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What’s your back up plan?
Not every year is a record-setter.
Like any industry, the heavy-duty aftermarket is vulnerable to the natural ebb and flow of business. Sales can be great one month and rotten the next; sometimes without explanation.
A benchmark of a strong business is being able to withstand those valleys when they come and remain stable until the market turns up again.
Distributors do this any number of ways.
Utilizing lean business practices and tightening your finances during times of crisis is a common way to stay afloat, and for good reason. A business that expertly survives an economic downturn is usually the first to grow when the economy turns around.
But saving every nickel you can isn’t the only way to handle sales lulls. The saying goes “You’ve got to spend money to make money,” and sometimes that’s a great long-term option.
One way to do that is through specialization.
If you’ve never considered specialization in your business, I’d advise you to look into it.
Specialization can be a great opportunity for aftermarket businesses because it allows you to find something you’re good at it and make that a focal point in your operation.
A good specialist provides a comprehensive list of components, services and guidance.
Specialization also allows you to pinpoint your strengths and capitalize on them. It makes you a value-added distributor, and customers are attracted to businesses that can provide multiple products and services.
This month’s cover story features six aftermarket distributors that have found success with specialization.
While some of the businesses have been operating as specialists for several decades, a few are new to the idea and just starting to reap its benefits. Each business has added specialization to its operation in different areas, and some have been so successful as specialists they’ve expanded their expertise into other areas.
That’s one of greatest aspects of specialization: you can do it with any part of your organization.
For example, say one of your locations is thriving selling trailer components and is becoming a go-to distributor for one of your largest fleet customers. Your success with this customer allows you to slowly expand your product offering, and doing that expands your sales with that customer and your remaining customer base.
Then, during a conversation with that fleet manager, you’re informed the fleet has expanded its business with your location because of changes its previous distributor made to its rates and product offering. It needs a full-time distributor and wants to know if you’re up to the challenge.
This is the exact scenario that makes specialization so enticing — it doesn’t just provide a chance to increase sales, it also provides the opportunity to increase sales relationships.
It allows you to target a soft spot in the market and create a niche.
When sales are down, having a niche can come in handy.
There are some components customers will get anywhere. Every distributor or service provider has them and they are all offered the same way.
But if you have a niche — if there’s one thing you provide better than everyone else — customers will show you loyalty. Customers like having an expert to call.
Ultimately, that’s what specialization is all about. It’s about creating a consistent aspect of your business in an inconsistent market.
It’s about investing in your business and creating a cash flow you can rely on.
Tightening the belt when things get tough can be a good short-term solution, but it can only be done so many times. Eventually you’ve got to fight back.
Besides, if your only response to business struggles is to make small cuts, you’re eventually going to create a pretty large hole.