How to start a distribution business as a newbie

The Beliefs

The first step to success is believing in yourself. When you just started to have the idea of “gonna” do a business, even you, who still doubts yourself, have to “believe”. People always see things in you that you didn’t see by yourself. One important lesson for those who still get affected by another’s opinion: never listen to the one who complains about what you’re doing while they are not the one having the things you are aiming for. Life is full of choices, and your life will be shaped by your own decisions.

When you decide to run a business, it is your choice, your decision, and your passion for a certain thing. If you believe in yourself and have a clear reason why you choose to pursue this business, you will reach the position you envision for yourself in the future. This belief will be the core motivation on your journey to succeed.

For those considering starting a distribution business, this blog will condense my 8-year journey of building my own business as an apparel inventory software company and summarize the knowledge and experiences gained from startups in this industry.

The report from Research and Markets forecasts the wholesale market size will reach $68,092.65 billion by 2028, growing at a compound annual growth rate (CAGR) of 6.5%. This means the distribution business is a good choice for those with limited funds who want to start a business.

However, like any other industry, starting a distribution business is not easy at all. It’s obvious to have failures during the time you build a business. However, learning and researching completely before stepping into any room is crucial for both black and white life as well as the business market.

3 important things you need to know before stepping into the distribution business

I started as a start-up in the apparel distribution business, and now I am the founder and CEO of EMERGE, one of the leading apparel inventory software companies. Been through a lot of hard times as an entrepreneur, having insight into the process of building as well as managing a business. How it has done to me, how it’s shaped me. I truly want to share valuable insights that could help you on your journey to achieving your dreams.

1. Having a thriving mindset

Once you decide to give up the employee version of yourself and become the boss, you must think and act like a boss. No longer are you a 9 to 5 person who just focuses on doing enough and completing tasks, you are now someone willing to sacrifice your time, your freedom, and even happiness for your business.

And from now on, you are running a marathon that never stops. You have to keep running, running even when your business is set up and maybe gain some certain achievement, you still have to keep running, keep going. There’s no concept of “enough” in business, especially in wholesale distribution. Expanding is the mantra for everyone in this field. You are not building a business for just “surviving”, you must “thriving” and keep trying nonstop.

With the vision of bringing ease and productivity in apparel inventory management for SMBs in the wholesale distribution business, EMERGE is step by step expanding its era. We started in Singapore with assisting with small and medium-sized apparel companies in managing their inventory. Today, we’ve established ourselves in the US and UK markets. Recently, we’ve even onboarded a new client from Libya. As an example of a thriving mindset, it also means that you have to think big and dream big. Believe in yourself, believe in the process, and believe it before it happens.

2. Be prepared

Learn and learn and learn. Since the competitive market is set for all industries, a full brain of experiences and knowledge about what you are doing is a must. It is the first shield of your business to fight with your competitors.

Anytime now and then, a professional one always gains a lot more money than just a newbie in the field. The same thing comes to business, knowledge and experience help you measure the problem, make decisions, and bring your business to a safe position over your competitors. It’s also a part of sensibility and flexibility that you need to realize that what you are doing is not responding or not working, which is important in running a business that could cost a lot of money.

Learn everything related to your business, whatever! Throwback to the past, I feel grateful because I have started my clothing distribution brand. Back then, of course, my company did face so many challenges. But with every single problem, I learned one lesson and built my tree of knowledge in this field. If I hadn’t built my clothing distribution business, I don’t think that I could have built my apparel inventory software company later. For this software company, I have learned a lot of different kinds of knowledge such as how to find good people about software, what kind of people a software company needs, what the difference of apparel inventory software from other kinds of software, etc.

3. Be obsessively passionate

As a necessary condition, being passionate about your business is your superpower. You completely will face A LOT of struggles as well as problems during and even after when your company is settled down. So an obsessed passion for your business is also a weapon for you to fight when hard times come. When you do something that you are passionate about, even staying up all night, running like a dog with a lot of leg work, you still feel right and happy about it, because it’s your passion, your happiness.

At the time I was just starting my clothing distribution brand. I lack information about my inventory because I don’t know the exact amount of money that is stuck in the warehouse. My employees have been doing some suspicious things that make me can’t trust them anymore. By then, I wish there was something that could help my business. From there, helping traditional wholesale distribution businesses like me became my passion, and up till now, I’ve created EMERGE, one of the best apparel inventory management software for wholesale distribution businesses. This can be considered as my hearted result, generated from my past problems as well as my understanding of the needs of wholesalers, and distributors, EMERGE brings ease and simplicity to traditional B2B business.

Fully steps to build a distribution business

For a clear understanding, I will take the journey of building my business, an apparel inventory software company as an example. This is not a distribution business but about the basic things you need to know about B2B and any models like that, you can relate to my story. And, first off, apparel inventory management software was the idea for my clothing distribution business. I had enough experience and knowledge about distribution first then that was also the basement for me to build the apparel inventory management software.

1. Find your differentiation

Look around and count how many competitors you have. Right there, you will see that this distribution business has potential, therefore it’s a competitive market as well. So what is your differentiation that stands you out from your competitors? What is special about your business compared to the rest? With a distribution business, you can consider many aspects to create differentiation such as delivery time, customer support, customer benefit, price, quality of product, or the availability of product,…

For example, simplicity in utilization is the differentiation of EMERGE. As I said before, I want to create something easy, and simple for traditional businesses who can employ and use it with ease. As you know, apparel businesses are all people who just want apparel inventory management software that helps them control the stock level and show what exactly is inside their warehouses in real-time. Especially, it’s better to be obvious in the display and easy to understand.

Differentiation has to be useful in a NICHE market. It means you have to research and the more specific your niche is, the easier to find a differentiation for your company. The same goes for the distribution business. If you are a company that distributes apparel material for a certain company, maybe in the north of China, your company is in Guangzhou (the south of China). Because the weather in these two areas is so different sometimes and the demand for clothes is different too. The differentiation you can choose may be the delivery time parallel with the availability of the product. Want the customer to sort you out of the crowd? Because Guangzhou is the city of the apparel industry. Guarantee the shortest delivery time in the market which can meet the everchanging demand whether the trends change or a new seasonal fashion comes as long as the products are always ready to ship can be considered as a differentiation.

2. Create a powerful team

Here you are. A business is a corporate model, you can not do it alone, especially with a wholesale distribution business. What you bring to the table should be the management and you are now a leader who is gonna lead the team, your people. A powerful team supports you as your sidekick and helps you dominate your competition. You know, supporters may just have only one but there will be a hundred or a thousand people who are celebraters.

Since the distribution business is the bridge between customers and suppliers. A great team you need to create is the people between the company and suppliers as well as the people between the company and customers. A good purchase director and a good sales director will be your sidekick in the race of building distribution companies.
Back then when I was running my clothing distribution business, we didn’t have a strong operational process, every step was so traditional with Excel. My sales reps at that time would create sales orders via Excel and send me a check. As an unpreventable problem in business, one day we found out that she had pocketed some invoices. After that, I had to rethink the loyalty of my people. Later now and then, the most important part when I hire someone is their faith in this company and the commitment between them and the company. So up till now, I have had some employees who worked for me from the very first day when EMERGE was just a family company with one CEO and a few developers. I am so proud of my team, who cooperated with me, understood my vision, and conquered the niche market together to have such a useful apparel inventory software company nowadays. A huge thanks to all of my team!

3. Create a master plan and schedule

It’s important to create plans and milestones, which can be used to measure after each stage and track your progress. A plan that has specific milestones helps you analyze and be aware of every step that the company is going to take. It also shows you where you are at, what you need to do to reach the next milestone, and if your company is going well or not.
Just like a checklist for building a business. Preparation stage, Approaching suppliers stage, approaching customers stage, launching and marketing stage,… The more specific it is, the more productive your activities are.

4. Generate the networking

Networking is the key to approaching good suppliers, investors, and vendors, which is so important for distribution companies. It’s a feeling like you’re lost in nowhere, you have no idea who to contact, how to contact, what to do,… But sometimes, if you don’t have any position in the field yet but you have good networking with truthful people, somehow you will gain people’s trust, sell your products, get another network, and this circle will repeat. That’s how business works. And don’t forget to generate internal relationships in your company (with your team and your employees).

So how to approach and generate a network with valuable people in this field? First off, try to classify which group of people you want to approach. It could be the investors, suppliers, or customers. Since every kind of role has its own habit and specific place to go and stay. Your work is going to those places and starting to talk and impress yourself in front of them.
As a start-up in the apparel business before, with my knowledge and experience. For those who want to generate a network of suppliers in this field, going to the fairs is the most effective way. Canton Fair is a good choice for you. This fair is insanely big, you have to consider if you want to wear a running sneaker or a pair of men’s Western shoes. They even have electric scooters drive through the boots. This Canton Fair was also the place where I talked with so many manufacturers, and vendors as long as learned about their needs and wants in apparel inventory management software. About investors, try to go to private events where the investors talk about business. There, prepare a great pitch that can make them remember who you are and what’s special about your business. Memorable one!

5. Create a compelling statement for yourself and your business

Imagine you’re joining an event for wholesalers and manufacturers. Now you want to make a move and widen your relationship circle. But when you approach one potential customer, you start feeling embarrassed in front of him because you’re talking the same thing as 50 other distributors in this room.
Now that you know you need a compelling statement for yourself as well as your business. A compelling pitch has to be direct and clear, specific, including your differentiation, including the biggest benefit for the customer, and better with a guarantee. Don’t ever start with “Hello, I am ABC. I’m starting a distribution company and wish to cooperate with…” Say something decent!
For my business, whenever I participate in a fair, that’s my time to cook. “I assist traditional wholesale distribution businesses in improving their inventory management productivity within 30 days or less. EMERGE guarantees straightforward navigation and usability, accessible to anyone familiar with its operation as an apparel inventory software.”

6. Do paperwork and start milking the cow!

Conclusion

There will be a lot of differences based on the parallel of each model of business but basically, these are steps you need to know before starting and running your distribution business to prevent the miss-outs that may lead to failure.