Need Help? (888) 742-5060

In The News:

Key Financial Metrics for Distributors to 'Manage the Panic of 2009'

January 13, 2009

Brent Grover was our speaker on an MDM Webcast this week, and as always with his background as a CEO and CPA, addressed a range of focus points for distributors to review as they manage the panic of 2009, the title of his talk. Brent is far from an alarmist, but he argues that this downturn is structurally different than others most business executives have experienced.
He covered the details, levers and pain points across several financial areas - financing, credit, cash flow, cost control - and how distributors can sharpen their focus in each. As moderator, I felt it offered some benchmarks and tools for distributors of all sizes to form the core of an executive team meeting on how to tighten the seams of the ship, even in the middle of a storm.
Brent is a strong advocate for trailing-twelve-month financials (TTM) to give a much more accurate picture of trends. "Distributors should treat every month as year-end," he said, and not rely on the last calendar year or quarterly data.
One slide that especially caught my attention was a distributor checklist - 15 indicators or danger signs that Brent feels are important to monitor. Here are half of them:

  • 5-10% drop in TTM sales

  • 1-2% GM% TTM drop

  • Cash flow TTM drop

  • Cash cycle days rising

  • Credit line utilization above 80%

  • Vendors' tightening terms

  • Sales concentration increasing

  • Turnover in management/sales reps

Brent made the point that every distributor will see some of these indicators in a down cycle, but if the speed of downturn increases, or the number of indicators increase, it can be an early warning sign and indicate stronger actions must be taken to correct.
Brent also touched on the Employee Free Choice Act, the current "Card Check" legislation now working through Congress. It will potentially make it easier for unions to form, and at this point appears to have a fairly good chance of being enacted in 2009. Brent recommends reviewing supervisory personnel now to gauge "abrasive" management styles and whether your company might be vulnerable to a push for unionization. Plan now what your response and strategy will be.
This wasn't just a survival kit program. Brent offered some positive short- and long-term steps for positioning your company. Call Kim at 303-443-5060 to order this 90-minute program.

© 2019 Gale Media, Inc.

Please do not reprint MDM's content on your website without MDM's express permission as it is copyrighted material. To gain permission, email us, or call 1-888-742-5060. For information on PDF or print reprints, visit MDM welcomes inbound links from your site. Please cite Modern Distribution Management.

2018-top-distributors-listThe 2018 Top Distributors List

This free PDF includes lists of top distribution companies across 14 sectors.

You will also receive MDM Update, our daily distribution e-newsletter & other distribution-focused content.

Download the Free PDF now >>

MDM-UpdateMDM Update: Daily Newsletter 

Sign up to read the best source for news & trends in wholesale distribution, MDM Update. Delivered daily to your inbox. 

Sign-up for MDM Update >>

Post a comment to this article

Partner Center