Comments on: Using Brokers To Get Retail Accounts http://smallfoodbiz.com/2013/02/21/using-brokers-to-get-retail-accounts/ for those who dream big about starting small food businesses Wed, 19 Jun 2013 16:56:14 +0000 hourly 1 http://wordpress.com/ By: smallfoodbiz http://smallfoodbiz.com/2013/02/21/using-brokers-to-get-retail-accounts/#comment-4031 Thu, 21 Feb 2013 23:59:03 +0000 http://smallfoodbiz.com/?p=3310#comment-4031 Jack,

You’re correct. In this instance I was mainly focused on when the broker opens the accounts but doesn’t work with a distributor (ie, either the broker or producer is responsible for delivery) which is how many small food businesses initially start when it comes to brokers which is why a higher rate was quoted. Though, as you pointed out, that rate can vary widely depending on a number of circumstances. Additionally, as you pointed out, there are a whole host of ‘add ons’ that can cost you the producer money. I plan to write another article down the road that looks at some of those other aspects of working with brokers and distributors (both the good and the bad) as I didn’t want to complicate the ‘pricing’ discussion by adding too much into one piece. As always, any thoughts or insight you have to add based on your experience is always welcome.

Thanks so much!

]]> By: Jack Czarnecki http://smallfoodbiz.com/2013/02/21/using-brokers-to-get-retail-accounts/#comment-4023 Thu, 21 Feb 2013 18:27:58 +0000 http://smallfoodbiz.com/?p=3310#comment-4023 Actually, broker commissions are pretty standard at 5% when delivery is to a distributor. This goes to 15% when the producer and/or the broker brings the units directly to the retail outlet. Also, brokers can be a good source for finding distributors.
However, when a broker wants a retainer or up-front fee it usually indicates that most of his placements will want free fills or slotting fees. The more successful the latter type of broker is, therefore, the more likely you are to go broke by giving away tons of product. You will also be asked to pay for any advertising or other promotional costs by the retail outlet or chain. This, in a nutshell, is how easy it is to lose your shirt in this business.

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