The Distributor’s Mid-Recession Checklist


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Believe it or not, we had an early forecast of the impending recession in late 2006 – yeah, back when business was good. Some of us were prepared – most were not. The economic forecasters tell us this recession will end in a sometime late this year. Will you be prepared? I suggest working on your own recovery plan: Now!

In the next 60 days

1) Evaluate employee performance
I suggest ranking employees by performance. I know it’s considered impolite but I suggest understanding exactly who are the very best and who lags the pack by ranking them from top to bottom. This should include: ability to bring in new business, ability to generate gross margin, effectiveness and ability to grow with your organization.

If you have an employee who falls at the bottom of the list with no prospects for improvement, this is a great time to consider moving them from your team.

Absolutely, positively make certain to share your vision of the future with your top players. Even top employees get nervous when changes take place all around them. The trouble is top employees attract job offers even in recessions. Failure to hold them close may inhibit your future.
(email us for our Sales Person Ranking Guide)

2) Evaluate potential new hires
There are some good people out there. They may work for a competitor, a supplier or a customer. They are most likely still employed, but unhappy with the direction of their organization. The best ones aren’t looking for jobs. They can be identified and now is a great time to start “talking” to them. A soft sell works best. When you share your own up-beat attitude about the future, they begin to think of you as a future home – just in time to help you grow on the up-side.

3) Review your Process
Would you like to do better marketing but have a tough time getting feedback from your sales people? Do you wish you could have a better forecast of future business yet get constant “lip service” rather than quality forecasts? The same thing applies to selling of new lines, sales targets, organized plans and sales accountability. I suggest using the recession as an excuse to make sweeping process improvements.

4) Evaluate your suppliers
Are there suppliers who don’t line up for your future? This can be the result of policies, distribution trends, shipping policy and whole bunch of other things. Now is a great time to start conversations with new suppliers.
(email us for a free supplier evaluation template)

5) Evaluate customers
Do you know who the profit contribution of each of your customers?
Do you know which customers are likely to grow and prosper in the coming economic times?
Do you know the customers who appreciate the value proposition you provide?

6) Schedule a meeting with your bank/investors
Cash flow and availability of cash to make strategic purchases in the next year will be critical. There may be expansion opportunities after the ramp up on the economy. According to economists, many companies survive (squeak through) the recession but run out of cash in the early stages of the recovery. Plan for picking up some bargains now.

7) Plan low cost customer events
It’s natural for customers to see a drop off in sales “touches” from everybody during a recession. Many distributors cut back on numbers of sales calls, lunches, golf outings, promotions and other activities. I hear customers say, “We have been loyal customers of AA Distribution for 15 years. Since the recession we haven’t bought quite as much, and they quit calling on us.” Whether this is true or not, it’s the customer perception. Customer events needn’t cost much. Some of the best ones are home spun and almost free. During the 1883-4 recession, I know one distributor who committed to invite one customer a week into their warehouse to talk about future needs. Once the good times hit, the results were a tripling of business over the next 6 years.

Don’t forget to push your message to the customer’s management team. Management to management conversations can drive gains in all kinds of economic weather. In stormy conditions, they make big decisions.

In the next 3-6 months
8) Create your long term needs list
Need to buy buildings, property, computer systems? There will be bargains on the market. Part of being a savvy buyer is making the right decision today – then standing back and waiting for bargains.

9) Develop a plan for marketing
According to research, companies who continue to aggressively market themselves during a recession come out stronger after the recovery. This has been true during every recession since the 1960’s. Since many distributors operate with just a skeleton of a plan, I suggest devising a plan which can be ramped up quickly at the first signs of rebound. If you do not have a professional marketing person on staff, consider hiring help – an outside consultant can be had without breaking the bank.

10) Expand your network for competitors who might be for sale
First, there is no need to buy if you can get their key players and customers for free. But, it makes good sense to know who might be for sale in your area. You may find acquisition candidates allow you to migrate into new territories or new lines of trade.

Weak competitors often serve as the spring board for strong national and regional players who might affect your market. Networking allows you to be more “in the know”.

11) Market to the “shaky” competitor’s customer base
Buy or build a list of your competitor’s customers. You can take advantage of the other guy’s lack of preparedness. Since you have prepared ahead of time, you will be able to extend a positive message while your competitor is still thinking about what to do.

12) Renegotiate leases, long term purchase agreements and other items
Landlords, service providers and a lot of other costs can be negotiated downward during these tough times. Take advantage of the recession to lock into lower prices which will extend into the economic up-tick.


  1. Excellent article, Frank. I’d like to suggest that the supplier evaluation step might include the question, “How is our supplier willing to work with us now, under these extraordinary economic circumstances?”

    Every product category in industrial distribution is made up of numerous competing manufacturers. A good manufacturer should have a plan in place to not only ensure his success in a bad economy but, more importantly, help his channel partners build their businesses as well with new customers and increased market share.

    For example, Bison Gear is a fractional horsepower gearmotor manufacturer. We’ve put in place a plan to enable us and our distribution partners to more aggressively win competitive new business. It works because we work together with our distribution partners. In a competitive situation where a competing distributor has the business with a competing product, we let our channel partners know it’s possible to capture that business if they take the time to do more than just pass along the simple “what’s your best price?” query. To ensure we’re both successful, we ask distributors to provide us with the answers to three simple questions (they should be asking anyway)to get our best offer:

    1. Annual unit volume and number of shipments?
    2. Who is the competition (i.e., manufacturer X, Y or Z)? (We won’t entertain special pricing to shift Bison business from one distributor to another).
    3. More importantly, what is the target price and to whom (you as distributor or customer)?

    Of course, we have a 24-hour turnaround goal on these competitive quote requests and support our distribution partners with an In-Stock, Instant-Ship program covering all our standard products.

    The point is, that it takes teamwork to be successful today and manufacturer programs enacted to build distributor business in tough times should be capable of being able to continue to grow the relationship and mutual business when good times return.

  2. Great article Frank. I agree with all of it. If we are at the midpoint (and everything I read and hear says that we should start to see a turnaround in the last qtr of 09) in this recession now is the time to start to structure your organization for the comeback, while your competitors are stilling worrying about how to survive.


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