10 tips for turning your idea into a successful business.
One of the hardest parts about having a great idea for a new product or service can be figuring out a way to sell it. The many options for structuring a business, funding it, and reaching customers can make even the simplest decisions feel monumental and overwhelming.
Do market research.
Before you do anything, you'll need to make sure that there's a market for what you're selling. The most economical way to conduct this kind of research is by getting feedback from friends, relatives, and others in your network. Make sure your product or service is something people are willing to pay for.
Check out the competition.
In addition to getting feedback from your friends-and-family focus groups, do some online research. Find blogs about your industry or visit stores that sell similar items. Look for gaps that your product or service could fill.
When Daniel and Stephanie Rensing were getting ready to launch their company, The Smart Baker, they carefully examined other products already on the market. They took their first product idea – an apron with cooking measurement conversions printed on it – to local craft fairs and other events.
Dot your i's and cross your t's.
Getting the proper licenses, registrations, trademarks, and patents are the most important aspects of becoming a small-business owner. Business registrations and tax filing requirements vary by state, so these entrepreneurs recommend investigating what resources are available at the state level to help you get started. Go to local business events, like those often held at community colleges, to learn tips from other business owners for navigating the back-end paperwork. Consider hiring a professional — like an attorney or accountant — to help you get off the ground. Our veteran entrepreneurs also advised checking out the resources available through the U.S. Patent and Trademark Office.
Use an all-in-one e-commerce solution.
When you decide to launch an e-commerce business, you need to ask yourself some very important questions. Will you be able to manage shipping and fulfillment? Do you have space to store your inventory? How are your computer skills? Can you build your website yourself or will you need to hire a web developer?
Pay more when buying bulk costs less.
This might sound counterintuitive, but there's a method to the madness. One of the most important things to remember when you're a small business is that you need to operate differently than a large business. Spend in small increments to reach short-term goals. Don't invest as though you have already reached the longer-term goals of becoming a larger company. “Use your size to your advantage," says Wyzisk of Earhoox. “Don't think you are bigger than you are."
As sales build, you'll want to make sure you have enough product to meet demand, while keeping your overhead to a minimum. Find the right schedule for ordering that keeps your product in stock without getting out too far ahead of future orders. Be clear about who you're targeting and how you're going to fulfill those orders. Going too broad too quickly can be a real strain on your resources.
With an early-stage startup, you're probably relying on relatively little capital to fund your dream. Make sure your budget can reasonably accommodate your needs, while fitting within your limited resources. And stick to it!
Financing your startup.
Think long and hard about how quickly you really need to ramp up your business before asking anyone for money. If you feel awkward asking family and friends to borrow money to fund your startup, think about how embarrassing it would be if you couldn't pay them back.
Before you try cashing in your 401k, there are other financing options you should explore. Rensing of The Smart Baker suggests researching grants created to encourage small-business development – the U.S. Small Business Administration (SBA) is a good place to start. You can also look into your state, county, and municipal resources for local grant and funding opportunities, but keep in mind grants can be hard to come by (and the funds may not be immediately available).
If you need fast access to cash at a competitive price, visit our business loans page to learn more about small business financing options.
Give yourself room to grow.
Remember that outsourcing roles like fulfillment and customer service can be a huge help once your sales ramp up. Goodman and his partner Griffin Thall, founding partners of Pura Vida, tried to manage shipping and customer service themselves at first, but they soon found they could run their business better by outsourcing those functions to specialists.
By using a third-party logistics firm for shipping and a professional service provider for customer support, Goodman and Thall could spend their time on tasks with higher returns. Instead of juggling fulfillment logistics and answering phones, they were able to focus on growth, product development, and managing their core team.
Hire someone who shares your vision.
Once your business idea become reality, it's time to think about branding. How will you package your product? What colors will you use on your website? Who will design your logo? These decisions may seem like small potatoes compared to the financial and legal hurdles you've already overcome, but don't underestimate their importance.
Branding is more than eye-catching colors and a cool logo. There are logistical elements you need to consider. The key components of your brand need to be easy to reproduce – whether it's online, in print, or on packaging – and the design elements need to maintain their integrity, even in lower resolutions or black-and-white. This is why it's important to work with a designer who has experience in branding.
Use social media.
With the expansive reach of social media, you don't need a giant advertising budget to reach consumers. Loyalty programs can be powerful tools to drive engagement and, ultimately, purchases. At Earhoox, founders Wyzisk and Becker started by offering incentives to new followers on Facebook, such as free shipping and buy-one-get-one-free offers. Now they use social platforms to drive people to their website where customers can earn rewards for referring friends.
“That has been enormously powerful," says Becker. “We got 1 million visits to the website in the first two weeks, and we've been using that model ever since."
Connect with influencers.
Bloggers are looking for products to write about, so why not give them what they want? Screen potential candidates to make sure they have a wide reach and then decide which ones are the best match. The possibility of putting your product in the hands of a blogger's few thousand followers is likely worth the small upfront cost of sending a couple free samples. Just make sure to clearly communicate your expectations for the product review – the number of mentions you get on social media, pictures you can share on your own pages, etc.
You got this.
Starting an e-commerce company is a challenge, but it's one you can face with a little bit of guidance and proper planning.
SmartBrief is the industry leader in curated business news and custom content. Serving more than 5 million senior executives, thought leaders and industry professionals, SmartBrief is the leading online publisher of targeted business news and information by industry. Our editorial experts have knowledge across industries and sectors, ensuring your content is relevant, timely and high-quality. SmartBrief is ready to partner with you and your organization on all your content needs.
More than just payment processing, PayPal has solutions for every stage of business. Get tools to build your business, services and support for your day-to-day operations, or help finding the financing to expand into new markets. PayPal is the partner that grows with you. So, whether you’re selling at a local farmer’s market or to our more than 267 million accounts in over 203 markets around the globe, PayPal has you covered. Learn more.