Forums: Discussions for entrepreneurs and small business.

Okay, if there are no no brainers, then I have another question (boy, are you going to get sick of me!)  Why would I not be able to just get my website up, with photos of my lovely items, contact the stores and give them my sales pitch, "You simply cannot live without these, customers will flock from near and far to purchase them, this is my wholesale price, you could most certainly double it," etc.  I would have insurance to protect me from potential lawsuits, but does this really have to be as complicated as some of you imply?  LLC, for instance.  I assume that is some kind of corporation, but why is it important to me?  I would just like to keep things as simple and as inexpensive as possible, but I need to know if this really can be simple and inexpensive before I really pursue this further.  In the end, I just want to make my items and sell them to stores. 

a few ideas, suggestions, etc.
I would certainly get your website up and start promoting it everywhere. It would be tough to get into stores. The problem would be finding the buyer responsible for products. Not sure which stores you`d be trying to get into, but you could try smaller stores local in your area.
Would the items be made by you in your home, by someone else, etc. What about shipping costs, distribution costs, marketing costs, the store will also want to know what you`ll do to help promote the product in the store - posters, signs, etc.
LLC is a limited liability company and provides protection and limited liability. The owners assets are separate from the business. More info can be found on the web.

my 2cents


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No Eternal Reward Will Forgive Us Now for Wasting the Dawn.

Check out step four for benefits of each type of structure. 

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My three cents. 

Keep it simple - you`re on the right track.  Almost ALL business models are built for and by big business, and then small business adopts them because they think it`s the only way, and we get buried in trying to mimic what we think is good business practices (for a Fortune 5000 company).   

Spend time  ONLY on a very few critical success factors:

1)The purpose of a business is to acquire and retain customers.  There is no other purpose.  Your first step should be to see if you can acquire customers.  You love your product, and maybe so do some people who you`ve showed it to.  But can you get someone to buy it?  90+% of the Big Business Plan is trying to get you to figure out what the depreciation on a water cooler will be five years from now.  It won`t matter if you can`t sell your product easily without doing it yourself (if it only sells when you personally sell it then they are buying you, not your product - other people won`t be able to sell it - can somebody besides you sell it easily?).

2) The purpose of a business is to acquire and retain customers.  There is no other purpose.  Your second step should be to figure out how you can get repeat business - retaining loyal customers.  The Big Business Plan will only give you theories and possibilities as to how other folks are doing with something similar.  Get a customer, then see if they buy again, and ask them why they bought again.  Get a couple more and see if you can find a simple pattern of why people come back for more.  If you see a clear pattern emerging (the product is unique, you`re easy to buy from, the price is right, it is shipped quickly, etc.), now you have something you can replicate and build on to retain customers.

3) The purpose of owning a business (different than the purpose of a business itself) is to create the lifestyle we want for ourselves and our family.  If you can find customers and then retain them, can you find a way to manufacture this product that doesn`t cost you your life doing it yourself or managing others who do it?  If not, your dream will become a millstone around your neck.

4) Forget revenue projections - they are meaningless.  Focus only on profit projections.  The polish sausage vendor buys his sausages for $1.00, sells them for $.99 but feels he`s doing okay because he is selling so many of them he knows he`ll make it up in volume.    If your profit is only theoretically available down the road, chances are you won`t every see any.  Plans that take two-three years (or even one) to become profitable are REALLY high risk.  And a lot of times they only take that long to become profitable because the Big Business Plan tells them to spend all kinds of money up front on fancy websites, brick/mortar, expensive advertising, infrastructure and other things only big businesses can afford.   Can you be profitable, and how quickly?  (A friend of mine actually cut a customer`s revenue from $850,000 a year to $300,000 a year and increased their profit from $35,000 a year to over $150,000 a year - profit matters, revenue doesn`t).

5) Forget advertising and marketing until you have money to burn.  Instead, find gatekeepers.  These are the people who know how to get your product into the stores, catalogs, and websites so you can make money.    Let those stores, catalogs, and websites be your advertising for now.  It`s a lot less expensive for you to make 100 phone calls and 25 visits to coffee shops to meet people than to do some advertising.  And it will be a lot more effective.  Many of us hide behind marketing because we don`t want to do the hard work to build our business, so we throw money at mailboxes and hope we can sit and watch the cash flow back in.  Do the hard work to find the gatekeepers.

6) Do the Ten Steps to start a business that these guys promote on this site (no I`m not advertising for them, I just stumbled onto this site a month ago).  I went through them and found them very effective.  FYI - If it takes you more than 10-60 work hours to complete the whole thing, you`re likely building the Big Business Plan that you only need for Step 8 below.

7) If you need funding, don`t go to the bank or the SBA - they only fund businesses that don`t need money.  Find an angel or some other investor (after you`ve proven it will sell and you can build a loyal customer base it won`t be hard).  Find one who will accept a better than average interest rate (don`t give away ownership) - guarantee the loan with your personal assets (after all, you`ve already proven it works).

8) If you`re only recourse is to borrow money from a bank or the SBA, ignore the seven steps above, then spend countless agonizing hours putting together an excruciatingly (thick) detailed business plan and hope they don`t turn you down because you don`t already have all the assets in your business to more than cover the loan.

If you can 1) sell your product and 2) retain repeat buyers 3) for a profit, then all the rest of it starts to matter (websites, incorporation, bank relationships, 3 year projections, etc.)    Until you can acquire and retain customers for a profit, the rest of it is just a lot of hard office work.

Be profitable!

Chuck


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Team Nimbus facilitates peer teams who advise each other from their collective business experience to raise profits in less time, so they can focus on the passion that brought them into business in the first place. We help move their business from survival, through profitable success, to significance.

I agree. Find out if you can make money with your product first. Everybody has great ideas-but will they sell? When you get ready to find stores to sell your product, contact me. I built a small website for a high-end baby/kids store in Jacksonville, and I will give them your contact information!

A lady I met decided the same thing, to put up a Web site, be of goof faith, offer a product, and make some money. She didn`t get too involved in all the legal stuff, figured her product wouldn`t hurt anyone, and it wasn`t that difficult to just set up a business.

Then her site was hacked, orders were shunted to a different location, money was taken, and no products shipped. Soon, she began having complaints, then eventually lawsuits. She shut down the site, realizing she had no protection at all in any form. She we personally liabel for damages. When I met her, she was about halfway through paying off about $50,000 in resulting debt.

I don`t much care for the expression, "Look for the best but expect the worst." To my way of thinking, that`ll almost guarantee that you`ll experience the worst. That being said, I also advocate using one`s brain, thinking things through, and predicting likely scenarios based on those who`ve done the same thing before.

Learn from the past, otherwise you`re doomed to repeat the same mistakes. That doesn`t mean freaking out, going into a depression, and becoming a cynic. It doesn`t mean giving up before even trying to create something new. It only means having a reasonable regard for reality, the world around us, human nature, and typical business safeguards.

First sell some product to a few people to see if anyone wants it at all. That`s a feasibility study. If they do, then talk to the many others who`ve started businesses, just as you`re doing. Do what you can afford in terms of covering your bases, and wait until you can afford it before getting in over your head. You don`t have to go from Step 1 to $1-billion annual revenues overnight! You have some time before you die of old age. :-)

Start by selling product. Proceed with getting professional advice. Continue selling more product on the basis of that advice.

A freind of mine is assisting her daughter with a process like this. The daughter has designed a high end piece of baby gear. She found a regional manufacturer to make 50 pieces. Now she is shopping it around to specialty (high-end) baby boutiques in the area. She also somehow landed a meeting with the buyer for the Nordstrom baby department (they are headquartered nearby).

You should have a local/regional parents type magazine. Upscale specialty shops usually advertise in these as they are aimed towards more affluent parents. Hope this helps.

One more idea: once you have located local specialty retailers, depending on your budget, you could offer to split the cost of a display ad (approx. 3"x5")running in the local parents magazine/newspaper with them. Your display ad would of course be for your product, but would include something like: "Now available at such-and-such store". Offering to help defray the cost of advertising that will help them get more customers in the door could be your ticket to getting your item on their shelves.

For my 3 1/3 cents take an each way bet.

 

Start with a 1-2 page business plan in bullet point with three sections;

 

1 What I need to start:

Licences, insurance, and other essentials.

 

2 What I need to do very quickly In the first few months:

Small batches, trial marketing, trade shows, pricing, paypal, credit card facilities etc

 

3 What I need to improve in the long term once I have established:

Staffing, procedures, new developments in product/ marketing, selling into chains, moving out of the home office, branding PR etc.

 

Initially I would think, do, review; that is think of something to start or improve, try it on a small scale then review what happened if it works, keep going and think of ways to improve it , if it doesn’t live up to expectations then learn from it and think of a new approach and repeat the cycle building up as you go.

 

Regards

J

 

 

Okay.  So how does this sound?  I get insurance (how do I know how much I need, by the way?), I trademark the business name, I get a website up and going.  Will I then be ready to start contacting businesses?  What else am I forgetting? 

By the way, I just wanted to thank all of you who are taking the time to answer my questions.  It is very much appreciated - every one of you.  I`m lucky to have found a site with such intelligent, successful people.  Thanks!