Are you an accounting professional looking to unlock the full potential of your clients’ distribution businesses? Distribution and reselling is a burgeoning industry that could provide an ample niche for professionals who start an accounting business.
Transforming a distributor or reseller into a valuable company may seem challenging, but it’s not impossible. Distributors often face challenges in attracting potential acquirers, as they’re perceived as vulnerable to price wars. In this article, we’ll explore how you can leverage innovation and intellectual property to set your distribution clients apart in the market.
The Power of Intellectual Property
Consider the remarkable journey of Miles Faulkner, the visionary founder of Blended Perspectives, a reseller specializing in Atlassian products, renowned for their software solutions for large teams. Faulkner’s story serves as a model for accounting entrepreneurs seeking to elevate distribution businesses and help their clients.
Faulkner’s aspiration was to create a more valuable reseller, and he accomplished this by developing his intellectual property, the Marketplace Analytic Research Service, or MARS. This innovative tool was designed to assist Atlassian users in selecting the most suitable aftermarket apps to complement their Atlassian software.
While Blended Perspectives still generated a significant portion of its revenue by reselling Jira and Confluence licenses, MARS became a unique selling proposition that set them apart from the competition. This distinction not only attracted prospective clients but also piqued the interest of Contegix, a larger reseller of Atlassian products. When Contegix acquired Blended Perspectives, the reasoning was clear: MARS provided a valuable differentiator. By owning this intellectual property, Blended Perspectives was more than just a distributor; it was a game-changer in the Atlassian ecosystem. This unique element justified a premium acquisition price and exemplified the worth of creating distinctive products and services in a fiercely competitive marketplace.
Evolving into a High-Value Company
Another inspiring success story is that of Mahul Sheth, who transformed a basic parts distributor into an eight-figure business. In 1995, Sheth founded VMS Aircraft, initially serving as a distributor of airline parts. His initial value proposition was being a “one-stop shop” for airlines and their maintenance crews to find parts and accessories. However, Sheth was determined to increase the value of his business.
Sheth recognized the need to evolve from a mere local warehouse for distributing third-party products into a sophisticated provider of advanced materials. He chose to focus on materials critical to airline safety that required meticulous handling. Sheth invested in a clean room to minimize dust, purchased dry ice containers for temperature-sensitive materials, and repackaged materials to offer smaller quantities.
Sheth’s transformation led to a remarkable increase in gross margins, soaring from 22-23% to an impressive 60-70%. Along the way, his commitment to value-added services attracted the attention of a French company eager to enter the U.S. market. Rather than competing with Sheth, they recognized the uniqueness of VMS’s offering and acquired the company for 7.4 times EBITDA. If you start an accounting business and land clients who can see increases like those, you’ll be set to profit and market your services to new clients. A great way to get started is to take an online bookkeeping course, an online tax course or enroll in business advisory courses.
As accounting entrepreneurs, it’s vital to help your clients pinpoint their unique selling proposition and invest resources in developing their intellectual property. These strategies not only boost the value of their distribution businesses but also strategically position them for potential acquisition opportunities down the line. By following the footsteps of visionaries like Miles Faulkner and Mahul Sheth, you can empower your clients to elevate their businesses to new heights, making them highly attractive in the eyes of potential acquirers.
If you’re interested in starting an accounting business, adding more services at your business, or just learn the basics of bookkeeping, give Universal Accounting School a call at 877-801-8080. You’ll see massive progress at your firm or in your career. You can also schedule an appointment to discuss your future with our team of experts here.