Some call it superstition, some say it provides powerful motivation. Whatever your thoughts, ringing in a New Year has its way of lighting a fire under those of us with a dream. This is an especially meaningful time for entrepreneurs, or aspiring entrepreneurs, to strategize a strong foundation upon which to build those dreams.
This foundation begins with a plan. It’s most likely that you are building what I call a “lifestyle business,” so it’s best to keep it rather simple. A great plan for a lifestyle business (one that provides the income to live a comfortable life and/or save for the future) includes basic accounting and, most importantly, a solid marketing plan. Follow these steps and you’ll have a true formula for success in 2017 and beyond.Research FDA guidelines and other legalities.
Many fatal mistakes in business can be avoided; using ingredients that the FDA may question is one thing you certainly want to avoid. Do your homework by visiting http://www.fda.gov/Cosmetics/default.htm
Liability insurance is something that too many small business owners lack, mostly because they believe they can’t afford it. Honestly, the question to ask is, “can I afford NOT to have insurance?” Handmade Artisan Insurance (https://www.handmadeinsurance.com)
offers a simple, easy and affordable solution.
Speak to your accountant about incorporation, tax filing and business registration (if required in your county or city). Equip yourself with this information at the onset because surprises from the government are never a good thing!
Lastly, for quality control and your own protection, keep batch records on every batch of product you produce. These records include details such as ingredients and amounts used, and exactly how you made the batch. Determine your brand and unique value proposition.
Why do you think people will prefer your product over other brands? There’s vast competition in the cosmetics field, so you must stand out. Don’t let this discourage you because competition is a good thing; larger brands generate awareness and interest. Let the big guys invest the marketing research dollars so you can learn from their findings. Follow in their footsteps, but make sure to put a different spin or creative twist to your product and brand message.
Once you have identified your unique value and selected a company name, hire a talented artist for logo and packaging designs. Professional design is an investment that pays back over time. If you don’t know a good designer check into professional freelance sites like upwork.com.Test your idea for consumer interest and opinion.
Your mom, friends and co-workers are a good place to start, but these people love you so you’re not likely to get an unbiased opinion here. Once you’ve developed recipes that adhere to FDA guidelines, roll out a sampling campaign. This will not only tell you if people like your product, but will give you an indication of consumer interest in general. Some startups do this via crowdfunding platforms, some perform focus groups, and some ask acquaintances to host house parties. Get creative, how can you get one or two of your products into the hands of your target audience in exchange for honest and unbiased feedback? Prepare a solid marketing plan.
Please do not subscribe to the “if you build it, they will come” mentality. While they are critical components, a website and Facebook page will not make your products sell. Even if you have no intention of seeking investment from venture capitalists, take a lesson from their playbook. These savvy investors only invest in companies with a proven marketing strategy. This means the companies have repeatedly acquired customers by following a specific formula, and they know exactly what it costs to acquire each customer.
What combination of activities will draw customers to your product? Some things to consider are: selling locally at craft shows, an Amazon or Etsy store, selling from established brick and mortar stores, or opening your own brick and mortar store. In terms of your website, Search Engine Optimization (SEO) is key. Blog frequently and familiarize yourself with other online marketing strategies before you build your website. To avoid hefty consulting expenses, consider marketing coaches who offer group and self-study courses on online marketing. One of my favorites is The Bacon System (http://baconcoach.com
), taught by Brian Basilico. Know your numbers.
Creative people don’t always like numbers. This is simply a fact; it does not provide you with an excuse to ignore them. You must take everything into consideration when pricing your products or you risk operating at a loss. Keep track of your numbers and pull a profit and loss statement monthly. Also, avoid false assumptions like: “my time doesn’t cost me anything”, and “I make the product in my kitchen so I have no overhead”. Educate yourself through an accountant who specifically works with small businesses. You can also obtain free advice from volunteer advisors at www.score.org
Lastly, here’s an all-time favorite tip from my own planning process: Book yourself into a nice hotel for a couple of nights and take advantage of the quiet, relaxing environment while you research and plan. It’s so much more fun when you do!