Many successful independent businesses distribute products manufactured by others. Typical businesses fit into the distribution chain in a variety of stages of the process, from purchasing directly from the manufacturer to purchasing from subdistributors and selling to the consumer. Examples of the items produced in these businesses include cosmetics, jewellery, cleaning supplies, and a great variety of other products. A business can distribute products produced by others through a variety of operating formats. Wholesalers, distributors, and retailers purchase goods for resale. By selling goods at a higher price than their purchase price they generate revenue to cover the cost of goods purchased and to make a profit from their own work. These people must pay for the goods they purchase for resale, regardless of whether or not they succeed in reselling them. A franchise operation is a common method of distributing goods. Franchises have been described as the most successful marketing concept ever created. A franchise organization is in fact a contractual association between a franchisor (the manufacturer or wholesaler) and the independent franchisees who purchase the right to distribute the franchisor’s products. An estimated 4500 franchisors provide a broad range of franchise opportunities in Canada. Many of the opportunities represent great potential for small business operators. Suitable service areas include beauty and health, business, computer, education, maintenance, photography, and publicity. Dozens of directories and handbooks are available in public libraries and bookstores that detail various franchise opportunities. These resources also outline what to look for and what to avoid when purchasing a franchise. The next chapter addresses the topic of franchising in greater detail. Another growing trend is the use of multilevel marketing. As the name suggests, this involves a number of different levels of distributors. The manufacturer sells products to a high-level distributor, who in turn resells the products to the next level of distributor. This lower level distributor sells to yet a lower level distributor, and so on. The purchasing and reselling continues until, ultimately, the products are sold to the end user. Examples of companies that use this multilevel marketing approach are Amway, Mary Kay Cosmetics, and Tupperware. Contemporary advancements in communications technology and services—such as overnight delivery from factory to home—increase the attractiveness and profitability of these businesses. As with franchises, there are a number of resources available to provide guidance with respect to these multilevel business opportunities. Yet another approach to distribution, suitable for the small business format, is the use of representatives or agents who represent specific manufacturers or producers. These people never actually own the products that they sell. They take orders for the manufacturer or supplier and are paid a commission on their sales. Unless otherwise agreed, commissions are payable when the supplier receives payment for the goods sold. Growing nostalgia has given new life to the expression that everything old is new again. Collecting and reselling anything that is old— furniture, jewellery, books, newspapers, trading cards, clothes, and so on—has become a major source of revenue for many people. Trading in nostalgia is ideally suited for small businesses. Not only is a fixed place of business unnecessary to sell the products, it is often restrictive. Shows, fairs, and other exhibition locations can be found at the nearest shopping centre, at downtown and suburban hotels, and at flea markets everywhere. The stock-in-trade is hauled from home (or storage) to the show, where it is set up and offered for sale. Unsold items are returned to home base to await the next sale. The management and administrative work is usually completed in home offices.
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