How to start a product-based business – three case studies
Are you trying to launch or grow a product-based business? Read three clever ways product-based entrepreneurs overcame common start-up problems.
Launching a new business is exciting and exhilarating – with lots of firsts, highs and successes to be enjoyed along the way. But there will also be bumps in the road.
Product-based businesses face unique challenges
Running a product-based business has its own set of unique challenges. From careful stock management and precise forecasting, to sourcing and ordering raw materials, and creating/manufacturing enough product to meet demand – there are lots of hats you’ll need to juggle if sales (and profits!) are to be maximised. And that’s in addition to making sales, marketing your business and so on.
All of this can be highly challenging for a start-up or business with limited experience and no sales history to use as a benchmark for future forecasting.
So, how do you overcome these challenges to ensure a thriving business?
How three business owners have overcome their challenges
Paula Hutchings from Marketing Vision Consultancy has worked with numerous start-ups and small businesses in the UK and Australia, including a number of product-based entrepreneurs.
Now she’s sharing the experience, advice and practical steps taken by three women to overcome the challenges they have faced.
So, if you’re a product-based business looking for inspiration, grab a cuppa, read on and be assured that you’re not alone in your struggles!
Challenge 1) Tracking sales and managing stock
Carol Lovell, founder of luxury leather accessories brand Stow London, sells through a number of prestigious retailers including Harrods and Fortnum and Mason. Carol advises that it has been imperative to track sales carefully and to create an operations manual for each area of operations. Here’s her advice:
Keep accurate track of sales by sku (stock keeping unit code) and write an operations manual. From day one I would recommend these are two things you must start and keep up-to-date as the business grows. They will become vital to future success for ordering correct stock quantities and building a strong team.
The first is keep spreadsheets to track and forecast sales by product line and in our case, colour. From day one. Allocate each line an in-house sku and EAN (bar) code if you are selling to retailers. Add your sales channels to the top of the spreadsheet and products down the left hand side. Track them weekly.
Keep weekly stock spread sheets too: Our plan is to invest in a software package that will speak to our various online and retail sales channels and quickly update and analyse both stock and sales on a minute by minute basis.
But for now, good visual spreadsheets suffice and have insured we don’t over-order a particular line as we now have three years of trading history to rely on, where we can see peaks and troughs by line and by month.
Create an operations manual from day one: As the business grows, and we get involved in new processes we now keep and update an operations manual for each part of Stow’s operations. When someone new (full-time or part-time) starts they receive usual induction training, but can also refer to the manual for a specific process.
This is especially helpful for the fulfilment process but can also be related to any area of the day to day functions of the business, such as receiving stock, sending stock out, responding to enquiries, taking payments etc. It saves huge amounts of man hours and can be written by any staff member currently doing that role.
Challenge 2) Managing seasonal fluctuations in product orders
Martha Keith, founder of delightfully illustrated personalised gifts and stationery brand Love Give Ink, has put systems in place that enable them to manage seasonal variations in product orders. Here’s her experience:
As a personalised product-based business, one of our biggest challenges is coping with the seasonal fluctuations in orders. At certain times of the year, for example Christmas or Valentine’s Day, orders can increase by 10 fold, which puts huge pressure on our production capacity.
To manage this, as well as re-forecasting weekly sales on a regular basis, preparing products during quieter periods and outsourcing where possible, I put a huge focus on the skills and flexibility of our production team.
As well as having a core team of permanent production staff who are trained on multiple processes and recently employing a Production Manager, we have built a network of local self-employed people who are happy to help on an ad hoc basis. This way our team can expand at very short notice to cope with
It is a constant balancing act, and we are already planning now for this Christmas to make sure we get it right!
Challenge 3) Structuring your day to maximise productivity (and profitability!)
Kate Box, founder of independent knitwear label Kate Box Knitwear uses her mornings to tackle the tasks she likes least! Fresh from a good night’s sleep, Kate is at her best first thing in the morning and can whizz through things. This approach frees Kate up for the rest of the day to be able to work on the aspects that she most enjoys. She says:
My biggest challenge is the juggling act between the creation of my product (every item is handmade by myself), and managing all the other of aspects of running a business such as admin, marketing, PR and the part I love most, the designing.
The best way for me to cope with this constant juggling act is to work on the bits I find the hardest (for example the admin and PR) in the mornings. Mornings are when I’m at my best and I’m able to complete these tasks confidently and efficiently. I save jobs that I know I am good at (designing and production) for the evenings, as its work that I enjoy and can savour.
Another big eye opener for me has been outsourcing work as and when I can afford it. There are always going to be facets of running a business that I’m not good at and will be best left to someone experienced in that specific area”.