BOOK REVIEW
Are We Making Money Yet? Book Review: Profit Guide for the Small Distributor As a sales rep, you run your territory as your own business. But it’s part of something larger. The decisions you
make in the field – the number of calls you make, the sales you close, and yes, the prices or terms you negotiate – have an impact on the company at large.
A book by Albert D. Bates, “Profit Guide for the Small Distributor” (©2021, D.M. Kreg Publishing), looks at factors affecting the profitability of small distributors. Although intended for owners, it offers plenty for field reps to think about. Bates is principal in the Boulder, Colorado-based Distribution Performance Project, a research group dedicated to distribution issues.
Return on assets The most basic questions for any business owner are: Where do we stand? Are we profitable today? Are 32
April 2022
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we likely to be more profitable in five years – or less? Bates believes the answers lie in figuring out the company’s return on assets (ROA), that is, profit before taxes divided by total assets (e.g., cash on hand, accounts receivable, inventory and fixed assets). He believes that in terms of ROA, distribution companies can be divided into three categories: ʯ Disasters (below 5% ROA). ʯ Soldiers (an ROA between 5% and 10% – where about 70% of distributors lie). ʯ Winners (10% ROA or higher).
