Value Drivers for a Distributorship
Distributorship, also known as multi-level marketing or direct selling, is a growing industry. The industry has grown by 5.3%. Experts expect growth to continue by about 0.5% each year. This is due to low startup costs and the appeal of extra income to individuals. When valuing a distributorship, it is important to understand the industry. The industry includes the direct selling of home goods, cosmetics, coffee-break services, vitamins, nutritional supplements, newspaper routes, party-planning merchandise, and more. Whether you are buying, selling, or growing a distributorship it is critical to know and understand the value. A business appraiser can help. They analyze value drivers for a distributorship when valuing a distributorship.
In this article, we go through the key value drivers for a distributorship. These are important to know if you are buying, selling, or expanding a distributorship. A business appraiser looks at the key value drivers for a distributorship when determining the fair market value of a distributorship.
Obtain a business valuation to know the value of your distributorship! Peak Business Valuation, a business appraiser, would love to help you with a business valuation for a distributorship. We are also happy to answer any questions you may have about valuing a distributorship. Valuing an MLM is very similar. Schedule a free consultation today by clicking the link below!
Key Value Drivers for a Distributorship
In the following paragraphs, we discuss a few of the key value drivers for a distributorship. To better understand how to value a distributorship read Valuing a Distributorship. The best way to know the value of your distributorship or the value of an MLM is by obtaining a business valuation. Peak Business Valuation, business appraiser, is here to provide you with a business valuation. We can answer any questions you have about maximizing the value of a distributorship. Schedule a free consultation to get started!
Online Presence
First, when valuing a distributorship, online presence is key. In today’s world, people want to buy things from the convenience of their homes. By having a strong online presence, your distributorship can sell products that best meet consumer wants and needs. In addition, a strong online presence expands your customer base.
Social media is an important part of the online presence of a distributorship business model. Often when customers hear about products, they look up the product or company on their favorite social media. Social media has become one of the key marketing tools for distributorships and MLM businesses. As such, it is important to figure out which social media marketing streams your target audience most often uses.
In addition, having a strong online presence will help you reach more customers. It also decreases the risk of having a high customer concentration. Social media and having a strong online presence can increase your number of customers, increasing your revenue. It can also give you an advantage over your competitors. When a business appraiser is valuing a distributorship, they will analyze your online presence, customer concentration, and customer loyalty among other factors. See The Value of SEO for more ideas.
Target a Specific Market
Next, know your target market. Individuals between the ages of 20 – 64 are the industry’s main customers. Individuals in this group have steady incomes and can afford the products sold by distributors. When valuing a distributorship, it is important to know your target market. Knowing your target market can give you a great advantage over your competitors. This can help you specifically market to those individuals. Business analysts analyze the financial statements of a distributorship when valuing a distributorship. Targeting your market increases revenue, which impacts the value.
Assess Competition
Another important value driver for a distributorship is assessing the competition. Consumers want convenience. As such big box stores have an appeal as they can provide many products all in one location. Whereas a distributorship generally only sells one product or a small variety of related products. However, by providing specialty products a distributorship can stand out from the competition both from big box stores and other online retailers.
At Peak Business Valuation, business appraiser, we often look at the competition and how your distributorship compares. Having a lot of competitors in the local area or for a specific product can affect the value of a distributorship. Implementing value drivers for a distributorship can help you differentiate and stand out from the competition. For questions, schedule a free consultation.
Location
While a distributorship can operate from anywhere, a good location drives the value. The Southeast, Western, and Great Lakes areas of the United States tend to have more direct-selling companies. Factors that affect location are population density, consumer spending, household income, and customer demographics.
It is important to identify where your distributorship can have the most value. Areas with high local shopping trends attract more potential customers. Having your distributorship located in a prime location can increase the value of a distributorship. When valuing a distributorship a business appraiser, such as Peak Business Valuation, analyzes the location.
Well-trained Team
The most valuable distributorships have a well-trained team. Employees who are well-trained and committed to a distributorship increase sales and customer satisfaction. Having a quality team also decreases the level of owner dependence. Each of these increases the value of a distributorship. For more ideas take a look at Reducing Owner Dependence.
Unemployment Rates
Lastly, unemployment rates have an impact on the value of a distributorship. When unemployment rates increase, the number of individuals who establish a distributorship also increases. This creates competition. When unemployment rates are low the direct selling industry sees a decline in competition. Peak Business Valuation, business appraiser, analyzes the economy and how your distributorship compares to the competition.
Summary
Understanding the key value drivers for a distributorship is critical. If you are looking to buy, grow, or sell a distributorship, you need to know the value. Valuing a distributorship may prove complicated. As such, reach out to a business valuation professional. They use their judgment, experience, and relevant information to determine the value of a distributorship or the value of an MLM.
A business valuation determines the fair market value of a distributorship. In addition, it can help you set new goals as it identifies the strengths and weaknesses of your distributorship. A valuation analyst does this by analyzing the financial statements and comparing your distributorship to competitors.
Peak Business Valuation has experience valuing distributorships across the country. We are happy to answer any questions you have about valuing a distributorship or valuing an MLM! Please reach out by scheduling a free consultation.
Schedule Your Free Consultation Today!
