January 13, 2014
First and foremost, welcome to the new site. What do you think? I realize at first it can be a little disorienting – sort of like walking into a supermarket and realizing they’ve changed up all the aisles – but hopefully you agree with me that this new look and feel is exactly what Small Food Business needed. However, back to our regularly scheduled programming – and today that has us talking about distributors and brokers.I’m not kidding when I say the best ideas come from you guys and this is one example of that. I had an entrepreneur contact me a few weeks ago as she prepared to head to San Francisco for the Fancy Food Show. She wanted to know the best way to negotiate with the distributors and brokers she’s hoping to meet there. Specifically, when they start throwing margin calculations around, what’s the best way to look professional (aka – not fumble with a calculator) and still make sure you’re making money.
So it was that question that prompted me to create a Distributor/Broker Negotiation Cheat Sheet. It’s a pretty simple spreadsheet – simply put in your Cost of Goods Sold (COGS) and your wholesale price in the orange cells and then the spreadsheet will calculate a number of different price points and your associated profit at that percentage amount.
Just to be clear, I’m not advocating a 50% margin to anyone, but I wanted to give you a range of percentages so that if someone threw out to you – for example – 17% – you’d have a rough idea of what that would mean for your profits.
Best of all, this prints out neatly on one page (when printed in landscape format). So you can keep it hidden from view as you sit across the table talking to distributors and brokers.
Actually, the best piece really is that it’s free (for now at least…it will likely be integrated into a future update to the Product Cost & Pricing Spreadsheet). So whether or not you’re headed to the Fancy Food Show this week or any other tradeshow in the future, go grab yourself a copy of this spreadsheet so you can make sure that when negotiating with food brokers and food distributors, that you’re not giving away the kitchen sink.
Speaking of the Fancy Food Show, are you going? If so let me know your booth number as I’d love to stop by and say a quick hello on Monday.