business
Business

Starting a Product-Based Business: What You Need To Know

If you’ve decided or are thinking of setting up a company to sell a product, there’s much to think about even if you’re already certain there’s a demand for your offering.

Each element from the product itself and its packaging right through to final dispatch requires planning and provision. For example, putting in place modern warehouse inventory management systems can be a huge help in achieving accurate and efficient order processing.

So what should you consider with a product-based business?

Product viability

Demand – ensuring your product is needed is a somewhat obvious first step, but a step others have founded over – lack of demand is a prime reason for business failure.

Profitability – can you make a profit from your product? A viability study should be undertaken so you can judge whether the costs of providing your product are exceeded by the price you can charge.

Even if there’s a demand, if you can’t charge enough to make a profit it’s not viable.

Write a business plan

A crucial step and linked to the ‘viability’ study above.

You need solid business objectives and clarifications of how you’ll achieve them in terms of sales, revenue, cashflow forecasts and a marketing plan.

Investors and other potential funders such as banks will expect to see a detailed business plan; it may change over time but it’s your road map.

Check licensing and permit regulations

Even selling products nationwide from your base online could well entail a permit or license depending on whereabouts in the US you are, so check carefully what you may require.

Business structure and taxes

How you set up your business regarding its legal structure is an important decision as it will have a bearing on your tax affairs.

Be aware of what taxes your business could be liable for over and above income tax.

Your location

Think carefully about location even if you’re operating in a small way and dispatching products from home. For a start, your town or city may not allow businesses to be run from home due to possible zoning regulations.

If you’re considering a bona fide business premises, think ahead a little. For example, the least expensive option may be tempting but will it be enough if and when you grow? Perhaps the costlier yet larger unit may be a better choice.

Product and brand protection

Ensure an original product is protected by necessary patents and trademarks, and protect your brand and logos.

Packaging

It’s tempting to go with the least expensive packaging, but it’s your customers’ first ‘experience’ with you and your product.

Appearance and effectiveness of packaging matters; think of the lengths companies like Apple go to with theirs.

Infrastructure in place

Ensure your product supply infrastructure is in place; reliable, easy to use order processing systems as mentioned earlier should be ready.

Customer contact methods and routines should be settled on, and your selling mechanism (e-commerce website for example) should be fully operational and tested.

Don’t leave anything in the ‘sales machinery’ side under developed or not in place before you launch; you want to be able to focus on providing the product once you’re operational – not tending to the mechanics.

Related and follow up products

Not many businesses can rely on only one product, and it can also be a missed opportunity not to offer more.

On the one hand you’ll need more products to stay in business, but related products can help you sell more to existing customers. Successful retailers offer related products such as Amazon’s “if you like this, try this” approach – so offer your customers more and build a relationship with them.

Twice as long

Be aware it could – and maybe will – take twice as long as you think to reach the stage where your product is actually on sale from start up. Ensure you’re in a position to take more time if required rather than risk being under prepared.