What inventor hasn’t dreamed of having a big-box retailer sell their product? When Walmart purchasers decided to order one of my inventions years ago, I learned just how hard fulfilling the needs of a chain business can be. I wouldn’t say we were prepared, but we managed to get it done.
The truth is, there are so many things I wish I had known in advance. So I recently sat down with Tom Gray, an entrepreneur who has been finding, designing, manufacturing and selling consumer products for nearly two decades now, to pick his brain.
Tom began working with the world’s largest retailers in Australia. Now based in the U.S., the founder and CEO of The Handy Camel communicates regularly with inventors and major buyers including Home Depot as alike.
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These are his thoughts on the roadblocks that most often plague fledgling businesses and independent inventors en route to the big boys.
1. Proven history
Many buyers won’t agree to test a product in their stores before it takes off elsewhere. They’re risk-averse. They want to sell popular products at the best price, not debut new products.
At a trade show you might hear a buyer say, “We love it, but you’re not big enough yet.” It’s just a reality.
A distributor might be interested, but you need to be careful: Now you, the independent stores that carry your product and your distributor are all trying to turn a profit. But if your product ends up costing too much on the shelf, it won’t sell.
Inventors need to know: If your product costs a dollar to manufacture, and you get a retailer to purchase it from you for R15, you’ve done well.
What do I mean by that? Big-box retailers have a keen grasp of manufacturing costs. Inventors tell me, “Well, it costs a dollar to manufacture, so I’m going to offer it to them for R40 or R50, and then they’ll turn around and sell it for at least R100.” No. Companies are never going to pay you that much. Margins are low and competition is high.
Another note on pricing: At first, you’ll be tempted to allow anyone who offers to sell your product for you. But don’t forget to set a minimum! Say a price war breaks out on Amazon, and someone ends up selling your invention for R49. Home Depot is not going to want to sell it for R99 after that.
3. Marketing costs
You invent a product people love – after you demo it, that is. Your product might be the coolest in the world, but it’s not going to sell itself simply by sitting on a shelf, unfortunately.
If people don’t have a clue what it does, you’ll need to educate them. Effectively getting the word out can be costly.
Overseas imports can result in huge cash flow problems. You’ll need to account for the fact that you’ll have to pay your manufacturer six to nine months before a retailer pays you.
5. Reaction time
If you receive an order and are unable to fulfill it within a certain time frame, you’ll be penalised.
6. Buyer rotation
Establishing a relationship with a buyer can take time, but you don’t have much, because they’re frequently moved between departments in an effort to reduce favoritism. So, be aware that there’s a good chance you’ll have to go back to square one with a new buyer at some point.
To make room for your invention, they’ll need to dispose of another product. And that’s why you see rows of more or less the same brand in some aisles.
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These brands have major marketing power. How can you compete? Eliminating a big brand product favour of a no-name brand is difficult to justify.
Getting set up will feel like it is taking forever. As a new vendor, you’ll have to tackle everything from insurance to training to mastering their computer software system – all of which will take time. Budget for it. Your monthly overhead won’t stop.
Don’t be dissuaded. (If you’re anything like Tom and I, like we even could dissuade you.) Our intent is to open your eyes to the reality at hand.
Tom says to be prepared to spend at least two years gaining the momentum needed to work with a big box retailer to get your invention on its shelves, and I fully agree.
“This is not for the faint of heart!” Tom says. He, and I, wouldn’t have it any other way.
This article was originally posted here on Entrepreneur.com.
What Can Businesses Expect From The Future Of Work?
While the future of work will always be a constant process of innovation and change, here are a few things that business today can expect in the near future.
The phrase “future of work” is something professionals have been talking about since the birth of the traditional workplace in the late 19th century.
Once defined by cubicles that were arranged neatly side by side with meeting rooms and, of course, the head office with an amazing view of the skyline, today’s offices are strikingly different.
Over the last decade, there has been a surge in the development of open-plan offices, and more and more companies are moving their employees to co-working spaces and experimenting with remote work. For businesses that are still straddling the traditional office, but looking to embrace the future of work, it could be overwhelming at first. While the future of work will always be a constant process of innovation and change, here are a few things that business today can expect in the near future.
Expect flat hierarchies
In 2017, most companies have recognised that employees, especially younger ones are turned off by the conventional hierarchies that once dominated the world place.
Start-ups and small businesses often pride themselves on their “flat” workplace culture, which aims to give both leaders and employees the chance to give input on an equal level. In theory, these structures aim to make room for more innovation and also to help workers feel more appreciated in their roles.
Yet, it doesn’t come without its issues. There have been various studies showing that egalitarian workplace structures can be disorienting and can potentially result in higher turnover rates, as employees feel lost in their roles. Thus, it will take time for the workplace to strike a balance between structure and equality, but so far it seems we are well on our way.
The architecture of the office space is changing rapidly
Chances are you’ve heard of open-plan offices. With corporate giants like Facebook and Google companioning the flexible workspace, company around the world are breaking down literal walls to create airy and open offices that encourage collaboration.
Again, much like the flat workspace, open-plan offices need to be considerate of individual needs. While many workers appreciate the chance to work in a more informal setting, the open office has also faced criticism for introducing new distractions by not including enough private areas, which can lead to a downturn in productivity. As a result, more companies are turning to co-working spaces, which offer both workspace and community space.
Co-working spaces differ from open-offices in the way that they provide community management, structure, and flexibility, ensuring that workers have their needs met, whether that means a private office for the whole company or a hot desk for workers who just want to come in a couple of times during the week.
Remote work will be commonplace
Allowing employees to work remotely has proven to be successful. Companies have been introducing remote days over the last five years, and some even allow their staff to telecommute on a full-time basis. In the early days of the freelance ecosystem, remote work was considered to be unprofessional, but we have learned over the years the allowing employees to telecommute, even on a part-time basis can make them more productive and satisfied in their roles.
There’s no doubt that advancements in communication tools, such as Slack, have allowed workers more freedom, but there are also enormous benefits for businesses as well.
Companies can save on overhead costs by moving teams into a co-working space, or take out a flexible lease in combination with allowing workers to work outside of the office, even if it’s just a few days a week. By saving on rent and utilities, leaders can make room in their budget to invest in employees, by offering educational workspaces or purchasing new equipment.
Overall, these changes have a long way to go before they become permanent fixtures in the workplace. In fact, many businesses are now experimenting with various workplaces trends to find what works best for them and their employees.
Yet, even if you are not ready to grant your staff remote days or turn your office into a single shared space, it’s vital that your business is aware of these trends so you can keep up with the rapidly changing future workplace.
How Investors Can Take Advantage Of The Rand’s Currency Trading Rates
Negative sentiment is likely to be pervasive with the SA economy, and it will take more than a new figurehead in government to right the wrongs of a mismanaged economy.
The USD/ZAR currency pair is trading in the 13.65 range heading into mid-December 2017. Over the past year, the 52-week low was 12.3126, and the 52-week high was 14.5742. As one of the more volatile currencies in the trading spectrum, the ZAR is closely associated with the political shenanigans taking place in South Africa.
The year to date return for the currency pair is -0.50%, after having started 2017 at 13.7351. Much of the activity taking place with the ZAR is speculative. Futures contracts are largely responsible for the whipsaw movements in prices.
Wilkins Finance strategists stress the importance of credit ratings agencies on currencies:
‘Whenever credit ratings agencies such as Moody’s and Fitch downgrade their assessments of the South African economy, this has a negative impact on the ZAR. The impact is not always predictable however – towards the end of November 2017, the USD/ZAR had appreciated after the recent ratings downgrade of the economy.’
Moody’s Investors Service downgraded South Africa’s economy to a rating of Baa3. This is the lowest rating level for Moody’s. Further ratings will be announced in February next year. Fitch has already downgraded the foreign currency and local currency to BB +, but has offered a stable Outlook for the ZAR.
That S&P also downgraded the South African economy to sub-investment grade is an important decision, and one that will have negative ramifications for the South African bonds market. Now, the Barclays Global Bond Index will no longer feature South African bonds. That South Africa’s bond market will be excluded from the World Government Bond Index will also be a bugbear to any hopes of the ZAR appreciating.
Interest Rates in the South African Economy
The South African interest rate is highly attractive to foreign investors, given that the UK, US, Canada, Japan, and European bank rates are at historic lows. There is little to be gained by investing cash in fixed-interest-bearing securities in these economies. The current interest rate in South Africa is 6.75% (as at November 23, 2017). The interest rate has dropped to expand economic activity in the country.
Overall, South Africa’s inflation rate for the year is expected to remain at 5.3% dropping to 5.2% in 2018 and rising to 5.5% by 2019. Global investors remain concerned about the risk/reward environment in South Africa. The country has experienced significant capital outflows in recent years, driven in large part by uncertainty regarding future prospects. The USD/ZAR was trading at 14.60 in late November, and current ZAR strength is being attributed to USD weakness.
Factors on Both Sides of the Atlantic
One of the major economic events affecting exchange rates will be the reconciliation of the House and Senate bills on US tax legislation. Any major overhaul of the US tax code will invariably result in a dramatically boosted USD, and a weakened ZAR. For traders, it appears to be short-term call options on the local currency and long-term call options on the USD.
It is evident that currency traders are hedging against the ZAR over the long-term. The fundamentals of the economy are structurally unstable. The power grid infrastructure, water supply problems, and political instability at the highest echelons are but a few of the many problems plaguing South African growth prospects.
However, the ZAR will draw strength from the election of a credible leader, and this will be particularly noteworthy with Cyril Ramaphosa’s appointment. Overall, negative sentiment is likely to be pervasive with the SA economy, and it will take more than a new figurehead in government to right the wrongs of a mismanaged economy.
For many people, the holiday season represents a time of change.
For many people, the holiday season represents a time of change. Some folks have made the decision throughout the year to start a new business in 2018, and the festive season’s message is one of hope for a bright new entrepreneurial future. Unfortunately, for most, this dream can become a nightmare without considerable amounts of planning on part of the entrepreneur and start-up founder.
So, without sounding too depressing, Christmas and New Year’s should be a time for stringent planning rather than celebration for the season and the year ahead. Call me Ebenezer Scrooge, but hitting the laptop and doing research is the best thing an entrepreneur can do while family and friends are unwrapping gifts or holiday-making.
As a business owner who has used the month of January as a starting block for my foray into a new industry, I can say that one of the problems I encountered was not accurately defining my customer personas, both in real-time and online. It got me thinking; if I can make the mistake when it comes to accurately segmenting customers in real-time, how many people make the mistake of inaccurately creating customer personas for their online brands?
It’s All About the Customer
Creating a customer persona is easy. Most business founders have an idea of who their customer is before marketing their product. And once you know who the customer is, its just as easy to find out their likes and dislikes, as well as their habits.
The best way to create customer personas is to base your personas on research and data. Many established businesses find this a simple task, as they have a wealth of clients from which to draw this data. Unfortunately, this is not the case for business founders, so they must carefully test the waters using surveys, third-party research, and an ear-to-the-ground within the industry.
Once a business understands its various buyer personas, it’s time to start considering the typical online buyer persona…
Just because you can accurately determine your optimal customer due to your created customer personas, you may have to create alternative personas for online consumers. This is because a slightly different person will be looking for your product online.
As an example, Bob owns a pool business, building as well as maintaining pools for residential clients across Johannesburg. Bob’s nominal customer persona is that of Adam, the 40-something business owner who owns a home in a middle-class neighbourhood. Adam is likely to come across Bob’s out-of-home marketing material, or comes to Bob for business through referrals. However, Adam differs from Lerato. Lerato is a different age, race and gender. Even more importantly, Lerato looks for products and services exclusively online. To appeal to Lerato over Adam, Bob’s customer persona must be changed for the online customer, and the online customer must be exposed to tailored content to be appealed to.
Lerato also lives in a middle-class neighbourhood, but Lerato has young children, while Adam’s children have now moved out of home. This means that Bob can take advantage of Lerato’s need for pool safety nets and a custom-built pool fences, and Bob will make sure that Lerato is exposed to content about these services while making her online journey.
When creating online material, ensure that it is developed to take advantage of the online customer. One mistake that business owners make is that, in their attempts to be recognised as industry leaders, they try very hard to use industry specific language. They make attempts toward showing their prowess in the trade and showcase their own certification and business journey.
The online customer persona representing the business’s primary online buyer does not care about the business’s goals and objectives, and they have no clue as to what is being said when the website uses online lingo. They want content created for them; they want to know why they need the product or service, they want to know that they are using the best business for the job, and they want social proof regarding the service offered.
Make sure that you do proper content mapping research, and identify the online journey taken by the consumer through online channels before they make a purchasing decision.
Take this a step further and make sure that you define several online customer personas. Determine the value of each persona and structure content and the consumer journey for the most profitable of the personas. Additionally, determine the lifecycle of the journey, how much attention a segment of online content generates, and capitalise accordingly. For example, if most of the purchasing decision is made on the product or service landing page, make sure that the landing page is optimised as often as possible to increase your business’s revenue.
Hit January 2018 running, and make sure you understand your online client before receiving your first online lead. And if you make a few mistakes initially, don’t worry. 2017 was – and 2018 will be – known for being the year of big data, where business owners make operations and marketing decisions based on the behaviour of customers online. Always analyse the data available to your business when made available, and make changes accordingly. The best of luck for the year ahead!
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