Scroll Top

Free Money! Managing Supplier BDF

By Dave Rose

Meridian’s partner Dave Rose wrote the following article. Dave spoke on operational efficiency at Focus on Finance. For further information on creative ways to manage your valuable BDF opportunity, contact Dave Rose at Sierra Management Services, (916) 752-6950, or e-mail at sierra4services@yahoo.com.

In today’s market, major oil companies are willing to invest thousands of dollars to help you do all the things you’ve always wanted to do. Whether you’ve been thinking about upgrading your lube tank farm, painting that oxidized truck, advertising on the radio or TV, or even expanding through a merger or acquisition, your supplier may be ready to help.

The vehicle your supplier uses to help is called Business Development Funds (BDF) — volume incentives offered by major oil companies to support your efforts to maximize growth and profits. These incentives allow majors to direct marketers toward alignment with their brand’s vision and goals.    Different tiers of support are offered depending on market area, volumes, territories, and whether marketers are single or multi-branded. Although criteria-specific, most majors are very flexible with disbursement of BDF funds. They even pay for training and education such as Meridian’s Focus on Finance. As the old saying goes, “If you don’t ask, how will you know?”

Unfortunately, many marketers do not have a plan for the distribution of this “free” money, instead using a “shoot from the hip” approach to BDF. In many cases, marketers end up losing literally thousands of dollars as a result of not having a plan. This is due to BDF program beginning and expiration dates and specific “use it or lose it” clauses. Marketers often scramble for receipts as they approach a program expiration date, only to come up empty-handed, forfeiting serious money.

Maximizing BDF takes planning. Start the planning process by collecting input from key people in each area of your business – sales and marketing, operations and MIS. A technique called SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is highly effective for BDF planning. SWOT should include internal and external analysis. For instance, an internal Strength might be experienced staff; while an external Strength might be that you are the only marketer in a fifty-mile radius.

Prepare your key people for the BDF planning meeting by giving each of them an outline of the SWOT process in advance, including a worksheet. Advance preparation gives them the opportunity to think about their particular department. The worksheet should contain the specific headings of Strengths, Weaknesses and so on. Each manager should list at least five items for each internal and external SWOT item for a total of 40 ideas.

Sales and marketing department SWOT should address achievement of market share including advertising, brochures, business cards, calendars, trade shows, giveaways and signage. Do they have the tools they need to sell efficiently such as prospect management software and sales and product training? Some majors even offer a telephone on-hold system. They should be asking themselves, “How well do we handle the most common expense in sales, such as the proverbial loaned equipment?”

Operations should consider efficiencies such as repackaging, bulk lube dispensing, label printing, truck painting, education for drivers and warehouse personnel and how to maintain product integrity. MIS should consider label printers, software for label printing, bar coding of package stock and oil analysis software. BDF opportunities exist with laptops and contact management software like ACT or Goldmine, not to mention Equipment Tracker or CashTracker®.

As an owner, or principal, think about your business in more general terms such as short term (1 year) and long-term business goals (5 years). Do you want to focus your efforts on improving processes in sales or operations? Will you be expanding your business through a possible merger or acquisition (M&A)? If so, some majors reimburse 100% up to $5,000 to hire evaluators and consultants used in a successful M&A. A professional like Betsi can conduct evaluations on assets and cash flow or do market and customer satisfaction studies to provide you with valuable knowledge needed before you invest capital. Some suppliers BDF reimburse as much as 50% of the first $40,000 spent on organization costs of M&As and offer loans as high as $2,000,000 with extremely reasonable terms to help finance M&As.

In your planning meeting you will prioritize your strengths and weaknesses to offset your opportunities and threats and then decide what percentage of your BDF money will be directed toward implementing improvements. Will you invest 30% to operations, 40% to sales, 10% toward marketing, etc? You can take advantage of your SWOT analysis to develop a strategic plan to implement actions to achieve your goals.

Finally, plan a meeting with your supplier rep to look into their resources for developing your plan. These educated and experienced people can provide an enormous amount of knowledge, manpower and literature to help direct you and your business toward an effective plan of action. And why wouldn’t they? The whole point behind BDF is to support the mutual goal of maximizing growth and profits.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.