So they looked at the travel industry from a different angle. What they discovered was the increasing popularity of food and wine especially with the cruising boomers. They really identified and pioneered this market with their unique, high quality European wine and food “Epicurean Tours,” resulting in Larry being chosen by Conde Nast as World’s Top Wine Travel Specialist for three years in a row.

During our Halloween dinner with this well-traveled and cultured entrepreneurial couple, the conversation got around to our favorite subject – entrepreneurship, its challenges and its principles. They often give us great sound bites that sum up complex business relationships in just a few well-chosen words. This evening Larry said, “It’s volume or it’s margin.”  Then he added,” Distribution makes the difference.”

It sounds so simple; decide if your product or service is going to be at a velocity price point (volume sales) or if you are willing to forego distribution for margin (higher profit on fewer sales). But it gets complicated. Most small businesses are looking for higher margin because they know they can’t afford the investment in time, energy and capital to achieve a positive cash flow at lower price points.

Other businesses have a model that doesn’t require distribution, then charge enough to see a profit at a low volume of sales. Still others evolve at medium prices but soon reach their capacity and are unable to expand.

The only way to enter the market when we started our business was at the velocity price point. That is the price at which the greatest volume is sold. Little did we know that we would have to sell over 200,000 cases per year just to break even! Back then folks would say, “Why doesn’t America have a good $5 bottle of wine?” The answer was that it simply didn’t pencil out, especially for an undercapitalized startup.

Now that we have had that painful experience, we counsel our clients, “Make up your mind; is it going to be high margins or large distribution?” Most want to produce and sell a competitively priced product, but they generally underestimate the cost of sales, including the costs of distribution. Unless they are starting with a big investment, or unless they are willing to spend years cash flowing the cost of expansion like we did, they are naturally limited to a smaller market at a higher price.

The obvious problem with the higher margin model is that unless you sell it to a bigger player who wants a high margin business and has the capacity to expand it, you run the risk of being underpriced by a bigger player.

The problem with the higher volume distribution model is the years you have to work at it before you see any real margin. The good news here is that by establishing a market for your product you may be able to attract an acquirer who can scale your business up quickly because they have a distribution infrastructure already in place that can “bolt on” your low margin, velocity price point business.

This is the beauty of the “road side fruit stand” approach. Folks drive up, buy your products and drive home with them. And that’s the end of the distribution program. But it may be hard to sell the fruit stand! So what’s it going to be? Are ya goin’ for margin, or are ya goin’ for volume?

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Entrepreneurs Must Decide Between Volume or Margin appeared first on The Barefoot Spirit.

It is an erroneous assumption that B2B is somehow insulated from the source of most income, the general public. If your client goes out of business, your B2B loses that account, and you lose an income source. Of course you need to worry!

The more your company understands and assists your clients to sustain and grow their customer base, the better your chances of keeping that revenue. Don’t be the last one to find out your client is in trouble. Be proactive and help them stay healthy so you too will benefit from their success.

Here are some ways your B2B can help your client or customer:

1. Take an interest in how they make their income, including its source. Is it another business that sells to another business that eventually sells to the public? How many layers exist before reaching the end-user? Do they sell direct to the public?

2. Take an interest in their industry, including the trends that are on the rise or decline. Are your customers experiencing rapid growth, or having difficulty maintaining their market or price points? The answers to these questions can give you a big hint about how you can possibly help them.

3. Show them how to buy your products or services to best match their current needs. When they are in a growth cycle, provide them with discounted quantity purchases. When they are struggling, provide them with longer terms. By being sensitive to their needs beyond your product or service, you help them and your company succeed.

4. Provide them with information and objective feedback. Show them that you care and act like an engaged team member. Your input will be respected since they know you have an interest in their success. You may have some insight that only an outsider could have, or you may see something in the market that they may have missed.

5. Keep your eyes peeled for talent. You may have more contacts than they do, thus, you may be aware of hiring opportunities they may not know about. Find out what they are looking for and pass the word. Strong companies and strong clients are made up of strong people. It’s their most valuable resource.

6. Call for a meeting in person, if possible. Ask about their business challenges, growth, and customers. Let them know you care about their business and are interested in helping them succeed.   A face-to-face will reveal lots of information that an email or phone call can never achieve. And it helps build an invaluable personal relationship.

When you think about it, there are many ways you can help your client remain viable beyond what you are selling. You will win their loyalty and increase their purchase orders by being a real team player.

No business is truly isolated and insulated from their client’s customers. As these last few years have painfully demonstrated, we are all interdependent. The more you know about your customers, the more you can help and the more your B2B will continue to be.

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post B2B or Not to Be? That is the Question! appeared first on The Barefoot Spirit.