In the first couple years, small business success has more to do with achieving benchmarks than profitability alone. These benchmarks are reached via a mix of the marketing, financing, and money management tools discussed in earlier episodes, culminating in a clear path to growth and profits.
Emily Doyle and Mei Kwok, founders of Dune Suncare, have experienced substantial growth in their first three years, despite not yet being profitable. In this episode of Mind The Business: Small Business Success Stories, they’ll share some of the early decisions they made that have helped their company be successful. Listen to the full episode below.
A plan to be profitable: 3 business strategies at work
Dune Suncare might not be profitable yet, but Doyle and Kwok say it will be soon — very soon. Here are three of their ongoing strategies to be profitable in year four.
1. Operate as a lean machine
“We’ve been incredibly lean,” admits Doyle. “We’re a two-woman band. We work with an onslaught of freelancers, contractors and agency folks, but Mei and I are running every corner of this business by ourselves, and have been for over three years.”
2. Get finances right from the start
“One of our longest-standing and most valued partners is our finance and ops team,” says Doyle. “They’ve been with us for over a year and a half. They’ve really helped build our entire financial model, projecting for the next five years. We’re constantly updating that to input actuals and input updates, based on new relationships that we have, or sell through expectations from retailers, etc.”
Doyle says it’s imperative to build a strong business infrastructure right out the gate. Waiting to hire a finance team can set a business up for failure, with messy books, delays, and jeopardized relationships with vendors.
3. Find and secure the right partners early
Being in the skincare industry, Kwok and Doyle knew it was important to find a PR firm that could get the attention of big-name retailers. “Our PR agency [helped] drive our long-lead press and our short-lead digital press,” says Doyle. “Initiatives prior to launch put us on the map, and they absolutely blew it out of the water.”
With their agency’s help, Dune Suncare was featured in publications like Vogue, Elle and Vanity Fair. “We made Oprah’s June O list. … We were off to the races.”
A chance to sink or swim: Overcoming supply chain issues
No new business makes it through the first three years unscathed. Those that weather the storm, however, generally come out with unique strength and perspective — including Kwok and Doyle, who encountered supply chain issues along the way.
“I would say the biggest hurdle for us was about five months pre-launch,” says Doyle. “We had gotten a call from our packaging supplier and a contract manufacturer we were about to go into contract with [and] learned that our packaging was not going to be able to deliver [on time].”
“We found the right partners that can meet our deadline and goals.”
Kwok and Doyle were told their product launch would be delayed until September, causing them to completely miss the sun season. “We had already raised capital, so we had investors and partners that were heavily counting on us for a summer / pre-summer launch,” Doyle explains. Adding insult to injury, they were also informed that because of raw material shortages and ships being held up at port, everything they’d ordered was going to be twice the cost.
“We were devastated. I mean, we thought for sure that was it,” says Doyle. “Mei and I scrambled to find new partners that would help us launch in time and at the price points we needed to offer accessible formulations, and we were able to pull it off. But yeah, that was … that was the time when we felt like, this is really a make-or-break moment.”
In the end, Doyle and Kwok were able to overcome their supply chain issues by finding vendors that could meet their needs. “We did a lot of vendor vetting,” says Kwok. “We [met with] every contractor or raw material supplier possible. [In the end,] we found the right partners that can meet our deadline and goals.”
Kwok and Doyle set manageable benchmarks to make it through their first few years. They knew there would be rough seas ahead, but so long as they kept their eyes on the next goal, they’d be okay. To hear more of their story and find out how Dune Suncare is doing today, check out the full episode.
This article originally appeared on QuickBooks and was syndicated by MediaFeed.org.
5 tips for organic business growth
It’s no secret that startups have a prodigious failure rate. In fact, according to a recent Entrepreneur.com study, the four-year survival rate for a startup is just 49%.
With demoralizing stats like this in mind, entrepreneurs may be tempted to grow their profits through any means necessary, including inorganic strategies like acquisitions or mergers. However, the truth is that business owners can achieve impressive growth through organic strategies as well, allowing them to retain control of the companies they built from the ground up.
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Also known as “true growth,” organic growth refers to the process of growing a business by reducing costs and increasing sales, either by finding more customers or enhancing output to current clients. On the other hand, inorganic growth occurs when a company merges with or is acquired by a second business. Entrepreneurs should take the time to familiarize themselves with the advantages of organic and inorganic growth, as well as some of the top strategies for execution, so they can decide which is the best choice for their business.
As a new business owner, you’ll likely want to increase profits as quickly as possible. By employing inorganic strategies like mergers and acquisitions, startups can grow their businesses more quickly while taking advantage of resources such as stronger credit lines and expanded market resources. Additionally, joining with another company lets you take advantage of its expertise and experience in the industry to develop your own brand.
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By merging with another business, you agree to hand over some of your control and equity to another company. Not only can your initial vision become diluted, but you may also be forced to take on new business and managerial challenges before you’re truly ready. In some cases, you may have to rush to grow your staff and production capabilities to keep up with demand.
On the other hand, organic growth techniques allow you to grow your business on your own timeline. Because you aren’t sharing control with another company, you can hire employees and expand sales at your own pace. Additionally, entrepreneurs who maintain their autonomy now can sell for a larger profit later when the company is fully developed.
While retaining control of your company offers many advantages over the long haul, it can make business growth challenging in the short term. Some entrepreneurs struggle to grow beyond their current marketplace, while others find themselves cut down by the competition. Additionally, new businesses must often fight to make ends meet from month to month. Fortunately, strategies exist to help startups grow their profits without handing over control to partners or investors.
Here are just a few of those strategies to help you grow your business organically:
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Want to grow a business that will feed your family and employees for years to come? The first step on the road to entrepreneurial success is starting the right kind of company.
With home-based and e-commerce businesses, you can avoid expenses like rent and commuting during the early, lean years of your company. As an added bonus, working out of the home lets you write off parts of your mortgage and electric bill. You can then invest these savings back into the business to help you grow in the long term.
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A common conundrum for new business owners is whether to take your full cut of the profits or invest the money back into your company. While you may be tempted to keep some of those hard-earned dollars for yourself, you should aim to reinvest gross profits whenever possible to help your business grow. Investing your own money shows prospective clients and lenders that you are confident in your company’s long-term potential.
Not sure where to put profits? When in doubt, invest in marketing, SEO and other tactics likely to generate more business for your startup. If your income permits it, you may also want to invest in employee training and technological improvements, as these can yield large profits down the line for your company.
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No matter how happy your current clients are with your offerings, you will have trouble growing your business organically if you don’t put effort into finding new sales channels. If you don’t currently sell your goods online, you should definitely consider starting a website to expand your reach to other regions. Additionally, you can introduce new products, cross-market services to your existing clients and expand to different markets. For example, a company that specializes in SEO may want to expand its services to include social media and search engine marketing.
Finally, business owners should employ market segmentation to customize their strategies according to the specific channels they are leveraging and the specific markets they are trying to reach. This way, you can create unique campaigns based on customer location and demographics and watch your sales rates skyrocket.
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As a new business owner, you may feel the urge to micromanage everything that happens at your company. However, the truth is that macro-management is a far more effective way of enabling organic growth for your startup.
To keep your company moving forward, you should train top employees to take over some of your daily responsibilities. While you may be tempted to keep costs down by hiring employees who will work for less, in the long run these staff members could end up costing you more if their efforts aren’t up to par. Find people you can trust to get the job done—even when you’re not around—so you can focus on growing and developing your business in the years to come.
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From minimizing spending, to reinvesting profits back into the business, organic growth strategies help ensure that you will retain control of the company you worked so hard to build. Do your research, and consider all the growth strategies available in order to give your business the best shot at success.
Do you know how sales taxes are impacting your bottom line? Check out our sales tax calculator.
This article originally appeared in the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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Featured Image Credit: shapecharge/istockphoto.
