The Art of Growing a Start-up

The Art of Growing a Start-up

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Question:

A young entrepreneur who holds a full time job while trying to launch his stationery distribution company is experiencing difficulty increasing his sales without increasing costs.

Response:

This entrepreneur asks a question, but at the same time teaches us valuable lessons – this is wonderful!

He has set up a part-time business supplying stationery. He uncovered a need within educational institutions for an ongoing supply of pens for sale to the learners, and in internet businesses a sporadic demand for printer paper. He supplies and delivers to them as they require. Lesson one: He is providing the customer with a solution more than a product. They could go off to a large stationer and buy cheaper, but he offers the convenience of delivery when required. We keep saying “find a need and then satisfy it,” but how many businesses are doing it as well as this entrepreneur?

Because he works full time he supplies customers on the route between his home and work. Lesson two: Don’t drive past potential customers to get to others. How many entrepreneurs can say hand on heart that they have canvassed every potential customer around them or on their delivery routes? How many times do entrepreneurs drive to the airport heading to another city while passing hundreds of businesses who don’t even know their company exists? Take a lesson from this smart entrepreneur.

How to grow the business

So now to his problem – he has to grow the business for it to become self-sustaining. His costs for delivery are high if he cannot supply on his way to or from his office, while his volumes and margins are small. How does he grow the business within the limitations of it being a part-time activity, and with very limited funds for marketing? He can’t even canvas during the working day.

He needs to apply the same smart thinking to these challenges as he did in setting up originally. For instance, if he can’t canvas during the day, can he find potential customers which are active after-hours or on weekends? Think of any facility where people write, fill in forms or print which is open outside business hours. A great way to grow any business is to look for the ‘neighbours’. These prospects are found by asking the question “which businesses are most closely connected to, or closely resemble my current customers” and then approaching them.  So for instance if he was supplying the trader who sells pens at a licensing office he would ask himself ‘where else are there lots of people filling out forms who may have arrived without a pen?’  The opportunities are obvious.

More sales

The second immediate growth opportunity is to sell more products to the same customers. He may find the educational institutions also need erasing fluid, inexpensive calculators or highlighters. But he also should not wear blinkers and confine himself to stationery – perhaps there are needs like tissues, shoelaces, tennis balls or memory sticks?

In order to grow using this concept he needs to talk to his customers to find out what products they need, but find it inconvenient to send someone to buy. Then he should help the customers to develop demand for the products and advertise availability to increase sales. Simple posters or display stands may be all he needs. Lastly he needs to build word-ofmouth for his business. He should get professionally printed business cards and print small glossy brochures that showcase his great service. He should ask all his customers and friends to give them to everyone they know who is in the right area.

Delivering the goods

Deliveries will continue to be a challenge unless he can grow the business to the point where he can run it full-time. A possible solution may be to piggyback on deliveries going to his customers anyway, or to hire a scooter driver on a demand basis. But in this case he needs to check out the legalities and any license issues. Finally, and I hate saying this, but some business problems will never be fixed by trying to ramp up sales. If this proves to be the case here, he may need to think of restructuring the business, for instance by letting someone run it full-time while he takes a share of  the profit.

Ed Hatton
Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.