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Friday, 31 August 2012


Whatever decisions you make in life, you can get them right or wrong, partly or wholly. It is no different in selecting who you do business with. However, you can do a number of things to make any risk a calculated one based on facts, figures, and reputation, and therefore minimise the degree of risk to your own business.

In PART ONE of this Tale, Om and Joseph demonstrated a hunger and persistence that encouraged belief in their dedication and will to succeed, and risks were taken in both cases by the companies who gave them a chance. Both risks were minimal and were calculated risks. Om was prepared to finance the purchase of machinery and he did, and our company at that time had no alternative options to sell into Dubai. It was a case of either do it or back off. There was no financial risk, but there was a risk to our reputation should Om have turned out disastrously. At first, Joseph operated as a Sales Agent for the German tooling manufacturer, so he had to win orders and ensure that payments were made before he received his commissions.

The US distributors continued to sell our machinery because we knew they could not get it anywhere else. They continued to sell for our European competitors, so it wasn’t ideal but suited us at the time. Both continued to whinge about the other but there was plenty of space in town for both of them. Our Nigerian friend has stayed in touch and may be of use in future years, so actually none of the cases from PART ONE of this article brought us to a complete dead end.

I only got to know the Nigerian in 2011, but before the advent of the Internet company verification could be quite a challenge. Now we have the luxury of online credit checks, Google Streetview, and a whole host of other information sources that go some way to help us establish whether or not a company is a good or a bad risk. The flip side is also true. Companies and individuals who are a bad risk use the Internet for a range of activities, both innocent and fraudulent.

So you start with two rules of thumb: if it sounds too good to be true then it probably is; if you have even the slightest doubt, check, check, and check again and do nothing if doubts persist. Below are 20 questions that I have used over the years to help verify new enquirers:

1.       What is the street address of your company?
2.       What is your website address?
3.       What is your company registration number?
4.       How many locations does your company operate from?
5.       What is the main business of your company?
6.       What company standards and certification have you achieved?
7.       How many years have you been selling into our market sector?
8.       What is your company turnover and how many people do you employ?
9.       How many sales people do you employ?
10.   What territory do they sell into?
11.   What market/industry sectors do you target?
12.   What complementary product ranges do you sell?
13.   What competitive products product ranges do you sell?
14.   Do you have your own warehousing facility?
15.   What Trade associations do you belong to?
16.   What Industry publications do you advertise in?
17.   What is the scope of your online advertising?
18.   What exhibitions do your company show at?
19.   What are your main sources of sales lead generation?
20.   What sales turnover can you generate for our company in the next 12 months?

What would your company’s 20 questions be? Of course you don’t need to ask all of them all of the time, but it is useful to ask four or five of these to provide you with a basic understanding of who you are dealing with. You know best what your company requires from an overseas partner, so build your own checklist based on that knowledge. Alarm bells should sound if companies are not prepared to answer reasonable questions, and some will not respond at all. Those who do tell you some or all of what you want to know are generally worth pursuing.

Be aware also that there are occasions when you can run through all possible checks but then still can’t tell! That’s when you have to rely on instinctive judgement, gut feeling. And that’s what it was always like 20+ years ago, and it remains an essential skill in appointing any new business partner, especially internationally.

Friday, 10 August 2012


One of the things I have been told most frequently by potential new distributors is ‘we want exclusivity!’ Although it started to sound like an overplayed record, I would probably ask the same if the boot was on the other foot. Distributors mainly ask for exclusivity because they want to commit to marketing and promotional expenses on your behalf, and why should they do that if you are going to side with someone else?

I had only been in post at Gaskell Textiles for a couple of months when I took a call from my sister company’s distributor in Athens, who shall be called Mr. G. He had clearly not been able to impress the previous guy, and probably thought the new boy would be a soft touch. I had barely opened my mouth before he told me he was our exclusive distributor for Greece! However, I had all the performance figures of all our distributors in a chart on my desk and I was able to retort that £18,000 of business this year and £4,000 last year hardly justifies an exclusive arrangement and that there was no distribution contract in place.

It got funnier. About six months later, I took another call from Mr. G. who was on his way to see our sister company ‘in one hour’. He suggested that I dropped everything to meet him. So I said no, but if he waited around until later in the afternoon I might be able to find ten minutes. And I kept my word, and walked into the showroom where the meeting was to take place, warmly greeted Mr. G., shook his hand and asked him about his journey, and then said “Mr. G. I would like to make my position clear. I will not give you exclusivity for our products until you show me £50,000 a year in sales turnover”. That didn’t make him too happy, and for all I knew there could be another distributor in Greece that would have provided a quicker route to my £50,000 a year – which I actually failed to achieve anyway! And the postscript to the story is that Mr. G. stood me up when I visited Athens later in the year. It’s all a bit of a game.

So who would you be prepared to offer an exclusive contract to? The following opportunities are true. The people are real. The cases are real (sorry folks, I nicked that from Judge Judy!). Think about each as you read on, and think about what you would do. The answers are at the end, but first use your own judgement, and see if your gut feelings are correct!

A former sales director colleague of mine was selling woodworking machinery at an exhibition in Dubai. He had gone to exhibit on a whim, to test the waters, to see how the land lies. He had taken a shell scheme and was not in the greatest location, and as a result he ended up twiddling his thumbs for most of the six days of the exhibition. However, on each of those days, one man called onto the stand promoting himself as someone who would build business for the company’s machinery across the Middle East. He had no experience of selling machinery. He had no experience of the construction sector into which our machinery was predominantly sold.

A German tooling company was exhibiting in Accra Ghana in the 1990’s. ‘Joseph’ pestered them daily for the right to sell their tooling into engineering companies in Ghana. He didn’t let up, and was there at the start of every day. Joseph was wearing no shoes at the time because he couldn’t afford them. He had no money and no experience of selling tooling, no experience of selling anything at all!

Two established companies in the USA, one in Springfield Massachussetts (no Simpsons gags please, they’ve all been done!), and one in Charlotte North Carolina. Both persistently demanded nationwide exclusivity for our products. Both had long and successful track records of selling machinery. Both had tremendous knowledge and experience.

I was introduced by a very well connected guy in South Africa to a Nigerian who in turn was well connected in the medical sector in his home country. He was full of energy and very demanding, both in terms of time and in terms of the support he would need to win a share of the market for my client’s incinerators. He travelled regularly to the UK and was familiar with all the necessary logistics and payment issues.

1.       Om became our best distributor in the Middle East, bringing a regular £300,000 of business annually.
2.       The German company gave Joseph a chance. At first he dragged his only tooling block around Accra on a homemade cart with a string handle. Within 5 years Joseph was driving a Mercedes and wore shoes.
3.       Neither US company were given exclusivity. The market is too big, and both companies were selling for competitive European companies. We weren’t the only show in town. And by the way, they both hated each other!

4.       I have no doubt that the Nigerian guy would have worked out, but Nigeria was not a priority market, and my client had already sold into the country through another source. He wanted expenses upfront because he was going to have to travel extensively to achieve his goals.
PART TWO will provide a few hints and tips on how to verify new distributors, and make judgements about what sort of contract to agree with them.