Should I buy an existing beverage distributor or start one?

Whether to buy or start is a question about time and risk. A drinks distributor needs brands to sell, stores to sell to, vehicles to carry stock and people to run routes. An existing business brings many of these together, and a new one has to build each. Neither path is right for everyone, so here are questions that help you weigh them for yourself.

Getting brands to sign

Suppliers choose their distributors carefully. A newcomer with no accounts may find it hard to be taken on, while an existing distributor already has the agreements. Ask yourself what you could offer a brand that it does not already have. If you are buying, find out whether those agreements will continue with you, because that is the first thing the purchase depends on.

Accounts, routes and equipment

An existing business comes with store and venue accounts, set routes, trucks, coolers and a warehouse. Starting means winning each account and buying or leasing the rest. Ask what you would have to learn about routing, merchandising and credit control, and whether you have time to build it. Check the condition and ownership of what comes with a purchase, because old equipment can need replacing soon.

• Which brands you could realistically carry
• What experience you have in routes, stores and credit
• How much of the existing team you would want to keep
• Who answers the licensing question before you commit

People and habits you inherit

Trained drivers and reps are a real advantage, since they know the customers. They may also leave when ownership changes, and their relationships may belong to them more than to the company. Buying also means inheriting pricing habits, informal promises and customer discounts. Ask the seller to explain each, and decide which you would keep.

Licensing and the legal side

If you plan to carry alcohol, licensing can decide whether either path is open to you, and who may hold a licence is a legal question. Ask a lawyer before you commit to a purchase or a start-up, and ask whether any existing permits would pass to you. Your accountant can talk through how each route would be set up and financed.