 (a 100% markup), you should sell the product for $20 (a 100% markup from $10). This, of course, is only a general guideline. [10] X Research source What you end up charging for your product will also depend on your market and your competitor's prices. Thanks Helpful 1 Not Helpful 0

business plan for an distribution company

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  • ↑ http://www.entrepreneur.com/article/190460
  • ↑ Art Lewin. Entrepreneur. Expert Interview. 11 June 2021.

About This Article

Art Lewin

To start a distribution business, contact your local Small Business Administration to help your company get licensed and registered. Then, you'll need to find a location where you can run your business. To keep your costs low, rent the smallest location you can, or work from home if your inventory is limited. To start getting inventory, contact the National Association of Wholesaler-Distributors. Once you are ready to make sales, develop a website and catalog so that you can market and sell your products. For information about developing a business plan, keep reading! Did this summary help you? Yes No

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Small Business Trends

How to start a distribution business.

The modern marketplace thrives on the seamless movement of products from manufacturers to consumers, a process made possible by the critical operations of distribution and wholesale companies.

These entities stand as the backbone of commerce, navigating the intricate web of supply and demand.

Entrepreneurs who tap into this sector find themselves at the helm of a dynamic and essential service, facing both vast opportunities and formidable challenges, often starting with understanding how to start a business .

how to start a distribution business

The Distribution Industry

A distribution business acts as an intermediary in the supply chain, moving goods from producers to retailers or directly to customers. Wholesale distributors, in particular, purchase products in bulk from manufacturers and sell them to retailers or other distributors.

At the core of commerce, a successful distribution business ensures that products arrive safely and efficiently at their intended destinations, often navigating complex logistical pathways.

Benefits of Launching a Distribution Company

Embarking on a venture in the distribution industry offers a unique vantage point within the global market.

Small Business Deals

Entrepreneurs gain insight into the multifaceted nature of transporting goods and the satisfaction of keeping the wheels of commerce turning. In fact, distribution business owners enjoy a variety of benefits, including:

  • Diverse Product Handling : Engaging with a wide range of products keeps business operations interesting and diverse. Distributors have the freedom to specialize or expand their portfolios as market trends evolve.
  • Supply Chain Significance : Operating a distribution company places you at a pivotal point in the supply chain. Your business becomes essential in bridging the gap between production and market presence.
  • Lucrative Partnerships : Building relationships with manufacturers and retailers can lead to profitable, long-term contracts. These partnerships often become the cornerstone of a successful wholesale distribution business.
  • Scalability : The distribution sector allows for scalable business growth. Companies can start locally and expand their reach as they establish their networks and increase capacity.
  • Technological Integration : Advancements in technology offer distribution businesses tools for efficiency and accuracy. Implementing these technologies can lead to streamlined operations and improved customer satisfaction.

how to start a distribution business

Mapping Out Your Distribution Business Strategy

Entrepreneurs venturing into the distribution sector must navigate a series of strategic decisions that will lay the foundation for their business. From identifying a niche to selecting a location, each choice shapes the future of the enterprise, influencing its growth, operations, and success.

Identify Your Niche and Target Market

Carving out a specific niche within the distribution industry can set a company apart from the competition. By focusing on particular industries, such as the burgeoning balloon business, entrepreneurs can tailor their services to meet unique market needs.

Understanding the target market, especially at the outset, can forge strong relationships with local retailers and retail distributors, offering a focused inventory that caters to their specific demands.

Financial Management

Establishing a robust financial structure for your business is imperative. This includes budgeting, pricing strategies, and securing funding if necessary.  It also means exploring tools like business credit cards, which can help manage cash flow and expenses.

how to start a distribution business

Craft Your Wholesale Distribution Business Plan

A comprehensive business plan serves as a roadmap for a distribution company. It outlines the vision, pinpoints the strategy, and is often a requisite for securing investment. This business plan should detail every aspect of the operation, from market analysis to financial projections, providing a clear path forward and a persuasive argument for potential backers.

Obtain the Necessary Business License and Insurance

Legitimacy in the distribution field begins with obtaining the appropriate business licenses and business insurance policies. These critical steps not only comply with legal requirements but also protect the company’s financial well-being.

Proper licensing establishes credibility with partners, while insurance safeguards against the myriad risks associated with the movement and storage of goods.

Choose a Suitable Location for Your Distribution Business

The location of a distribution business is a determinant of its efficiency. Factors such as accessibility to major roads, the capacity for storage, and proximity to transportation hubs like ports and airports are crucial.

The right location can reduce transit times, lower shipping costs, and ultimately enhance customer satisfaction.

how to start a distribution business

Decide on the Scale of Your Distribution Company

Determining the scale of operations is a pivotal decision. Starting small allows for a focused approach, often with lower initial costs and risks. It provides an opportunity to build a solid reputation with local businesses.

Conversely, aiming for a regional or national presence can offer larger revenue streams and a broader market reach but requires more capital and a robust infrastructure from the onset.

how to start a distribution business

Decide on Common Business Structures

Choosing the right ‘common business structures is crucial for tax, financial, and legal considerations. It’s one of the many steps outlined in a comprehensive business startup checklist that can guide new entrepreneurs through the process.

How to Start a Distribution Business: Step by Step

Embarking on the journey of starting a distribution business involves meticulous planning and execution. Entrepreneurs must consider each step carefully to transform their business vision into a successful operation.

The process from conceptualization to operation is intricate, requiring a strategic approach to product selection, channel management, technology implementation, and logistics.

how to start a distribution business

Select Products and Inventory Management

The cornerstone of a distribution business is its product selection. Entrepreneurs must choose items that not only align with their niche but also have a steady demand. Effective inventory management is crucial to balance supply with customer demand and avoid overstocking or stockouts.

Establishing strong relationships with suppliers is vital, as these partnerships ensure a reliable flow of products and can often lead to better pricing and terms, which is especially important to wholesale distributors.

Opt for the Right Distribution Channels

The choice between direct and indirect distribution channels can significantly impact a business’s reach and profitability. Direct channels allow for closer customer relationships and higher margins, while indirect channels involving intermediaries can expand a business’s reach without the need for extensive infrastructure.

The decision should align with the company’s scale, target market, and whether the focus is on wholesale or retail distribution.

how to start a distribution business

Implement Technology in Wholesale Distribution

In today’s digital age, technology plays a pivotal role in the efficiency of wholesale distribution operations. From sophisticated inventory management software to customer relationship management systems, technology can streamline processes, reduce errors, and enhance customer satisfaction.

Investing in the right tools is essential for staying competitive and managing the complex demands of wholesale distribution.

Understand and Manage Logistics

The success of a distribution business hinges on its logistics—the art of coordinating transportation, warehousing, and the overall movement of goods. Effective logistics management ensures that products are stored properly, inventory levels are maintained, and items are delivered on time.

A well-oiled logistics operation can become a significant competitive advantage, leading to satisfied customers and repeat business.

how to start a distribution business

Marketing and Expanding Your Wholesale Distribution Business

Marketing serves as the engine for growth in the wholesale distribution company, propelling brand visibility and facilitating expansion. A robust marketing strategy can distinguish a distributor in a competitive market, attracting new partners and opening doors to growth opportunities.

how to start a distribution business

Build a Brand in the Distribution Industry

In the distribution sector, a strong brand is synonymous with trust and reliability. It’s not just about a logo or a company name; it’s about the reputation for delivering on promises and providing consistent quality service.

Strategies to build a brand include developing a professional website, engaging in industry events, and leveraging social media to showcase expertise and thought leadership. A brand that resonates with reliability can become a preferred choice for suppliers and retailers alike.

how to start a distribution business

Establish Strong B2B Relationships

The lifeline of a wholesale distributor is the network of B2B relationships they cultivate. Strong partnerships with suppliers ensure a steady flow of products, while relationships with retailers are crucial for sustained sales.

Effective communication, transparent operations, and reliable service are key to forging these connections. By prioritizing the needs and success of their partners, distributors can create a collaborative ecosystem conducive to shared growth.

how to start a distribution business

Adapt to Market Changes and Trends

The distribution industry is in a constant state of flux, with new trends and market shifts regularly emerging. Staying abreast of these changes is not just beneficial; it’s necessary for survival and growth.

Distributors must be agile and ready to adapt their strategies and operations to meet evolving market demands. Whether it’s embracing new technologies, expanding into new product lines, or adjusting to economic shifts, flexibility and foresight are critical for a distributor’s longevity and success. It also means having a website startup guide to ensure a clear path for your online presence.

FAQs: How to Start a Distribution Business

How much does it cost to start a distribution business.

The cost to start a distribution business can vary widely, typically ranging from $10,000 to $100,000.

This initial investment covers expenses such as leasing a warehouse, purchasing inventory, securing transportation, and obtaining the necessary licenses and insurance.

Costs will fluctuate based on the scale of operations, the type of products distributed, and the chosen location.

Prospective business owners should also account for technology and marketing expenses to fully operationalize their venture.

How do distribution businesses manage large-scale logistics?

Distribution businesses manage large-scale logistics by investing in robust logistics software and technology that optimize routing and inventory management.

These companies often establish partnerships with reliable transportation companies to handle deliveries efficiently. Likewise, they may employ logistics experts to oversee supply chain operations, ensuring goods are stored, handled, and transported effectively.

Strategic planning and real-time data analysis are crucial for managing the complexities of large-scale distribution logistics.

What are the challenges faced by new distribution companies?

New distribution companies often face challenges such as intense competition, the need for substantial capital investment, and the complexity of supply chain management.

They must navigate the intricacies of logistics, maintain cost efficiency, and establish strong relationships with suppliers and customers. Staying current with technological advancements and regulatory changes is vital. These hurdles require strategic planning, market knowledge, and adaptability to overcome successfully.

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Warehouse Business Plan Template

Written by Dave Lavinsky

warehouse business plan

Warehouse Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their warehouse companies.

If you’re unfamiliar with creating a warehouse business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a warehouse business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your warehouse business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a warehouse business or grow your existing warehouse company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your warehouse business to improve your chances of success. Your warehouse business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Warehouse Businesses

With regards to funding, the main sources of funding for a warehouse business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for warehouse companies.

Finish Your Business Plan Today!

How to write a business plan for a warehouse business.

If you want to start a warehouse business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your warehouse business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of warehouse business you are running and the status. For example, are you a startup, do you have a warehouse business that you would like to grow, or are you operating a chain of warehouse businesses?

Next, provide an overview of each of the subsequent sections of your plan.

  • Give a brief overview of the warehouse industry.
  • Discuss the type of warehouse business you are operating.
  • Detail your direct competitors. Give an overview of your target customers.
  • Provide a snapshot of your marketing strategy. Identify the key members of your team.
  • Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of warehouse business you are operating.

For example, you might specialize in one of the following types of warehouse businesses:

  • Distribution centers: These types of warehouse businesses are usually large facilities that hold high quantities of goods for short periods of time from multiple suppliers to be transported to customers quickly.
  • Climate-controlled warehouses: These types of warehouse businesses specialize in storing temperature-sensitive products such as frozen foods, fruits and vegetables, and other perishable goods.
  • Smart warehouses: These types of warehouse businesses run on artificial intelligence to automate the process of storing, organizing, and transporting products.
  • Bonded warehouses: These types of warehouses specialize in storing imported goods.
  • Consolidated warehouses: These types of warehouses specialize in the intake of small shipments from various suppliers and grouping them together into a larger shipment to be distributed to buyers.

In addition to explaining the type of warehouse business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

  • When and why did you start the business?
  • What milestones have you achieved to date? Milestones could include the number of customers served, the number of shipments processed, and reaching $X amount in revenue, etc.
  • Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the warehouse industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the warehouse industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your warehouse business plan:

  • How big is the warehouse industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential target market for your warehouse business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your warehouse business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of warehouse business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other warehouse businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of warehouses, order fulfillment service providers, or inhouse storage and distribution operations. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

  • What types of customers do they serve?
  • What type of warehouse business are they?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you make it easier for customers to acquire your product or service?
  • Will you offer products or services that your competition doesn’t?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a warehouse business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of warehouse company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide long-term storage, temperature control, third-party logistics, or order fulfillment services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your warehouse company. Document where your company is situated and mention how the site will impact your success. For example, is your warehouse business located in a busy retail district, a business district, or a standalone warehouse? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your warehouse marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

  • Advertise in local papers, radio stations and/or magazines
  • Reach out to websites
  • Distribute flyers
  • Engage in email marketing
  • Advertise on social media platforms
  • Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your warehouse business, including answering calls, scheduling shipments, billing and collecting payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth cusotmer, or when you hope to reach $X in revenue. It could also be when you expect to expand your warehouse business to a new city.  

Management Team

To demonstrate your warehouse business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing warehouse businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a warehouse business or a small order fulfillment operation.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you make 20 sales per day, and will your average inventory be 500 units? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your warehouse business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a warehouse business:

  • Cost of equipment and office supplies
  • Payroll or salaries paid to staff
  • Business insurance
  • Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your warehouse lease or a list of key performance indicators (KPIs) you track.  

Writing a business plan for your warehouse business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the warehouse industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful warehouse business.  

Warehouse Business Plan Template FAQs

What is the easiest way to complete my warehouse business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your warehouse business plan.

How Do You Start a Warehouse Business?

Starting a warehouse business is easy with these 14 steps:

  • Choose the Name for Your Warehouse Business
  • Create Your Warehouse Business Plan
  • Choose the Legal Structure for Your Warehouse Business
  • Secure Startup Funding for Warehouse Business (If Needed)
  • Secure a Location for Your Business
  • Register Your Warehouse Business with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Warehouse Business
  • Buy or Lease the Right Warehouse Business Equipment
  • Develop Your Warehouse Business Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Warehouse Business
  • Open for Business

Where Can I Download a Warehouse Business Plan PDF?

You can download our Warehouse business plan PDF  here. This is a business plan template you can use in PDF format.

Don’t you wish there was a faster, easier way to finish your Warehouse business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how a Growthink business planning consultant can create your business plan for you.

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The 5 Components of a Distributor’s Strategic Plan

Ian_Heller

  • February 19, 2018
  • Type Articles

I had a lunch with a distribution executive once and he explained that they didn’t conduct strategic planning because, “Who really knows what a strategic plan is, anyway?”

I’ve also heard – many times – “What’s the point of doing a strategic plan? It just turns into a three-ring binder that gathers dust on a shelf.”

Those are dumb reasons not to have a strategic plan for your business. I don’t understand how companies like this formulate effective budgets. It’s like hoping you will have a fantastic summer vacation and then laying out a detailed route even though you have no idea where you’re going. 

Some companies succeed despite the lack of a strategic plan thanks to an inspired, visionary (and usually quirky) owner. Even these companies would be better with everyone aligned around a widely understood strategy.

If your company has no plan or yours is gathering dust, then here’s a strategic planning outline you can use that has worked for some distributors I’ve worked with over the years:

A valid business strategy has five components:

  • Your company's current or desired core competencies
  • The industry or industries in which you intend to compete
  • A description of how you will differentiate versus competitors
  • The annual initiatives you plan to implement in the areas of sales & marketing, operations, information technology, finance and organizational development (HR) and M&A if applicable
  • Dashboards to track your progress and a financial forecast that shows how your plans will meet stakeholder requirements over the next three to five years

Let's look at each of these components.

1. The first component of a valid business strategy is a clear definition of your company's current or desired core competencies.

Wikipedia defines core competencies this way: "A core competency is something that a firm can do well and that meets the following three conditions:

  • It provides consumer [“customers” and “accounts in B2B] benefits
  • It is not easy for competitors to imitate
  • It can be leveraged widely to many products and markets.”

Distributors often have core competencies related to assortment, product availability and technical expertise. You need to determine (preferably through quality research) what benefits your customers crave and then build the competencies you need to provide them. The market is changing rapidly, however. If you don’t have great core competencies in digital capabilities, you’re falling behind. Is this a key part of your strategy?

2. The second component of a valid business strategy is a description of the industry or industries in which you intend to compete.

You need to be able to define just what kind of distributor you are: for example, do you define yourself by products (i.e., power transmission) or a customer segment (i.e., the education market)? These are related, of course but not the same.

This step sounds easy, but I find that distributors are often so concerned about getting too narrow in their focus that they fail to become really clear about what they want to do. Here’s a tip: start with a focused market. Once people understand you, you can broaden your target over time. But if customers do not “get” what you’re trying to be, you never gain traction.

3. The third component of a valid business strategy is a description of how you differentiate versus competitors.

Differentiation is about being the best at something. How are you going to beat the competition? No matter what core competencies you decide to build, other distributors in your market will have similar capabilities. In the strategic planning process, you need to decide how you will be different.

It takes a lot of hard work to come up with a great answer to this question and even more work to make that differentiation real. It's easy for us to say that we will have superior technical expertise (for example), but it's extraordinarily difficult to build it and maintain it.

4. The fourth component of a business strategy is the set of initiatives you plan to implement in the areas of sales & marketing, operations, information technology, finance, organizational development and M&A.

This is where your strategy connects to your tactical plans. When I hear a distribution executive complain that their strategy “gathers dust on a shelf,” it’s typically because their planning process ended at a very high level – they didn’t continue the process with specific individuals and teams assigned to develop tactics in each of these areas.

The most common reason the strategy stops at a high level is because this is when various leaders on the planning team start competing for resources. It’s just easier to let the old company politics and power struggles decide who gets what budget and headcount than it is to surface the disagreements and fight over resource allocation in public. Unfortunately, this often results in the company pursuing too many initiatives that haven’t really been vetted and prioritized. It’s better to clarify the alternatives and make hard choices.

5. The fifth component of a business strategy is a set of dashboards and a financial plan that forecasts the results you expect to get from your strategy and illustrates how they will meet stakeholder requirements over the next three to five years.

Your strategic planning process cannot be separated from your annual budget process. In the vast majority of companies, if it's not in the budget, it doesn't exist. That's why you must have your CFO on your strategic planning team. During the planning process, your team must compile a financial plan that estimates the results of implementing your strategy.

Developing a detailed strategic plan is very difficult work. It’s frustrating to gain alignment between a group of strong-willed leaders. But that hard work and pain during planning will generate much better results for the rest of the year.

As always, I’d love to hear your comments. You can email me at [email protected] .

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  • Filed In: Strategy , Research & Analytics , MDM Blog , Management , Featured Blog

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The Coffee Warehouse

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

The Coffee Warehouse is a new business providing high-quality, full service distribution of coffee, specialty beverages and beverage-related supplies to coffee houses and espresso stands throughout the Spokane and Northern Idaho market.

The principal owners are Steve and Jennifer Smith, whose combined experience brings office management, high levels of customer service, and over 20 years in distribution and sales management.  At this time we are seeking additional equity capital to compliment our own investment and are seeking to arrange a bank line for inventory and receivables financing.  We have firm commitments to distribute several high-quality new age beverage products, and have verbal commitments from independent retailers throughout the Spokane and Northern Idaho market to carry our product.  We plan to distribute our first products within 30-60 days of finalizing financial arrangements.

Sales projections for The Coffee Warehouse are estimated to begin at approximately $2,229,000 the first year, increasing to approximately $2,558,000 in Year 2 and approximately $2,936,000 in Year 3.  Our net profit is projected at approximately $283,000 the first year, increasing to $406,000 by the end of the third year of operation.

Distinguishing characteristics of our business will be the combination of management experience, sales and distribution experience, high-quality, innovative products and exceptional customer service.  In particular, what really sets up apart is that we are the ONLY full service distribution company servicing the coffee and specialty beverage industry in the Spokane/Northern Idaho market.   In addition, The Coffee Warehouse has an exclusive contract to distribute a new, groundbreaking product that would enable us to gain immediate access to a majority of the potential customer base.

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1.1 Objectives

  • To open and operate a successful coffee and new age beverage distributorship in the Spokane/Northern Idaho market, employing three to five employees the first year.
  • To obtain a minimum of 100 regular customers in the Spokane/North Idaho market the first year of operation.
  • Achieve first year sales of $2,000,000.
  • Maintain an average gross margin of 25 percent.
  • To produce a net profit of at least $400,000 by the end of the third year of operation.

1.2 Mission

The Coffee Warehouse intends to become a recognized distributor of specialty beverages and beverage-related supplies and services to coffee houses and espresso stands throughout Spokane and Northern Idaho.

The Coffee Warehouse plans to develop strong relationships with key customers so we will be viewed as indispensable partners, rather than just another supplier. We will work closely with each customer to recommend product assortment unique for their retail base, appropriate stocking levels, pricing and display assortments, as well as promotional ideas and material to increase sales. The Coffee Warehouse will seek out and work with the manufacturers we represent to deliver the most innovative and exciting products possible to the customers we serve. We are not only selling product, we are selling service.

1.3 Keys to Success

  • Innovative quality products.
  • Individualized customer service – providing our customers with what they want, when and how they want it.
  • Only full service distribution company in the Spokane/Northern Idaho market.
  • Fully integrated programs to help customers increase sales through menu development, creative promotions, advertising, and custom marketing material.
  • Exclusive distribution rights to ground-breaking products not currently available in our market.
  • The combined experience of the principal owners bring upper office management skills, high levels of customer service, and over 20 years in distribution and sales management.

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Company summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">.

The Coffee Warehouse, Inc. is a new S-corporation business located in Spokane, Washington, and will be established based on the details of the following plan.

2.1 Company Location & Facilities

The Coffee Warehouse will be located in the Spokane Valley within the Spokane Industrial Business Park.  This is a prime location to service both the Spokane and Northern Idaho market. The facilities will include approximately 5,000 square feet of warehouse space, with an additional 1,400 square feet built out for office/retail space.  We are currently negotiating lease terms on the several available properties, and plan to have a lease signed by July 31.

2.2 Company Ownership

The Coffee Warehouse is a privately held S-Corporation owned in total by its co-founders, Steve and Jennifer Smith.

UBI Number:  XXX-XXX-XXX (removed to protect confidentiality)

2.3 Start-up Summary

Start-up expenses for the Coffee Warehouse total $16,450, and include expenses such as legal, marketing, lease deposit, computer systems, etc.  Start-up assets include $9,800 in initial cash requirements, $18,750 in short term assets (office furniture, refrigeration equipment), and $75,000 in starting inventory.  These start-up costs will be financed through investments and small-business loans.  The details of the start-up summary are included in the following table.

Coffee distribution business plan, company summary chart image

The Coffee Warehouse will provide a first-class delivery service of quality hot and cold beverage related supplies, including whole bean or ground coffee, flavor syrups, jet teas, fruit smoothies, bubble teas, concentrated milk, fresh baked goods and assorted paper supplies. Our services will include invaluable trade resources, effective promotional programs, custom-designed marketing material, informative monthly newsletters, training and product demonstrations, as well as information on the latest market trends in the coffee/specialty beverage industry.

3.1 Product & Service Description

PRODUCT DESCRIPTION The Coffee Warehouse will carry a variety of quality products that will enable us to provide full service delivery to espresso stands and coffee houses. Our underlying philosophy in selecting products is to choose lines that will bring consistent quality, competitive prices, and product satisfaction to our customers. We have personally researched and sampled each of the following products that we offer to ensure the quality we guarantee.

  • Lowery’s Gourmet Whole Bean and Wired Willey’s White Coffee
  • Assorted Gourmet Syrups & Coffee Toppings
  • Chocolate, White Chocolate and Caramel Syrups/Sauces
  • Oregon Chai Concentrate
  • Jet Cafe and Jet Tea Fruit n’ Tea Freeze
  • Cappuccina line of product
  • Big Train line of product
  • Red Bull Energy Drinks
  • Good Cow Concentrated Milk with Custom Dispensing Equipment
  • Fresh Baked Goods
  • Assortment of White, Pre-printed Paper, and Clear Beverage Cups Systems – as well as an assortment of other paper supplies

At this time, the majority of these products are only available to customers through wholesale vendors such as Cash and Carry retail outlets – therefore it is the customer’s responsibility to acquire these products by their own means. The Coffee Warehouse will make these same products available through our high quality, full service delivery – bringing these products directly to their doorstep at a competitive price.

SERVICE DESCRIPTION An important component of our business is not just our products, but our service. In addition to our full service delivery, the following are other important service elements that we will offer to our customers:

  • Ideas to help our customers increase sales through menu development, creative promotions, co-op advertising, and much more.
  • Custom designed marketing material such as printed banners, promotional posters, punch cards, pre-purchased beverage cards, reader boards, etc.
  • Distribute a monthly newsletter featuring the latest coffee trends, new industry equipment, breaking trade news, promotional ideas, new creative recipes, and upcoming events.
  • Samples of the latest product releases – with eye-catching point-of-sale to advertise new items to the end consumer.
  • Routine equipment maintenance and training.

3.2 Competitive Edge

KEY COMPETITIVE STRENGTHS No other wholesaler in the market offers full service delivery with the variety of product we feature. We are better positioned than our main competitors to take advantage of the increasing demands of coffee and specialty beverage supplies because we focus exclusively on high-quality distribution and customer service. In addition to the variety of products we feature, The Coffee Warehouse has exclusive distribution rights to Good Cow’s concentrated milk/dispensing system. This product is not currently available in our market by any other suppliers.

KEY COMPETITIVE WEAKNESSES Our primary weakness is that we are a new business competing largely against established suppliers. To significantly build sales, we must not just find new customers – we must take customers away from existing suppliers. However by offering a superior selection of supplies, new groundbreaking products to the market, and focusing on high-quality service and full service delivery, we feel will can quickly establish accounts and build strong relationships. Co-founder Jennifer Smith has had many discussions with owners of coffee and espresso businesses that confirm this opinion.

3.3 Sales Literature

Sales literature to be distributed to both current and potential customers will include brochures, fliers, newsletters, as well as other print media such as print advertisements.  Jennifer Smith is highly skilled in graphic design and desktop publishing, and has quality design and printing equipment to publish professional pieces at a low cost.

3.4 Sourcing

The Coffee Warehouse will purchase product directly from manufacturers, as well as master distributors. Because this eliminates the broker or “middle man,” this allows us to operate on a 25-30% profit margin, while providing our customers with competitive prices.

To further reduce costs, The Coffee Warehouse plans to share product shipments out of California with distributors operating in Portland, Oregon and Tri-Cities, Washington. Other product not being shipped directly to Spokane will be purchased and picked up in Seattle, Washington. The Coffee Warehouse plans to send a truck to Seattle on a bi-weekly basis to pick up product, thus cutting costs by an average of 5%.

3.5 Technology

To streamline the efficiency of our distribution methods, The Coffee Warehouse plans to use the latest in cutting edge technology – not only in the warehouse – but also in the trade.

All of our drivers/sales representatives will be equiped with Thinque MSP handhelds and software. Thinque MSP applications will reduce field expenses, decrease day’s sales outstanding, and increase worker efficiency. Features can be used in or out of the warehouse and include managing returns and collections; adjusting item price, profit or margin; applying promotional items to an account; streamlining orders; tracking inventory; reducing out-of-stocks; and providing sales history reports. All information recorded in the handheld is available in real time to be viewed by management in the office.

3.6 Future Products and Services

Within the first year of business, The Coffee Warehouse intends to open a retail/wholesale store and high-quality showroom.  Products will be available for purchase by both our wholesale customers who may need product between delivery days, as well as retail consumers interested in purchasing product for their home use.  We will also offer a showroom that will feature equipment, supplies, trade resources, and information on marketing services with examples of marketing and promotional material available to customers.

With the addition of the product showroom, The Coffee Warehouse will offer customers quarterly product and training demonstrations that will be presented by trained beverage experts from the industry.

The Coffee Warehouse also plans to hold semi-annual trade shows for current or potential customers. These trade shows will allow customers the opportunity to sample products, talk to manufacturers, learn about new industry trends, review marketing material, and network with other business owners in their market.

Market Analysis Summary how to do a market analysis for your business plan.">

Coffee is the second largest commodity market next to oil, and growth is expected to continue at a strong pace for the foreseeable future. The specialty beverage industry is growing at an equally strong pace, with sales growth in some categories projected to grow at rates of 40% per year.

This growth offers excellent opportunities for new companies to enter this market, and we are excited about the possibilities of what The Coffee Warehouse can accomplish in the Spokane and Northern Idaho market.

4.1 Market Segmentation

The gourmet coffee and specialty beverage industry is divided into several segments. Consumers who enjoy these products purchase drinks at restaurants, coffee houses, sports venues, drive-thru espresso stands, and even inside other retail establishments that might feature an independent beverage stand.

As illustrated in the chart below, within the market surrounding Spokane, Rathdrum, Post Falls and Coeur d’Alene, there are currently 250 drive-thru espresso stands, 18 coffee/tea houses, 52 independent inner-retail espresso stands, and approximately 10 stands in locations such as sports venues, university campuses, and etc. These figures are not including the number of restaurants, bars and cafes that also feature these beverages.

Coffee distribution business plan, market analysis summary chart image

4.2 Target Market Segment Strategy

While the market is already sizeable, this industry continues to grow. New espresso stands open their doors to the public on a monthly basis in our market, and it isn’t uncommon to see numerous espresso stands within a one or two mile radius. The article below, published by a national coffee retail magazine, discusses our market’s unique drive-thru espresso industry. The sales potential in this market is unlimited.

The Coffee Warehouse initially plans to target these drive-thru espresso stands, as well as all inner-retail espresso stands within our designated market. It is this segment that is most in need of the services we are planning to offer. Essential needs include: quality products at competitive prices, first class service, and strong sales support. It is most often these small owner-operated businesses that are neglected by larger suppliers and are forced to service themselves. It is also these smaller businesses who could most greatly benefit from marketing services, sales support, and full service product delivery. Providing the same high-quality service, within the first six months of operation, The Coffee Warehouse plans to expand our target into formal coffee houses and cafes, and as business grows and stabilizes, eventually evaluate the needs of potential customers in the restaurants and bar industry.

Coffee distribution business plan, market analysis summary chart image

4.3 Market Growth

Coffee has been a growing industry for the past several years.  In the gourmet/specialty coffee industry alone, the figures show an impressive rate of growth in the United States.

The new age beverage industry is growing at an equally strong pace.  Sales growth in the chai tea category alone is estimated to be 50% historically, with projected growth rates of 40% per year. Energy drinks, including brands such as Red Bull – and trends such as Jet Tea – are driving the new age beverage growth, and have increased 50-fold in the past three years.

Bubble Tea has been a rapidly growing market in Asia, though it is relatively new to the United States.   Introduced to trend setting marketings such as San Francisco and Seattle, sales have been exploding – and the craze of the “Tapioca Pearl” is expected to spread throughout America.

Coffee distribution business plan, market analysis summary chart image

4.4 Industry Analysis

The coffee and specialty beverage industry is pulverized, with hundreds of manufacturers, brokers, suppliers and retailers. Unlike the beer/soda industry, with large companies such as Anheuser Busch, Pepsi and Coca Cola controlling most of the market, the coffee and specialty beverage industry does not have large national chains with market control.

In an open industry growing at such a strong rate, The Coffee Warehouse is in position to capitalize on the customer’s need for quality product, exceptional service, and an effective partner to success.

4.5 Industry Participants

With the rate of growth in the gourmet coffee market, in addition to the recent trends in Jet Teas and other specialty beverages, the industry is comprised of many small participants, each focusing on only a few specific items or brands at a time.  As the markets evolve, we expect the industry to consolidate with larger distributors representing more of a vast selection of products in each market.

Currently in our segment of the industry, there are no large national chains with market control.  There are also few products that are offered with exclusive rights to one market.  While this is the case with many products, The Coffee Warehouse is working with manufacturers to change that practice, and not only represent a larger variety of product than others in our industry, but also acquire exclusive rights to many of the products in our portfolio.

4.6 Distribution Patterns

The following flow chart illustrates the overall industry surrounding the distribution patterns of coffee and specialty beverages.   (The Coffee Warehouse falls into the level highlighted in yellow).

Several manufacturers are represented by master distributors and/or brokers who in turn provide the product to direct distributors and other wholesale suppliers.  Other manufacturers allow distributors and suppliers to purchase product direct – depending on the quantity of product being purchased.   Product is then distributed or sold through cash and carry wholesale stores to retail businesses as illustrated below.

Coffee distribution business plan, market analysis summary chart image

4.7 Competition & Buying Patterns

While there are a handful of coffee and specialty beverage suppliers providing product in our market, there is still a great deal of room for new business. Most importantly, there is room for new business that understands the need for high-quality service and sales support – in addition to product at competitive prices.

In this industry, customers choose their suppliers based on available product, price, and service – though most often, it is the service that suffers most. While one supplier may offer the product at the right price, they do not provide the level of service that the customer demands. The next supplier may offer the right level of service, though their prices are too high. This results with the customer purchasing most of their supplies through a cash and carry style wholesale store – leaving the customer with no service or support.

By positioning ourselves in the market with in-demand, quality product at competitive prices, with a consistent high level of customer service – we are confident that we will see customers and their business continue to increase.

Sales and Marketing

The unique aspects of our business include individual product selection, quality assurance, and high-quality full service distribution. Our strategy is to focus 100% of our efforts on the market for espresso supplies in the Spokane and Northern Idaho area. By focusing all of our effort and energy on this particular area, we expect to quickly develop and maintain a leadership position. The Coffee Warehouse’s key personnel will stay in contact with our customers, and will be able to respond to changes in this market much faster than our competitors.

The Coffee Warehouse will offer the best, most highly personalized service in the marketplace. Being a small, owner-operated company, we intend to use this to our advantage to be absolutely certain that every one of our customers receive excellent service. We will go out of our way to make sure that our customers know that they truly matter to us.  Sales reps and in-house personnel who deal with customers will be carefully trained and given wide latitude for insuring that customers are always satisfied.

5.1 Marketing Strategy

Our basic marketing strategy is to work with customers on a one-to-one basis to ensure their supply needs are being met and help develop unique marketing programs for each of them. We intend to prioritize customer service and make it a key component of our marketing programs. We believe that providing our customers with what they want, when and how they want it, is the key to repeat business and positive word-of-mouth advertising. Because we want to develop close working relationships with our customers, we want to establish accounts in as personable a way as possible. It is for this reason that we will overwhelmingly emphasize in-person sales calls to build accounts.

We will closely integrate all of our marketing and sales efforts to project a consistent image of our company and a consistent positioning of our products and services. We will build this image around our name “The Coffee Warehouse, Inc.” and emphasize to customers the high-quality service that is behind this name.

To support our marketing initiatives and product knowledge, we will attend as many area conventions and trade shows as possible to ensure we are offering the most up-to-date market trend information.

5.2 Promotion Strategy

Relationships are the key to success in the distribution business. Personal selling will remain our most important means of promotion. Both Steve and Jennifer Smith will lead this effort – Steve, with his skill and experience in sales and distribution, and Jennifer in customer service and relations.  In addition to personal selling, The Coffee Warehouse has identified several other means of advertising and publicity.

The Coffee Warehouse will send news releases to local media and press, as well as trade magazines to try to get product and company feature coverage in front of the eyes of our customers – as well as the end consumer. We will also produce a few generic press releases about the products we are distributing for our customers to use toward publicity coverage for their businesses in local publications such as the Spokesman, The Inlander and Local Planet.

Third, we shall have a monthly newsletter for current of potential customers. This newsletter will highlight new and current trends in the industry, upcoming conventions and trade shows, offer promotions and special deals, as well as provide new recipes, fun tips and other information that can be used in their business. We will also highlight not just our products, but also display ideas and success stories of other business in the industry.   As a more straight forward advertising effort, The Coffee Warehouse will feature an advertisement in the Yellow Pages, frequent ads in the Spokesman Review, the Inlander, and the Local Planet, as well as participation in networking, local trade shows, and personal word-of-mouth advertising.

5.3 Distribution Strategy

To begin, The Coffee Warehouse will operate two delivery trucks with a third vehicle for special deliveries between scheduled delivery days.  Deliveries will be made Monday through Friday, and will be strategically routed to minimize travel time and fuel costs – while maximizing production.   On average, we will service 20-30 accounts per day, with deliveries to each account twice a week. As the number of accounts increase, the need for additional delivery trucks will continue to be evaluated. With each additional delivery truck, routes will be restructured to maintain maximum efficiency.

5.4 Sales Strategy

Distribution sales are dependent on repeat business, therefore the sales strategy for The Coffee Warehouse is based on personal, consistent sales contact, with a high emphasis on customer service and relations.   Because we are a new distributor, we understand that we will have to prove our worth to our customers in order to earn their respect and business. Both of the owners, Steve and Jennifer, will make personal calls on potential customers to review our product line and services, give general information on our company, and discuss how we feel we can help them succeed in their business.

The Coffee Warehouse will begin operations with two full-time delivery/sales representatives, who will be responsible for providing full service and delivery to current customers, but also make sales calls for potential new business. This delivery/sales representatives will receive a base salary, with commission on qualified sales, as well as bonuses for new acquired business.  Customers will be scheduled for a pre-arranged delivery day once or twice a week, depending on the quantity and timeline of product needed. Product orders can be placed in a number of ways to help facilitate the process:

  • Phoned Orders: Customers can easily phone orders into our office, up until 2:30 p.m. of the afternoon prior to their scheduled delivery day.
  • Faxed Orders: Customers can fax in a completed product order sheet, with the same deadline as phoned orders.
  • Tel-Sell: Customers may choose to have a representative from the office call them the day prior to their scheduled delivery to check product quantities and assist them in placing their order.

We understand the hectic schedule of a small business, so if a customer fails to call or fax their weekly order, they will receive a courtesy call from our office to verify that an order is not needed.

5.5 Sales Forecast

As indicated in the table, our sales are forecasted to increase rapidly, with an annual growth rate of approximately 30%.

Sbp, coffee distribution business plan, sales and marketing chart image

5.6 Milestones

The following table and chart are the important milestones for The Coffee Warehouse.

Sbp, coffee distribution business plan, sales and marketing chart image

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

The Coffee Warehouse will be owned and operated by its founders, initially working with a small employee base that will cover sales and delivery. Management and personnel plans are covered in more detail in the topics to follow.

6.1 Organizational Structure

The Coffee Warehouse will be managed by the two founding partners, whose individual areas of expertise cover many of the functional aspects of the business.

The organizational structure is very simple. Steve Smith will be responsible for the routing, distribution management and delivery systems.  Jennifer Smith will be responsible for customer service, accounting, shipping and the general administration of the business.  Together they will be responsible for product selection and sales and marketing.

The support staff at the office and warehouse, as well as the delivery personnel will report to Jennifer.  Because Steve will be spending a majority of his time in the trade, Jennifer will be able to support any day-to-day needs that the personnel may have. However even when Steve is out of the office, he will be in constant contact via computer or phone.

The goal of The Coffee Warehouse is to have a team of committed associates who empower each other so that the customer’s expectations can be exceeded.  Our goal is to offer career opportunities, advancement opportunities and a level of income and benefits that is competitive within the region and job classification.   It is our long-term goal to be the preferred employer within our niche of the beverage distribution industry.

6.2 Management Team

Steven D.  Smith Steve has a long history of experience in sales and distribution management, specifically in the beverage industry. As the sales and distribution manager for the largest beverage distributorship in the state, he currently manages ten sales representatives and twenty four merchandisers.  During this time as sales manager, he has helped increase market share from 25 to 40%.

Over the last twenty years, Steve has successfully built and maintained rapport with buyers in the city’s largest key accounts, and has strategically routed sales, merchandising and truck routes throughout the city.

Steve has many industry contacts and an in-depth knowledge of the market.

Jennifer L. Smith Jennifer recently operated as general manager for a local business and directed a staff of thirteen, overseeing the accounting practices, human resource issues, and day-to-day operations of the company.  Prior to this position, Jennifer has held a variety of other inside business management and operations positions.

Jennifer’s strengths and skills include strong management, excellent public relations, high levels of organization, extensive computer knowledge – including desktop publishing and graphic layout – and extensive presentation and reporting skills.

6.3 Personnel Plan

PERSONNEL – GENERAL Initially we expect to be able to handle business needs with Steve and Jennifer, one administrative assistant, and two product delivery/sales personnel. As business continues to grow, we intend to hire additional employees one at a time and pay premium, over market labor rates to attract and retain quality help.

Not only will we train our employees to deliver excellent service, we will give them the flexibility to respond creatively to client requests. In addition, we will continually monitor our clients’ level of satisfaction with our service through surveys and other convenient feedback opportunities.

To ensure our personnel are meeting our expectations, we will hold a minimum of quarterly meetings with all employees so that results can be reviewed and future plans can be discussed. At least twice a year, a refresher course will be required on product knowledge and how to exceed our customer’s expectations.

SALES AND DELIVERY In order to deliver high quality, personalized service we will carefully select all employees – with extra attention given to sales reps and delivery personnel who will deal directly with customers. We will carefully review references not just from past employers or manufacturers, but also from retailers whom these sales reps have served. We will also make sure that each employee understands our way of delivering quality service to each customer. We will have immediate back-up support available by phone from our office for more difficult service issues. We will also give employees enough latitude so that they can respond immediately to almost any customer request or complaint – which in this industry usually means granting immediate credit for damaged merchandise, and adding additional merchandise to an order.

Financial Plan investor-ready personnel plan .">

The Coffee Warehouse projects the gross margin to be at approximately 20-25 percent. Sales projections for FY2004 are at $2,229,652 increasing to $2,558,584 in FY2005 and $2,936,137 in FY2006. Cash-flow analysis, balance sheet, business ratio, break-even analysis, and other financial details are shown in the appendix.

7.1 Important Assumptions

General assumptions for this plan are on the following table.

7.2 Break-even Analysis

The following table and chart illustrate our break-even analysis. With our fixed costs estimate of approximately $15,000 per month, operating on average at a 25% profit margin, we will need to sell 67,666 units to break-even in a month. Fixed costs include our warehouse lease, vehicle leases, utilities, insurance, payroll, and an estimation of other running costs.

Sbp, coffee distribution business plan, financial plan chart image

7.3 Projected Profit and Loss

The following table and charts show the projected profit and loss. Monthly projections are included in the appendix.

Sbp, coffee distribution business plan, financial plan chart image

7.4 Projected Cash Flow

The following table shows cash flow for the three years, and the chart illustrates monthly cash flow in the first year. Monthly cash flow projections are included in the appendix.

Sbp, coffee distribution business plan, financial plan chart image

7.5 Projected Balance Sheet

The projected balance sheet is shown in the following table, with monthly projections in the appendix.

7.6 Business Ratios

The table shows projected business ratios.

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Introduction

Understanding distribution plans and how to develop them is paramount to the success of any business.

A distribution plan is a strategy that determines how, when and where a company product will be sold to their customers. This plan indicates who, what, where and how products are purchased and delivered. It encompasses product promotion, pricing strategies, delivery methods, stock control and even customer service.

Planning and designing a successful distribution plan can be key to the profitable growth of a business. For example, if a retail company identifies a niche market they can use this knowledge to tailor their product offering and delivery methods.

Assets Needed for a Distribution Plan

Designing an effective product distribution strategy requires research, analysis, and an understanding of the various steps and resources needed to implement it. In order to create a comprehensive distribution plan, businesses need to assess the assets required to successfully execute. To get started, a business needs data that includes information about its product or service and an understanding of the customer demographics and demand. Finally, the business needs to identify the best distribution channels, taking into account factors such as cost, ease of use, and potential for growth.

Data on Your Product Type

When creating your distribution plan, the first step is to assemble relevant data and insights about your product type. This should include information such as customer preferences, the competition’s network and channel strategies, current trends in the industry, and customer feedback. Gathering this data will enable you to determine the best strategies for marketing and distribution.

Analyzing Customer Demographics and Demand

The next step is to research customer demographics. Understanding your customers is critical for any successful product launch, so ask yourself questions such as who is likely to be interested in the product and why. Knowing customer information such as age, gender, location, preferences, purchasing power, and interests can help you develop a more targeted distribution plan. Additionally, analyzing customer demand is important because levels of demand can determine which distribution channels are best for the product.

Identifying Best Potential Distribution Channels

Once you have a better understanding of customer demographics and demand, you can begin identifying the most suitable distribution channels for your product. Consider criteria such as cost, ease of access, time to market, scalability, and customer convenience. Additionally, it is important to research the various distribution centers in order to understand their capabilities and identify any obstacles or limitations. Once you have completed this research and identified the best potential channels, you can begin developing a plan that works for your business.

3. Planning Out Your Supply Chain

Creating a logistical plan for your business’s distribution needs begins with an analysis of what your target market's needs are, and how these needs can be met in the most cost-effective and efficient manner. All of this takes place within the framework of any associated legal restrictions, so the planning and implementation process of your distribution should cover the following points:

a. Consider any legal restrictions related to your business

Depending on where your business operates, there may be local, state, and federal laws that govern your business operations. Additionally, factors such as taxes, permits, currency regulations and tariff regulations must be taken into account. Having a legal advisor during the in-depth planning process of your distribution plan is essential for ensuring that you are complying with all applicable laws and regulations.

b. Selecting the most cost-effective supplier and routes

Once the legal framework around your business has been established, your next step is to select the appropriate supplier for the type of product(s) you are selling. Researching multiple options and engaging in a competitive bidding process can help you get the best quality product at the lowest price. Additionally, consider whether outsourcing your production requirements is a viable option. If that’s the case, researching outsource providers and cost analysis should be part of this process. Finally, your routes selection should take into consideration the most efficient ways of transporting goods from purchase origin to delivery destination.

c. Prioritizing on-time delivery

Timely delivery of goods is essential to any business, especially those offering minimum lead times for customers. It is important to consider delay possibilities resulting from bad weather, missed delivery targets, labor strikes, and other liabilities. Additionally, having backup plans for emergency scenarios helps minimize any potential disruptions in the supply chain. Make sure to consider all of the steps in the distribution process and plan accordingly with contingencies in place for any eventuality.

Once the distribution plan and the logistical layout has been properly established, the underlying technology and tools must be implemented. Data-driven tools, AI-based applications, and predictive analytics all help with optimizing the supply chain operations, helping to improve the efficiency of the distribution process.

Devising a Plan for Reaching Customers

A distribution plan is a vital operation for any business. It not only decides what customer your business will be targeting but also establishes the price and discounts that your business offers. A comprehensive and well-devised distribution plan is essential to increase the reach of your business and generate sales.

Decide between direct-to-consumer or distributor

The first step in devising a distribution plan for your business is to decide whether you want to sell your product directly to consumers or through distributors. If you choose to use distributors, you can expand your customer network and give yourself more flexibility to create numerous pricing models and discounts. Additionally, you can benefit from the existing customer networks that distributors already have.

Establish pricing and discounts for channels

Once you have decided whether to implement a direct-to-consumer or distributor model, you need to decide on pricing and discounts for each channel. This will enable you to maximize profits while also gaining customer loyalty. You must also decide whether or not you offer the same discounts to each channel or tailor the discounts to different types of customers. Furthermore, it is essential to keep track of pricing in different channels and stay competitive in the market.

Researching and selecting suitable channels for your business

Finding the right channel for your business is critically important. Research different channels available to identify which one suits your target market and budget. You should also consider factors such as the return policy of the channel, their shipping services, the speed of delivery, the needed technology and the customer service offered. Once you have done the research, you can narrow down the available channels to pick the one that best meets your goals.

To conclude, designing a distribution plan for your business requires research and understanding of the customer networks. Deciding between a direct-to-consumer or distributor model, establishing pricing and discounts, and researching and selecting suitable channels for your business are all important aspects of devising a successful distribution plan.

Creating a Comprehensive Distribution Plan

When creating a distribution plan for your business, the focus should be on constructing a plan that will ensure the successful growth of your business while also ensuring the smooth functioning of all the associated activities. Having a detailed plan that takes into consideration all aspects of your distribution strategy will be crucial in the long run, providing you with clear guidance and expectations to foster growth and enable effective planning.

Assign Roles and Responsibilities for Each Team within the Business

In order to ensure the success of the distribution plan, it is essential to assign roles and responsibilities that clearly defines each team’s roles within the plan. This will assist in understanding who is responsible for which tasks, allowing for clear communication and smoother execution of the plan. It is important to set clear expectations for each team member’s roles and the goals that need to be achieved by each team within the plan.

Set Clear Timelines and Performance Metrics

Establishing clear timelines and performance metrics will be critical in setting expectations for both teams and individual workers. This will help ensure that milestones for the plan are met on time, with benchmarks used to measure progress and assess how expectations are being met. Doing this will help keep the plan on track, helping to stay ahead of any potential delays and having a reliable plan to return to if needed.

Define How to Manage Adjustments and Changes in the Plan

As the business grows, it is likely that the plan will need to be adjusted to reflect recent changes or take into consideration new objectives that have been set. Preparing for how to manage adjustments and changes in the plan will be needed to ensure the plan remains up-to-date. Anticipating how changes may occur and defining a process for making these alterations to the plan will help ensure that the strategy stays relevant and that any issues are efficiently dealt with.

Monitoring and Refining the Distribution Plan

Once the distribution plan is in place, it is important to track its performance on an ongoing basis. On-going monitoring of the plan provides important insights on how effectively it is meeting desired goals. Depending on the scale of the business, this may be tracked by an external firm or kept intenally by a designated team.

Track Performance of Each Stage of the Distribution Chain

Tracking performance of each stage in the distribution chain helps you identify inefficiencies and identify where investments are needed for improvement. It also helps you understand how different strategies and tactics are working in reality, so that you can make adjustments accordingly. Aspects to monitor include delivery time, order accuracy, inventory issues, returns and customer satisfaction.

Assess Whether Your Plan Is Meeting Desired Goals

To ensure that your distribution plan is working well, it is important to assess whether the desired goals and objectives you had initially planned for have been met. This helps measure success and gives you a better understanding of how to adjust the plan, if required.

Update the Plan as Needed To Ensure the Continued Success of Your Business

On the basis of the results from your assessments, it is important to refine the plan and make changes to ensure the continued success of your business. This could involve upgrading existing technologies, adding new partners in the chain or changing tactics to better optimize the plan. It is crucial to remain agile and adaptable for a successful and sustainable distribution strategy, as the market environment is ever changing.

Creating a successful distribution plan for your business is essential for its ongoing growth and profitability. A well-designed plan will ensure your product or service reaches consumer markets effectively, cutting costs and increasing customer satisfaction. By investing in your distribution plan, you can bring a competitive edge to your business and remain successful in the long run.

To keep your distribution plan effective, it is important to review it regularly. This will help you evaluate how well the current plan is performing against your goals and identify areas for improvement. By identifying and optimizing any existing gaps in the system, you can take advantage of new opportunities, use insights to boost your competitive advantage, and make changes to keep up with shifting market demands.

Finally, it is important to partner with reliable, reputable distributors and suppliers to ensure the smooth flow of goods throughout the supply chain. Establishing strong relationships with these partners will help you to further optimize your distribution plan, ensuring that your product or service is reaching the highest potential in delivery and customer satisfaction.

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  • Business Templates
  • Sample Plans

FREE 6+ Distribution Business Plan Samples [ Strategy, Company, Product ]

distribution business plan featured

Businesses are not simple entities to manage, even much less when you are dealing with an industry that involves a lot of movement. Distribution businesses are extensions of the much broader logistics industry . They manage how resources are distributed, acquired, and transported. they essentially take care of transporting goods from one place to another, control the movement and storage of materials, services, and information in the supply chain, depending on the client’s logistical and distribution needs.

Distribution Business Plan

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Distribution businesses may not be the most recognized industry in the world since these companies usually operate behind the curtains of larger companies and corporations, making sure that movement is present and keeping the global supply chain functioning. This is why planning out the scopes ahead of time is good valuable practice to prevent wasting fuel and other resources on ventures or projects that may ultimately fail. A good and comprehensive plan just brings the overall concept together really well, making every business and distribution operation smooth as butter.

This is where business plans come into the picture. A business plan is a largely important document that any business or company need to have a guideline or a roadmap that the business will follow in order to achieve the goals it has set. Operating a business without establishing a business plan is largely discouraged because most companies that do, typically don’t last very long. Sticking to a well written business plan comes with a slew of benefits. Including being able to come up with ideas without investing too many resources in it. To properly get acquainted with with a distribution business plan, check out these samples that we have listed down below. After getting the gist of the document, you can then use these samples as a guide or even as a template for when you want to develop your own distribution business plan.

distribution annual business plan

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distribution climate business plan

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distribution business proposal plan

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distribution services business plan

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A business plan is a written document that describes how a business would define its objectives and what steps are the managers willing to take to achieve their goals. A business plan lays out a roadmap for the business to follow derived from the perspectives of its different departments. From marketing , financial , to operational . Business plans are essential documents that’s usually used to attract an investment even before the company has made a name for itself. Although it’s more useful for startup or new businesses, every company should be able to establish as well written business plan.

It enables them to review and periodically update the document to see if the goals that they have set have been met and how the current circumstances have changed. A good business plan outlines all the projected and estimated costs of a project and the pitfalls of each decision the company makes. Even among competitors in the same industry, it is very rare for business plans to be identically similar to each other. Different companies tend to have different ways to deal and approach operational issues.

The length of a business plan varies greatly depending on the scope of which the plan covers and the overall nature of the business. Information would usually fit into a 15 to 20 page document, but that is still up to you. Although no two business plans are alike, they do work with almost all the same elements. These elements will be discussed in detail right below.

  • Executive summary The company and all its relevant basic information should be summarized in the executive summary section. Mission-vision values, company leadership, employees, operations, and location. It should talk about what the company is, the nature of the business, and all other basic information.
  • Products and services The company should then outline the products and services that they offer. This section will include pricing, product lifespan, and other customer benefits. Other factors that can be included are manufacturing and production processes, patents, and proprietary technology.
  • Market analysis A company needs to have a clear idea of its target customers and their demographics. It should outline who or what the competition is in the industry and will give you a better idea of how to stay on top of the market. It will also describe the expected consumer demand for the product or service and how difficult it would be to take advantage of the market.
  • Marketing strategy This section should describe how the company will attract the consumer base and what steps they are willing to take to keep it. It should include information about how it intends to reach the customers by outlining a clear distribution channel including advertising campaign, marketing, and through what mediums these campaigns will exist.
  • Financial planning The company will have to include its financial planning to attract the audience of the business plan. Financial statements, balance sheets, and other information may be included as well.
  • Budget Every company should have a proper budget in place. It has to cover costs, staffing, manufacturing, development, marketing, and all other business related expenses.

Business plans are often summarized for individuals who work in and around the company. For outside entities, investors, lenders, suppliers, clients, and other executives, they are given a full copy of the plan.

  • Situation analysis
  • Service positioning
  • Setting objectives

Target market refers to a group of customers or a small population of a specific demographic that has a similar need for a product or service, and has the money to avail said product or service.

The logistics and distribution industry is still a highly centralized and highly competitive industry. So naturally, establishing a business plan is always good practice. One last thing to remember is that a business plan should remain as a live document. Meaning it should be susceptible to change, as your company evolves and changes.

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How to write a business plan for a film distribution company?

film distribution company business plan

Creating a business plan for a film distribution company is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating a film distribution company business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

In this guide:

Why write a business plan for a film distribution company?

What information is needed to create a business plan for a film distribution company.

  • What goes in the financial forecast for a film distribution company?
  • What goes in the written part of a film distribution company business plan?
  • What tool can I use to write my film distribution company business plan?

Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write a film distribution company business plan in the first place.

To have a clear roadmap to grow the business

It's rarely business as usual for small businesses. The economy follows cycles where years of growth are followed by recessions, and the business environment is always changing with new technologies, new regulations, new competitors, and new consumer behaviours appearing all the time...

In this context, running a business without a clear roadmap is like driving blindfolded: it's dangerous at best. That's why writing a business plan for a film distribution company is essential to create successful and sustainable businesses.

To write an effective business plan, you will need to take stock of where you are (if you are already in business) and where you want the business to go in the next three to five years.

Once you know where you want your film distribution company to be, you'll have to identify:

  • what resources (human, equipment, and capital) are needed to get there,
  • at what pace the business needs to progress to get there in time,
  • and what risks you'll face along the way.

Going through this process regularly is beneficial, both for startups and existing companies, as it helps make informed decisions about how best to allocate resources to ensure the long-term success of the business.

To maintain visibility on future cash flows

Businesses can go for years without making a profit, but they go bust as soon as they run out of cash. That's why "cash is king", and maintaining visibility on your film distribution company's future cash flows is critical.

How do I do that? That's simple: you need an up-to-date financial forecast.

The good news is that your film distribution company business plan already contains a financial forecast (more on that later in this guide), so all you have to do is to keep it up-to-date.

To do this, you need to regularly compare the actual financial performance of your business to what was planned in your financial forecast, and adjust the forecast based on the current trajectory of your business.

Monitoring your film distribution company's financial health will enable you to identify potential financial problems (such as an unexpected cash shortfall) early and to put in place corrective measures. It will also allow you to detect and capitalize on potential growth opportunities (higher demand from a given segment of customers for example).

To secure financing

Crafting a comprehensive business plan for your film distribution company, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.

Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.

For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).

Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your film distribution company has the potential for healthy growth, profitability, and consistent cash flow generation over time.

Now that you understand the importance of creating a business plan for your film distribution company, let's delve into the necessary information needed to craft an effective plan.

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Writing a film distribution company business plan requires research so that you can project sales, investments and cost accurately in your financial forecast.

In this section, we cover three key pieces of information you should gather before drafting your business plan!

Carrying out market research for a film distribution company

Before you begin writing your business plan for a film distribution company, conducting market research is a critical step in ensuring precise and realistic financial projections.

Market research grants you valuable insights into your target customer base, competitors, pricing strategies, and other crucial factors that can impact the success of your business.

In the course of this research, you may stumble upon trends that could impact your film distribution company.

Your market research may reveal that customers might be looking for films with diverse characters and storylines. Additionally, it could uncover that customers may be interested in shorter films that they can watch quickly.

Such market trends play a pivotal role in revenue forecasting, as they provide essential data regarding potential customers' spending habits and preferences.

By integrating these findings into your financial projections, you can provide investors with more accurate information, enabling them to make well-informed decisions about investing in your film distribution company.

Developing the marketing plan for a film distribution company

Before delving into your film distribution company business plan, it's imperative to budget for sales and marketing expenses.

To achieve this, a comprehensive sales and marketing plan is essential. This plan should provide an accurate projection of the necessary actions to acquire and retain customers.

Additionally, it will outline the required workforce to carry out these initiatives and the corresponding budget for promotions, advertising, and other marketing endeavours.

By budgeting accordingly, you can ensure that the right resources are allocated to these vital activities, aligning them with the sales and growth objectives outlined in your business plan.

The staffing and capital expenditure requirements of a film distribution company

Whether you are starting or expanding a film distribution company, it is important to have a clear plan for recruitment and capital expenditures (investment in equipment and real estate) in order to ensure the success of the business.

Both the recruitment and investment plans need to be coherent with the timing and level of growth planned in your forecast, and require appropriate funding.

A film distribution company might incur staffing costs such as salaries for full-time employees, payroll taxes, and benefits. They might also have to hire additional staff for specific projects, as well as consultants to help with marketing and other tasks. Equipment costs could include rental fees for cameras, lenses, lighting, and sound equipment, as well as the cost of editing software and computers. They might also need to purchase or lease vehicles to transport people and equipment to different locations.

In order to create a realistic financial forecast, you will also need to consider the other operating expenses associated with running the business on a day-to-day basis (insurance, bookkeeping, etc.). 

Once you have all the necessary information to create a business plan for your film distribution company, it is time to start creating your financial forecast.

What goes into your film distribution company's financial forecast?

The objective of the financial forecast of your film distribution company's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a film distribution company are:

  • The profit and loss (P&L) statement ,
  • The projected balance sheet ,
  • The cash flow forecast ,
  • And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a film distribution company shows how much revenue and profits your business is expected to generate in the future.

projected profit and loss statement example in a film distribution company business plan

Ideally, your film distribution company's P&L statement should show:

  • Healthy growth - above inflation level
  • Improving or stable profit margins
  • Positive net profit

Expectations will vary based on the stage of your business. A startup will be expected to grow faster than an established film distribution company. And similarly, an established company should showcase a higher level of profitability than a new venture.

The projected balance sheet of your film distribution company

Your film distribution company's forecasted balance sheet enables the reader of your plan to assess your financial structure, working capital, and investment policy.

It is composed of three types of elements: assets, liabilities and equity:

  • Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
  • Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
  • Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.

example of forecasted balance sheet in a film distribution company business plan

Your film distribution company's balance sheet will usually be analyzed in conjunction with the other financial statements included in your forecast.

Two key points of focus will be:

  • Your film distribution company's liquidity: does your business have sufficient cash and short-term assets to pay what it owes over the next 12 months?
  • And its solvency: does your business have the capacity to repay its debt over the medium-term?

The cash flow forecast

A projected cash flow statement for a film distribution company is used to show how much cash the business is generating or consuming.

cash flow forecast in a film distribution company business plan example

The cash flow forecast is usually organized by nature to show three key metrics:

  • The operating cash flow: do the core business activities generate or consume cash?
  • The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
  • The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?

As we discussed earlier, cash is king and keeping an eye on future cash flows an imperative for running a successful business. Therefore, you can expect the reader of your film distribution company business plan to pay close attention to your cash flow forecast.

Also, note that it is customary to provide both yearly and monthly cash flow forecasts in a business plan - so that the reader can analyze seasonal variation and ensure the film distribution company is appropriately funded.

The initial financing plan

The sources and uses table or initial financing plan is a key component of your business plan when starting a film distribution company.

It shows where the capital needed to set up the business will come from (sources) and how it will be spent (uses).

sources and uses table in a film distribution company business plan

This table helps size the investment required to set up the film distribution company, and understand how risks will be distributed between the business owners, and the financiers.

The sources and uses table also highlights what the starting cash position will be. This is key for startups as the business needs to have sufficient funding to sustain operations until the break-even point is reached.

Now that you have a clear understanding of what will go into the financial forecast of your film distribution company business plan, let's have a look at the written part of the plan.

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The written part of a film distribution company business plan

The written part of a film distribution company business plan is composed of 7 main sections:

  • The executive summary
  • The presentation of the company
  • The products and services
  • The market analysis
  • The strategy
  • The operations
  • The financial plan

Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.

Let's go through the content of each section in more detail!

1. The executive summary

In your film distribution company's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your film distribution company, current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

In your film distribution company business plan, the second section should focus on the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.

Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.

When describing the location of your film distribution company, you could emphasize its access to a wide range of resources. It may be situated in a prime location that could provide easy access to potential partners, clients, and industry experts. You could also mention how the area could provide access to transportation networks, making it easier to distribute materials to a larger audience. Additionally, the area may have a well-developed infrastructure, making it a cost-effective location. Finally, you could discuss how the area could be attractive to talented professionals, giving your company an edge.

Finally, you should introduce your management team. Describe each member's role, background, and experience.

Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.

3. The products and services section

The products and services section of your film distribution company business plan should include a detailed description of what your company sells to its customers. 

For example, your film distribution company might offer customers physical DVDs and Blu-rays, digital downloads, and streaming services. This provides customers with the opportunity to view films in whatever format they prefer, and the convenience of being able to purchase the film in the way that works best for them. Additionally, your film distribution company could offer special editions of films with bonus content, such as director's commentary or deleted scenes, to make the viewing experience even more enjoyable.

The reader will want to understand what makes your film distribution company unique from other businesses in this competitive market.

When drafting this section, you should be precise about the categories of products or services you sell, the clients you are targeting and the channels that you are targeting them through. 

4. The market analysis

When outlining your market analysis in the film distribution company business plan, it's essential to include comprehensive details about customers' demographics and segmentation, target market, competition, barriers to entry, and relevant regulations.

The primary aim of this section is to give the reader an understanding of the market size and appeal while demonstrating your expertise in the industry.

To begin, delve into the demographics and segmentation subsection, providing an overview of the addressable market for your film distribution company, key marketplace trends, and introducing various customer segments and their preferences in terms of purchasing habits and budgets.

Next, shift your focus to the target market subsection, where you can zoom in on the specific customer segments your film distribution company targets. Explain how your products and services are tailored to meet the unique needs of these customers.

For example, your target market might include young adults who have recently graduated college. They have disposable income to spend on leisure activities such as going to the movies. Additionally, they are likely to be tech savvy and will engage with promotional materials online.

In the competition subsection, introduce your main competitors and explain what sets your film distribution company apart from them.

Finally, round off your market analysis by providing an overview of the main regulations that apply to your film distribution company.

5. The strategy section

When writing the strategy section of a business plan for your film distribution company, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your film distribution company could face a variety of risks, from the economic climate to legal issues. For example, your company may be exposed to a fluctuation in the market which could affect the success of your films. Additionally, your company could face legal challenges from copyright holders or infringers, which may result in costly legal fees and delays in the release of your films.

6. The operations section

In your business plan, it's also essential to provide a detailed overview of the operations of your film distribution company.

Start by covering your team, highlighting key roles and your recruitment plan to support the expected growth. Outline the qualifications and experience required for each role and your intended recruitment methods, whether through job boards, referrals, or headhunters.

Next, clearly state your film distribution company's operating hours, allowing the reader to assess staffing levels adequately. Additionally, mention any plans for varying opening times during peak seasons and how you'll handle customer queries outside normal operating hours.

Then, shift your focus to the key assets and intellectual property (IP) necessary for your business. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, make sure to include them in this section.

You might have key assets such as a library of films, and the rights to distribute those films. Additionally, you could have intellectual property such as logos, trade secrets, and patents related to the distribution process. These assets can be valuable in helping to market the films and ensure the company has a competitive advantage.

Lastly, include a list of suppliers you plan to work with, detailing their services and main commercial terms, such as price, payment terms, and contract duration. Investors are interested in understanding why you've chosen specific suppliers, which may be due to higher-quality products or established relationships from previous ventures.

7. The presentation of the financial plan

The financial plan section is where we will present the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of what goes in your film distribution company business plan, let's look at the solutions you can use to draft yours.

What tool should I use to write my film distribution company's business plan?

In this section, we will be reviewing the two main solutions for creating a film distribution company business plan:

  • Using specialized online business plan software,
  • Outsourcing the plan to the business plan writer.

Using an online business plan software for your film distribution company's business plan

The modern and most efficient way to write a film distribution company business plan is to use business plan software .

There are several advantages to using specialized software:

  • You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
  • You are guided through the writing process by detailed instructions and examples for each part of the plan
  • You can access a library of dozens of complete business plan samples and templates for inspiration
  • You get a professional business plan, formatted and ready to be sent to your bank or investors
  • You can easily track your actual financial performance against your financial forecast
  • You can create scenarios to stress test your forecast's main assumptions
  • You can easily update your forecast as time goes by to maintain visibility on future cash flows
  • You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

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The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.

Screenshot from The Business Plan Shop's Financial Forecasting Software

Hiring a business plan writer to write your film distribution company's business plan

Outsourcing your film distribution company business plan to a business plan writer can also be a viable option.

These writers possess valuable experience in crafting business plans and creating accurate financial forecasts. Additionally, enlisting their services can save you precious time, enabling you to concentrate on the day-to-day operations of your business.

It's important to be mindful, though, that hiring business plan writers comes with a cost. You'll be paying not just for their time but also for the software they use, and their profit margin.

Based on experience, a complete business plan usually requires a budget of at least £1.5k ($2.0k) excluding tax, and more if revisions are needed after initial meetings with lenders or investors - changes often arise following these discussions.

When seeking investment, be cautious about spending too much on consulting fees. Investors prefer their funds to contribute directly to business growth. Thus, the amount you spend on business plan writing services and other consulting services should be negligible compared to the amount you raise.

Another aspect to consider is that while you'll receive the output of the business plan, you usually won't own the actual document. It will be saved in the consultant's business plan software, which will make updating the plan challenging without retaining the consultant on a retainer.

Given these factors, it's essential to carefully weigh the pros and cons of outsourcing your film distribution company business plan to a business plan writer and decide what best suits your business's unique needs.

Why not create your film distribution company's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a film distribution company business plan is a terrible idea.

For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.

As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.

That's for the forecast, but what about the written part of my film distribution company business plan?

This part is less error-prone, but here also software brings tremendous gains in productivity:

  • Word processors don't include instructions and examples for each part of your business plan
  • Word processors don't update your numbers automatically when they change in your forecast
  • Word processors don't handle the formatting for you

Overall, while Word or Excel may be viable options for creating a film distribution company business plan for some entrepreneurs, it is by far not the best or most efficient solution.

  • Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
  • A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
  • A business plan has 2 main parts: a financial forecast outlining the funding requirements of your film distribution company and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your film distribution company business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

  • How to write a business plan to secure a bank loan?
  • Key steps to write a business plan?
  • Top mistakes to avoid in your business plan

Do you know entrepreneurs interested in starting or growing a film distribution company? Share this article with them!

Guillaume Le Brouster

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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Distribution Company Business Plan Template [Updated 2024]

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I. Executive Summary

This Section's Contents

Business Overview

Products served, customer focus, management team, success factors, financial highlights.

[Company Name] is a new beverage distribution company that operates in [location]. Our company will distribute various beverage products from local manufacturers to restaurants, bars, and retailers. Some of the products we distribute include wine, beer, soda, and bottled water. Our region has a thriving beverage industry, so our company will be a huge asset to small and local beverage manufacturers looking to distribute their products in retail stores.

[Company Name] will distribute various beverages from manufacturers to local businesses and retailers. Some of the products we will distribute include:

  • Fruit Juices
  • Bottled Water
  • Sparkling Water

We will purchase large quantities of these products directly from the manufacturers for a negotiated cost and then resell them to retailers for a moderate profit.

[Company Name] will primarily service beverage manufacturers within 20 miles of [location]. The area is home to hundreds of locally owned breweries, wineries, and beverage manufacturers looking to expand their customer base. We will deliver these businesses’ beverage products to grocery stores, bars, restaurants, and other retail establishments.

[Company Name] is headed by [Founder’s Name], who graduated from [University] with a degree in Business Administration. Prior to starting [Company Name], [Founder’s Name] worked as an operations manager at a distribution company for [X] years. During his career, he was able to learn all aspects of the industry, including the operations (e.g., running day-to-day operations) and management (e.g., staffing, marketing, etc.) sides. His experience will be invaluable to the business.

[Company Name] is uniquely qualified to succeed for the following reasons:

  • [Company Name] will focus primarily on the local region (about a 20-mile radius from [location]). Many small beverage manufacturers are overlooked by larger distribution companies and don’t always have the money or resources to distribute their products themselves.
  • The [location] region has a robust beverage industry in need of niche distribution services.
  • The management team has a track record of success in the distribution industry.
  • [Founder’s Name] has established relationships with local business owners and leaders that will help us build an initial client base.

[Company Name] is currently seeking $2,000,000 to launch. Specifically, these funds will be used as follows:

  • Warehouse design/build: $1,000,000
  • Vehicle and machinery purchase and maintenance: $500,000
  • Equipment and supplies: $250,000
  • Working capital: $250,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Top line projections over the next five years are as follows:

Comments are closed.

Distribution Company Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

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ProfitableVenture

Diesel Distribution and Supply Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Oil & Gas Sector

Diesel Supply Business

Are you about starting a diesel distribution business? If YES, here is a complete sample diesel supply business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a diesel distribution and supply business . We also took it further by analyzing and drafting a sample diesel distribution marketing plan template backed up by actionable guerrilla marketing ideas for diesel distribution and supply businesses. So let’s proceed to the business planning section.

The rule of thumb in choosing a business to launch is to look out for a business whose products or services are in high demand. A diesel distribution and supply business is one such business but you must have the right exposure and finances.

If you are sure that this type of business is what you truly want to do after you must have conducted your market research and feasibility studies, then the next step to follow is to write a good business plan; a detailed blue print of how you intend raising your seed capital, setting up the business, managing the flow of the business, sorting out tax and marketing your services amongst other areas.

Below is a sample diesel distribution and supply business plan template that will help you successfully launch your own business.

A Sample Diesel Distribution and Supply Business Plan Template

1. industry overview.

Diesel distribution and supply business is classified under the Fuel Dealers industry and players in this industry sell diesel, heating oil, propane and other fuels directly to end users. Related companies also deliver heating oil, propane and other fuels, such as auto – gas and kerosene, to domestic and commercial premises.

Please note that the Fuel Dealers industry has moderate barriers to entry. Entrepreneurs that intend entering the industry must gain access to cost-effective and reliable sources of heating oil and propane for distribution. They also need to attract a customer base, most commonly away from existing operators. High industry competition limits access to customers.

New operators lack economies of scale because they have few customers when first entering the industry. If customers are geographically distant, transportation costs may be prohibitive due to high per-unit expenses. Since the industry’s products are substitutable, operators differentiate themselves through service and efficiency.

The Fuel Dealers industry is a thriving sector of the economy of the united states of America and the industry generates over billion annually from more than 11,419 registered and licensed fuel dealers (diesel distribution and supply) in the country.

The industry is responsible for the employment of over 78,218 people. Experts project the Fuel Dealers industry to grow at a -5.6 percent annual rate between 2012 and 2017. It might interest you to know that only AmeriGas can boast of having the lion market share of the available market in the United States.

A recent report published by IBISWorld shows that a large majority of Fuel Dealers industry revenue is derived from heating oil and propane sales for household heating purposes.

Revenue generated from these sales fluctuates wildly every year, typically in line with changes in weather conditions and fossil-fuel prices. Revenue grew steadily in 2013 and 2014 as the particularly severe winter in early 2014 led to substantially greater fuel sales.

However, the industry is fighting to maintain its customer base as more buildings are refitted with less-expensive heating units, increasing external competition. Nevertheless, industry revenue is expected to gradually recover over the five years to 2023, largely due to an expected annualized increase of 4.4 percent in the world price of crude oil.

Some of the factors that encourage aspiring entrepreneurs to start a diesel distribution and supply business is the fact that the market is growing rapidly in the United States and it is not seasonal.

That makes it easier for entrepreneur who are interested in the business to come into the industry at any time they desire; the entry barriers might be high but that any serious – minded entrepreneur can comfortably raise the startup capital even if it means collecting loans from the bank.

Over and beyond, the Fuel Dealers industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business as long as they are able to obtain the required license and permits; you can choose to start on a small scale and supply on a community level or you can choose to start on a large scale with distribution network spread across key cities all around the United States of America.

2. Executive Summary

Julius Padres® Diesel Distribution Company, Inc. is a registered fuel dealer company that will be involved in the distribution of diesel and other fuels to retailers, industries, household, hotels and restaurants et al. Our warehouse cum administrative office will be located in Waco – Texas.

We have been able to lease a warehouse facility that can fit into the kind of diesel distribution and supply company that we intend launching and the facility has easy delivery network. Julius Padres® Diesel Distribution Company, Inc. will distribute a wide range of fuels such as Diesel, Propane, Heating oil, Gasoline and Automotive fuels to end users at affordable prices.

We are aware that there are several diesel distribution and supply companies and contractors all around Waco – Texas, which is why we spent time and resources to conduct our feasibility studies and market survey so as to offer much more than our competitors will be offering. We have robust distribution network and strong online presence.

Beyond the distribution and supply of diesel, our customer care is going to be second to none in the whole of Waco – Texas and our deliveries will be timely and highly reliable. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they patronize our products.

Julius Padres® Diesel Distribution Company, Inc. will ensure that all our customers are given first class treatment whenever they order diesel and other fuels from us. We have a CRM software that will enable us manage a one on one relationship with our customers no matter how large they may grow to.

Julius Padres® Diesel Distribution Company, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Julius Padres® Diesel Distribution Company, Inc. is owned by Julius Padres. He has a B.Sc. in Business Administration, with over 8 years of hands on experience in the retailing and distribution industry, working for some of the leading brand in the United States.

3. Our Products and Services

Julius Padres® Diesel Distribution Company, Inc. is in the industry to distribute a wide range of quality and safe diesel and other fuel products.

We are in the diesel distribution and supply industry to make profits and we will ensure that we do all that is permitted by the law in the United States to achieve our business aim and objectives. Our products and services offerings are listed below;

  • Heating oil
  • Automotive fuels
  • Other fuels

4. Our Mission and Vision Statement

  • Our vision is to become the ‘go to’ diesel distribution and supply company in the whole of Waco – Texas.
  • Our mission is to establish a diesel distribution and supply business that will distribute a wide range of quality fuel at affordable prices to retailers, households, industries, hotels and restaurants et al in Waco and other cities in Texas where we intend marketing our services and products.

Our Business Structure

Our intention of starting a diesel distribution and supply business is to build a standard diesel distribution and supply business in Waco – Texas. We will ensure that we put the right structures in place that will support the kind of growth that we have in mind.

We will make sure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business. As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more.

In view of that, we have decided to hire qualified and competent hands to occupy the following positions that will be made available at Julius Padres® Diesel Distribution Company, Inc.;

  • Chief Executive Officer (Owner)
  • Depot Manager
  • Human Resources and Admin Manager

Sales and Marketing Manager

Information Technologist

  • Accountants/Cashiers
  • Customer Services Executive
  • Drivers / Distributors

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

  • Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, appraising job results and developing incentives
  • Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
  • Responsible for fixing prices and signing business deals
  • Responsible for providing direction for the business
  • Responsible for signing checks and documents on behalf of the company
  • Evaluates the success of the organization
  • Reports to the board

Admin and HR Manager

  • Responsible for overseeing the smooth running of HR and administrative tasks for the organization
  • Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
  • Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
  • Defines job positions for recruitment and managing interviewing process
  • Carries out induction for new team members
  • Accountable for training, evaluation and assessment of employees
  • Responsible for arranging travel, meetings and appointments
  • Oversees the smooth running of the daily office activities.

Depot Manager:

  • Responsible for organizing the safe and efficient receipt, storage and dispatch of diesel and other fuel products
  • Responsible for liaising with customers, suppliers and transport companies
  • In charge of planning, coordinating and monitoring the receipt, order assembly and dispatch of diesel and other fuel products
  • Responsible for using space and mechanical handling equipment efficiently and making sure quality, budgetary targets and environmental objectives are met
  • In charge of coordinating the use of automated and computerized systems where necessary
  • Accountable for keeping stock control systems up to date and making sure inventories are accurate;
  • Accountable for producing regular reports and statistics on a daily, weekly and monthly basis
  • In charge of overseeing the maintenance of vehicles, machinery and equipment.
  • Ensures that proper records of diesel and other fuel products are kept and warehouse does not run out of products
  • Ensures that the warehouse facility is in tip top shape and diesel and other fuel products are properly arranged and easy to locate
  • Interfaces with third – party suppliers (vendors)
  • Controls diesel distribution and supply and supply inventory
  • Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
  • Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
  • Identifies development opportunities; follows up on development leads and contact
  • Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
  • Documents all customer contact and information
  • Represents the company in strategic meetings
  • Helps to increase sales and growth for the company
  • Manages the organization website
  • Handles ecommerce aspect of the business
  • Responsible for installing and maintenance of computer software and hardware for the organization
  • Manages logistics and supply chain software, Web servers, e-commerce software and POS (point of sale) systems
  • Manages the organization’s CCTV
  • Handles any other technological and IT related duties.

Accountant/Cashier:

  • Responsible for preparing financial reports, budgets, and financial statements for the organization
  • Provides managements with financial analyses, development budgets, and accounting reports
  • Responsible for financial forecasting and risks analysis.
  • Performs cash management, general ledger accounting, and financial reporting
  • Responsible for developing and managing financial systems and policies
  • Responsible for administering payrolls
  • Ensures compliance with taxation legislation
  • Handles all financial transactions for the organization
  • Serves as internal auditor for the organization

Client Service Executive

  • Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
  • Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
  • Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
  • Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries

Distribution Truck Drivers

  • Assists in loading and unloading diesel and other fuel products
  • Maintains a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
  • Keeps a record of vehicle inspections and make sure the truck is equipped with safety equipment
  • Assists the transport and logistics manager in planning their route according to a distribution schedule.
  • Inspects vehicles for mechanical items and safety issues and perform preventative maintenance
  • Complies with truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
  • Reports defects, accidents or violations

6. SWOT Analysis

Our intention of starting out in Waco and distribute our diesel and other fuel products only within Waco – Texas is to test run the business for a period of 3 to 5 years to know if we will invest more money, expand the business and then start our diesel distribution and supply all around the state of Texas.

We are quite aware that there are several diesel distribution and supply companies and contractors all over Waco and even in the same location where we intend locating ours, which is why we are following the due process of establishing a business.

We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be equipped to confront our threats.

Julius Padres® Diesel Distribution Company, Inc. employed the services of an expert HR and Business Analyst with bias in retailing and distribution to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.

This is the summary of the SWOT analysis that was conducted for Julius Padres® Diesel Distribution Company, Inc.;

Our location, the business model we will be operating on (robust distribution network), reliable distribution tankers, varieties of payment options, wide range of diesel and other fuel products and our excellent customer service culture will definitely count as a strong strength for us.

So, also our management team are people who have what it takes to grow a business from startup to profitability within record time.

A major weakness that may count against us is the fact that we are a new diesel distribution and supply business and we don’t have the financial capacity to compete with leaders in the industry especially as it relates to economy of scales.

  • Opportunities:

The fact that we are going to be operating our diesel distribution and supply business in Waco – Texas provides us with unlimited opportunities to distribute our products to a large number of factories, retailers, households and businesses.

We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they patronize our products and services; we are well positioned to take on the opportunities that will come our way.

Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing / spending power. Another threat that may likely confront us is the arrival of a similar business in same location.

7. MARKET ANALYSIS

  • Market Trends

Distribution of goods has been in existence for as long as human started trading goods, but one thing is certain, the distribution industry is still evolving. The introduction of technology has indeed helped in reshaping the industry.

The trend in the fuel dealer industry shows that as oil and natural gas prices decrease, industry revenue is expected to decline, industry operators have tried to cut prices to discourage customers from switching to natural gas and customers will likely transition from propane to natural gas due to price differentials.

Please note that external factors such as world price of crude oil and world price of natural gas will always impact industry performance.

Lastly, it is now a common phenomenon for diesel distribution and supply companies to leverage on technology to effectively predict consumer demand patterns and to strategically position their business to meet their needs; in essence, the use of technology helps diesel distribution and supply businesses to maximize supply chain efficiencies.

8. Our Target Market

The diesel distribution and supply industry has a wide range of customers; a good number of households, hotels, and manufacturing companies make use of diesel and other fuel products and it is difficult to find people around who don’t.

In view of that, we have positioned our company to service businesses in Waco – Texas and every other location we will cover. We have conducted our market research and we have ideas of what our target market would be expecting from us. We are in business to retail (distribute) diesel and other fuel products to the following businesses;

  • Manufacturing companies
  • Power plants that run on diesel
  • Facility managers that make use of diesel

Our competitive advantage

Julius Padres® Diesel Distribution Company, Inc. is launching a standard diesel distribution and supply business that will indeed become the preferred choice in Waco – Texas. Our competitive advantage revolves around our ability to attract local support and patronage, easy compliance with government regulations and having a loyal customer base.

One thing is certain; we will ensure that we have diesel and other fuel products available in our warehouse at all times. One of our business goals is to make Julius Padres® Diesel Distribution Company, Inc. a one stop diesel distribution and supply company.

Our excellent customer service culture, timely and reliable delivery services, online presence, and various payment options will serve as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.

9. SALES AND MARKETING STRATEGY

  • Sources of Income

Julius Padres® Diesel Distribution Company, Inc. will generate income by offering the following services and products.

10. Sales Forecast

One thing is certain when it comes to diesel distribution and supply business, if your business is centrally positioned coupled with effective and reliable distribution network, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.

We are well positioned to take on the available market in Waco – Texas and we are quite optimistic that we will meet our set target of generating enough income/profits from the first six months of operation and grow the business and our clientele base.

We have been able to examine the diesel distribution and supply industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. Below are the sales projections for Julius Padres® Diesel Distribution Company, Inc., it is based on the location of our business, and other factors as it relates to diesel and other fuel products startups in the United States;

  • First Fiscal Year: $440,000
  • Second Fiscal Year: $750,000
  • Third Fiscal Year: $1.5 million

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same products and distribution services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

  • Marketing Strategy and Sales Strategy

Before choosing a location to launch Julius Padres® Diesel Distribution Company, Inc., we conducted a thorough market survey and feasibility studies in order for us to be able to penetrate the available market and become the preferred choice in Waco – Texas.

We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want to attract per time.

We hired experts who have good understanding of the retailing and distribution industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Waco – Texas.

In summary, Julius Padres® Diesel Distribution Company, Inc. will adopt the following sales and marketing approach to win customers over;

  • Introduce our business by sending introductory letters alongside our brochure to diesel and other fuel products retailers, factories, facility managers, hotels, households and key stake holders in and around Waco – Texas
  • Ensure that we have a diesel and other fuel products in our warehouse at all times.
  • Make use of attractive handbills to create awareness business
  • Position our signage / flexi banners at strategic places around Waco – Texas
  • Create a loyalty plan that will enable us reward our regular customers

11. Publicity and Advertising Strategy

Even though our diesel distribution and supply business is well structured and well located, we will still go ahead to intensify publicity for the business.

Julius Padres® Diesel Distribution Company, Inc. has a long-term plan of opening distribution channels all around the state of Texas which is why we will deliberately build our brand to be well accepted in Waco before venturing out. Here are the platforms we intend leveraging on to promote and advertise Julius Padres® Diesel Distribution Company, Inc.;

  • Place adverts on community based newspapers, radio and TV stations.
  • Encourage the use of word of mouth publicity from our loyal customers
  • Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote our business.
  • Ensure that our we position our banners and billboards in strategic positions all around Waco – Texas
  • Distribute our fliers and handbills in target areas in and around our neighborhood
  • Advertise our diesel distribution and supply business in our official website and employ strategies that will help us pull traffic to the site
  • Brand all our official cars and distribution vans / trucks and ensure that all our staff members wear our branded shirt or cap at regular intervals.

12. Our Pricing Strategy

Pricing is one of the key factors that gives leverage to distribution companies and retailers, it is normal for retailers to purchase products from distribution companies that offer cheaper prices. We will work towards ensuring that all our diesel and other fuel products are distributed at highly competitive prices compared to what is obtainable in the United States of America.

We also have plans in place to discount our diesel and other fuel products once in a while and also to reward our loyal customers from time to time.

  • Payment Options

The payment policy adopted by Julius Padres® Diesel Distribution Company, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Julius Padres® Diesel Distribution Company, Inc. will make available to her clients;

  • Payment via bank transfer
  • Payment via credit cards/Point of Sale Machines (POS Machines)
  • Payment via POS machines
  • Payment via online bank transfer
  • Payment via check
  • Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our client make payment for diesel and other fuel products purchase without any stress on their part.

13. Startup Expenditure (Budget)

Having done our due diligence , this is what it would cost us to set up Julius Padres® Diesel Distribution Company, Inc. in the United of America;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of Julius Padres® Diesel Distribution Company, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant – $2,500.
  • The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for payment of rent for 12 months at $1.76 per square feet tank farm facility cum mini depot in the total amount of $75,500.
  • The total cost for depot facility remodeling (construction of mini depot / tank far) – $70,000.
  • Other start-up expenses including stationery ( $500 ) and phone and utility deposits ( $2,500 ).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $150,000
  • The cost for Start-up inventory (stocking with diesel and other fuel products and cylinders et al) – $200,000
  • Storage hardware (bins, rack, shelves) – $3,720
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost of purchase and installation of CCTVs – $5,000
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
  • The cost for the purchase of distribution tankers / trucks – $75,000
  • The cost of launching a website – $600
  • Miscellaneous – $10,000

We would need an estimate of $1.5 million to successfully set up our diesel distribution and supply business in Waco – Texas.

Generating Startup Capital for Julius Padres® Diesel Distribution Company, Inc.

Julius Padres® Diesel Distribution Company, Inc. is a private business that is solely owned and financed by Julius Padres. He has decided to restrict the sourcing of the start up capital to 3 major sources.

  • Generate part of the startup capital from personal savings
  • Source for soft loans from family members and friends
  • Apply for loan from my bank

N.B: We have been able to generate about $500,000 ( Personal savings $450,000 and soft loan from family members $50,000 ) and we are at the final stages of obtaining a loan facility of $1 million from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.

One of our major goals of starting Julius Padres® Diesel Distribution Company, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to supply/distribute our diesel and other fuel products a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.

Julius Padres® Diesel Distribution Company, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

  • Business Name Availability Check : Completed
  • Business Registration: Completed
  • Opening of Corporate Bank Accounts: Completed
  • Securing Point of Sales (POS) Machines: Completed
  • Opening Mobile Money Accounts: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of Insurance for the Business: Completed
  • Leasing of mini depot facility and construction of tank farm: In Progress
  • Conducting Feasibility Studies: Completed
  • Generating capital from family members: Completed
  • Applications for Loan from the bank: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents and other relevant Legal Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Printing of Promotional Materials: In Progress
  • Recruitment of employees: In Progress
  • Purchase of furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
  • Purchase of distribution tankers/trucks: Completed
  • Creating Official Website for the Company: In Progress
  • Creating Awareness for the business both online and around the community: In Progress
  • Health and Safety and Fire Safety Arrangement (License): Secured
  • Establishing business relationship with diesel and other fuel products well owners and production companies within and outside of the United States of America: In Progress

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How Fast Should Your Company Really Grow?

  • Gary P. Pisano

business plan for an distribution company

Growth—in revenues and profits—is the yardstick by which the competitive fitness and health of organizations is measured. Consistent profitable growth is thus a near universal goal for leaders—and an elusive one.

To achieve that goal, companies need a growth strategy that encompasses three related sets of decisions: how fast to grow, where to seek new sources of demand, and how to develop the financial, human, and organizational capabilities needed to grow. This article offers a framework for examining the critical interdependencies of those decisions in the context of a company’s overall business strategy, its capabilities and culture, and external market dynamics.

Why leaders should take a strategic perspective

Idea in Brief

The problem.

Sustained profitable growth is a nearly universal corporate goal, but it is an elusive one. Empirical research suggests that when inflation is taken into account, most companies barely grow at all.

While external factors play a role, most companies’ growth problems are self-inflicted: Too many firms approach growth in a highly reactive, opportunistic manner.

The Solution

To grow profitably over the long term, companies need a strategy that addresses three key decisions: how fast to grow (rate of growth); where to seek new sources of demand (direction of growth); and how to amass the resources needed to grow (method of growth).

Perhaps no issue attracts more senior leadership attention than growth does. And for good reason. Growth—in revenues and profits—is the yardstick by which we tend to measure the competitive fitness and health of companies and determine the quality and compensation of its management. Analysts, investors, and boards pepper CEOs about growth prospects to get insight into stock prices. Employees are attracted to faster-growing companies because they offer better opportunities for advancement, higher pay, and greater job security. Suppliers prefer faster-growing customers because working with them improves their own growth prospects. Given the choice, most companies and their stakeholders would choose faster growth over slower growth.

Five elements can move you beyond episodic success.

  • Gary P. Pisano is the Harry E. Figgie Jr. Professor of Business Administration at Harvard Business School and the author of Creative Construction: The DNA of Sustained Innovation (PublicAffairs, 2019).

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IRS shares 7 warning signs Employee Retention Credit claims may be incorrect; urges businesses to revisit eligibility, resolve issues now before March 22

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IR-2024-39, Feb. 13, 2024

WASHINGTON — With a key March deadline quickly approaching, the Internal Revenue Service today highlighted special warning signs that an Employee Retention Credit (ERC) claim may be questionable to help small businesses that may need to resolve incorrect claims.

The agency alerted businesses about seven suspicious warning signs that could signal future IRS problems involving ERC claims. The indicators, built on feedback from the tax professional community and IRS compliance personnel, center on misinformation some unscrupulous ERC promoters used. Many of these groups urged taxpayers to ignore advice from trusted tax professionals and claim the pandemic-era credit even though they may not qualify.

“IRS compliance activity continues increasing involving Employee Retention Credit claims, and those claiming this pandemic-era credit need to quickly review their situation to avoid future problems,” said IRS Commissioner Danny Werfel. “Many businesses were wildly misled about the qualifications, and the IRS is taking a special step to highlight common problems being seen about these claims. The IRS urges ERC claimants to get with a trusted tax professional and review their qualifications before time runs out on IRS disclosure and withdrawal programs. The ‘suspicious seven’ signs released today are clear red flags that ERC claimants should carefully review.”

The alert comes as a March 22, 2024, deadline approaches for the ERC Voluntary Disclosure Program for anyone that filed a claim in error and received a payment; the disclosure program allows businesses to repay just 80% of the claim. Taxpayers who filed a claim previously that hasn’t been processed should also review the guidelines and quickly pursue the claim withdrawal process if they now see their claim is ineligible.

The IRS took steps on the ERC program after the well-intentioned pandemic-era program came under aggressive, misleading marketing that oversimplified or misrepresented eligibility rules. Promoters pushed more applicants into the program, frequently by taking a percentage of the payout. The IRS wants businesses to know about these warning signs, revisit their claim if there are questions and act quickly before the special disclosure and withdrawal programs end. Resolving an incorrect claim through the IRS’s special programs will avoid penalties and interest.

“We’ve heard from the tax pro community and others that sharing more warning signs can help point well-intentioned people in the right direction,” Werfel said. “Many of these taxpayers were misled by overzealous and unscrupulous promoters taking advantage of honest taxpayers. The most beneficial time to resolve any incorrect claims is now before this special window closes.”

The ERC, sometimes called the Employee Retention Tax Credit or ERTC, is complex, and the IRS urged claimants to talk to a reputable tax professional for help with an ERC claim. Taxpayers should avoid working with anyone who doesn’t ask for details or business records, such as payroll records.

7 suspicious signs an ERC claim could be incorrect

Here are some of the common red flags being seen on ERC claims that the IRS is focusing on:

  • Too many quarters being claimed. Some promoters have urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon, and this could be a sign of an incorrect claim. Employers should carefully review their eligibility for each quarter.
  • Government orders must have been in effect and the employer’s operations must have been fully or partially suspended by the government order during the period for which they’re claiming the credit.
  • The government order must be due to the COVID-19 pandemic.
  • The order must be a government order, not guidance, a recommendation or a statement. Some promoters suggest that an employer qualifies based on communications from the Occupational Safety and Health Administration (OSHA). This is generally not true. See the ERC FAQ about OSHA communications and the 2023 legal memo on OSHA communications PDF for details and examples. The frequently asked questions about ERC – Qualifying Government Orders section of IRS.gov has helpful examples. Employers should make sure they have documentation of the government order related to COVID-19 and how and when it suspended their operations. Employers should avoid a promoter that supplies a generic narrative about a government order.  
  • Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages , depending on the tax period. The IRS urges employers to carefully review all calculations and to avoid overclaiming the credit, which can happen if an employer erroneously uses the same credit amount across multiple tax periods for each employee. For details about credit amounts, see the Employee Retention Credit - 2020 vs 2021 Comparison Chart .  
  • Business citing supply chain issues. Qualifying for ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for ERC. An employer needs to ensure that their supplier’s government order meets the requirements. Employers should carefully review the rules on supply chain issues and examples in the 2023 legal memo on supply chain disruptions PDF .  
  • Business claiming ERC for too much of a tax period. It's possible, but uncommon, for an employer to qualify for ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter . A business in this situation can claim ERC only for wages paid during the suspension period, not the whole quarter. Businesses should check their claim for overstated qualifying wages and should keep payroll records that support their claim.  
  • Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim ERC for tax periods when they paid wages to employees. Some taxpayers claimed the ERC but records available to the IRS show they didn’t have any employees. Others have claimed ERC for tax periods before they even had an employer identification number with the IRS, meaning the business didn’t exist during the eligibility period. The IRS has started disallowing these claims, and more work continues in this area as well as other aspects of ERC.  
  • Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment requirements, penalties, interest, audit and potential expenses of hiring someone to help resolve the incorrect claim, amend previous returns or represent them in an audit.

Resolving incorrect ERC claims

Businesses that are not eligible for ERC but have received it – as a check that’s been cashed or deposited, or in the form of a credit applied to a tax period – may be able to participate in the IRS’s ERC Voluntary Disclosure Program . The special program runs through March 22, 2024, and allows eligible participants to repay their incorrect ERC, minus 20%.

If a taxpayer’s ERC is incorrect and is paid after Dec. 21, 2023, they aren’t eligible for the ERC VDP. They should not cash or deposit their check. They can withdraw the claim , return the check and avoid penalties and interest.

The withdrawal option lets certain employers withdraw their ERC submission and avoid future repayment, interest and penalties. Businesses can use this option if they haven’t received the payment, or they've received a check but haven’t deposited or cashed it. If a taxpayer’s withdrawal request is accepted, the IRS will treat the claim as though it was never filed.

Resources and tools to learn more about ERC eligibility

The IRS’s frequently asked questions on ERC include links to additional resources and some helpful examples. The IRS also has an interactive ERC Eligibility Checklist that tax professionals and taxpayers can use to check potential eligibility for ERC. It’s also available as a printable guide PDF .

Eligibility highlights

The ERC is available to eligible employers that paid qualified wages to some or all employees after March 12, 2020, and before Jan. 1, 2022. Eligibility and credit amounts vary depending on when the business impacts occurred. The ERC is not available to individuals.

  • For 2020 and the first two calendar quarters of 2021, an employer may qualify if their trade or business operations were fully or partially suspended due to a government order related to COVID-19 or they experienced the required decline in gross receipts .
  • For the third quarter of 2021 , an employer may qualify if their trade or business operations were fully or partially suspended due to a government order related to COVID-19, they experienced the required decline in gross receipts, or they were considered a recovery startup business .
  • For the fourth quarter of 2021 , only recovery startup businesses are eligible.
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business plan for an distribution company

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Mukesh Ambani-Owned RIL Is Reportedly In Talks For A Stake In Tata Play

  • New Delhi ,
  • Feb 15, 2024,
  • Updated Feb 15, 2024, 5:33 PM IST

Mukesh Ambani-owned Reliance Industries is reportedly in talks for a 29.8% stake in Tata Play from the Walt Disney Company. According to reports, Reliance is eyeing a bigger footprint in India’s television distribution sector with the plan. Tata Sons has a 50.2% stake in the satellite television broadcaster. Apart from Disney, the remaining shares are owned by Temasek, a Singapore-based fund. If the deal goes through, it will be the first time Tata group and Reliance have partnered in a joint venture and may extend Jio Cinema's reach across the Tata Play platform.

  • Mukesh Ambani
  • Reliance Industries Limited
  • Walt Disney Company

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