Tips to Choosing the Right Distribution Channel

This New York Enterprise Report piece describes why choosing the right distributor is crucial for your business. Your product's desired distribution patterns, the nature of the proudct, and available resources all need to be considered when selecting one or more distribution channels. Direct sales can lead to the greatest revenue realization, but is also the most costly and resource intensive. Selling through distributors can place a product into new geographies and customer segments, but at a lower gross margin per unit. Selling your product through Original Equipment Manufacturers (OEM's) can be a valuable source of steady sales, but at lower gross margin than the other two options.

Customer Financing Can Be Tricky

Customers can be a valuable source of financing, but borrowers need to be aware, the August issue of Entrepreneur magazine reports. "There's always a catch," says business consultant Debra House. "The catch can be that they want you to devote the plant solely to making the buns needed for McDonald's restaurants in a certain region of the country. The thing that comes along with this is that McDonald's will usually tell you how much they'll pay for the buns." Smart business people always evaluate, what they are getting, what they are giving up, and what is the exit strategy if the relationship does not work.

Dynamic Pricing Best for Retailers, but may Upset Consumers

A recent University of Pennsylvania study found that 64% of respondents who had recently used the Internet did not know that it is legal "for an online store to charge different people different prices at the same time of day." Research shows that people often get upset if they learn that they paid more than someone else, possibly because they do not know much about what goes into a company's decisions to set prices. On the flip side, Wharton Professor Peter Feder says that companies that benefit most from dynamic pricing are those that experiment with different pricing strategies, trying out lower and higher prices to different customers, and utilizing coupons, discounts and other incentives to maximize the customers' shopping experience, and their own profits.

Outsourcing Opportunities for Small Businesses

Dr. Alok Aggarwal, founder and chairman of Evaluserve, said that the key for smaller businesses looking to outsource is to form buying cooperatives that sufficiently aggregate demand, the Westchester County Business Journal reported. Participating at a June 23rd panel discussion at Pace University, Aggarwal said that India has attracted $17 billion in exported business activity, making it the world's current outsourcing leader. India is challenged by its slow juidical system, and will face increasing competition from Canada and Europe, Aggarwal noted.

Consumer Confidence Index Hits Three Year High

The Consumer Confidence Index hit a three year high in June, rising from 103.1 to 105.8, the Conference Board reported. For the first time in three years, the percentage responding that jobs were "hard to get" did not exceed the percentage saying that jobs were "plentiful."

Sarbanes Oxley Impacting Smaller Companies

Many private companies are strengthening their accounting practices so their large company customers can comply with the Sarbanes-Oxley act, Business Week reported. Financiers are also holding companies to a higher standard as conditions for deals, requiring documented audits and oversight committees, both Sarbanes-Oxley requirements. Colleen Cunningham, CEO of Financial Executives International, says compliance is not a matter of if, but when.