A recent survey of distributor owners and managers showed that small companies sell more services to customers – as a percentage of overall sales – than do larger distributors. When asked what percentage of their revenue is from the sale of services, distributors with less than $5 million in annual sales said 21.3 percent, while those with between $5 million and $10 million in sales said 15.1 percent. That compares to roughly 12 percent for companies with annual sales of more than $10 million.

Most small distributors would not be surprised by those figures. As distributors must find new revenue sources, charging for value-added services becomes a necessity. For small companies, most of which consider themselves specialists in a particular product category or industry, adding value is a way of life — and getting paid for it is becoming more of a reality.

Distributors with less than $5 million in sales expect the service-revenue side of their business to jump to 25.2 percent of total sales in the next three years, while those with between $5 million and $10 million in sales expect it to rise to 21.6 percent. Distributors with between $10 million and $20 million in sales anticipate a rise to 19.2 percent, while those with more than $20 million in sales say services will represent just 16.2 percent of overall revenue in three years.

Those figures come from INDUSTRIAL DISTRIBUTIONS 57 thAnnual Survey of Distributor Operations, the findings of which will be released in a special report in our August issue. This month's sneak peek at some of the results is part of our yearly Special Report on Small Distributors. In addition, the following pages offer insight into a small distributor's Midwest business, a look at how the manufacturing community views small distributors, and a report on the small distributor's growing attraction to buying groups.

Our cover story, No rest in the Rust Belt , takes a look at how JMC Sales & Engineering Co. of Indianapolis is surviving as a small distributor, selling cutting tools and machine accessories in the Indiana marketplace. President David Mayer keeps one eye on the traditions of the past and the other on the rapidly changing business environment to keep his company on track. The strategy helps JMC Sales maintain the "hands-on" relationships that are the hallmark of a small business, while becoming technologically savvy enough to keep up with customers' demands.

Our second story, Small companies, big value , reveals the results of a brief survey we conducted in the Spring. We asked manufacturers to tell us how valuable small distributors are to their businesses. How many small distributors do they work with now and will they continue to work with them in the future? These are some of the questions we asked.

Our final story, The group buying blitz , investigates the growing popularity of buying/marketing groups among smaller companies. Our 57 th Annual Survey shows that 15 percent of distributors with annual sales of less than $20 million belong to a buying or marketing group.

Whether trying to make more money from services, blending old and new business strategies to keep up with customer demands, or building buying power with the help of a marketing group, small distributors are keeping one thing in mind: value. If they can make themselves more valuable to the marketplace, it seems, then long-term survival becomes much more of a reality.