Historically, building a real business takes years. And, launching one can take months, but things have changed – for the better, many would argue.
If you’re intimidated by the prospect of starting a new company, this story may provide you with some valuable clarity, even if you’re a first-time founder.
“Doesn’t matter who you are, it can be done,” explains to 21-year-old entrepreneur Adam Stinson, who just launched his doggie CBD product, HelloCBD, following a trend toward “plants over prescriptions”.
The key here is that an eCommerce business with a dependable supply chain has similar potential for scale, compared to a high-tech startup or any other business that might take hundreds of thousands of dollars and months or years to launch.
Three Steps to Starting a Scalable Business in Record Time
The intention here is to NOT sacrifice scalability for speed to market and cost.
When I first met him, Adam was planning to take out a business loan to buy a relatively-mature eCommerce business for between 200K and 1M – using some cash for down payment and a loan for the rest. The cost and risk associated with this approach seemed immense.
He decided to start one himself instead of spending valuable cash or getting a risky loan to buy one. Here’s how he did it.
Step 1) Pick a Winning Business That Requires Minimal Up–FrontInvestments
When scanning the opportunities that come across your desk, there’s going to be a lot, usually an overwhelming amount and most of which require a ton of up-front capita or a loan.
Instead, focus on how smart you can get on reducing costs, improving operations, and increasing margin. Effectively, try to understand: ‘how well is this business designed?’
No matter what stage you’re at, you should be thinking with the mindset of “how little can I spend” versus “what can I do?”.
Storefronts require rent, stock, employees, insurance, and much more. Startup seed rounds range from 250K – 2M, and any service business requires a ton of hands-on work and marketing dollars.
eCommerce is an ideal space because there are amazing platforms like Shopify and WordPress / WooCommerce that make it so easy, even grammy can do it.
Another consideration for reducing up-front investments is to sell a product that doesn’t require any physical presence, like an office or storefront.
Step 2) Pick a Niche That’s Trending
You don’t need to be a genius to spot something going viral. Why not follow along? Most products that are gaining in popularity are going to be growing for at least 6-12 months (assuming it’s not a sketchy or gimmicky product).
Of course, you need to be discerning here as well. But, using your intuition, you should be able to select a product niche that’s both growing in popularity but also not overly saturated.
Shopify’s recommendations include, based on demand:
- Men’s plaid shirts
- Travel accessories
- Automotive accessories
- Minimalist jewelry
- Heated vests
- Ankle boots
- Posture correctors
If you don’t have an appetite for the edgy products like CBD, the categories recommended by Shopify are a bit less risky.
Just make sure that it’s something you’ll enjoy selling – both ethically and logistically.
When choosing your niche – think about “what’s easy to sell, growing rapidly, and is digital-friendly?”
CBD is intriguing for a few reasons: It’s legal in most states and can ship nationwide, if “hemp derived”. Meaning, down the road, mass adoption will occur more and more as public perception becomes more “used to” seeing it, and regulation opens up.
Beyond that, the space is expanding extremely rapidly. Demand for “CBD” on Google has doubled since the beginning of 2018.
Lastly, the product also works.
Step 3) Ensure Your Operations Are Simple and Scalable
The most important consideration when evaluating an internet-based business is whether it can grow without significant time requirement from you, the founder.
Brick-and-mortar companies are unwieldy, particularly because they require physical product, warehouse space, and more. Instead of stocking actual product, you’ll want to have something that your manufacturer can ship directly after an order comes in. Or, a low-cost raw product you can store, ship, and fulfill quickly and cheaply.
If fulfillment is handled by a warehouse or distributor, an increase in orders won’t require more time from you necessarily.
The thinking here is as so: visualize what would happen if you got 1,000 orders today. What would happen? Where would breaks occur? What struggles would you have?
If none, great!
If that scenario means a lot of work, consider how you can streamline.
Price and Time to Market
While there are countless options for businesses, the two most important facets that affect your ability to make money are price and time to market.
HelloCBD launched in just 30 days. They sold and shipped their first two customer products the day he launched.
Think lean, think fast.
If you have questions, comment below! I’ll answer.
JMOpinions expressed here by Contributors are their own.