Running a business is no simple task. Sure, there are countless benefits that come hand in hand with being your own boss and running your own company. You get to choose your working style. This includes choosing your working hours, choosing when you want to take breaks and choosing when you want time off. You get to choose what kind of industry you specialise and work in. You can choose anything from selling t-shirts to scientific and medical equipment to frozen ready meals. You get to choose who you work with. You can choose your business partners and take control of the recruitment process, hiring positive and amiable individuals who fit well into the working style and workplace culture you’d like to cultivate. You get to choose where you base yourself, setting your business up somewhere you can lead a comfortable and happy life. However, it’s important to remember that running a business is also extremely hard work. It takes so much more than simply coming up with a product idea, bringing it to life and selling it. You’re going to have to learn the ins and outs of countless areas of business operations to make sure that your business succeeds, not only making sales but creating a brand, becoming recognisable, maintaining a positive reputation and generating sufficient profits to continue expanding and progressing. So, what areas should you make sure that you really focus on when getting things up and off the ground? Here are a few to consider!
Now, you may be thinking that your business doesn’t sell software, so you can skip this section. But don’t be too hasty. We’re talking about software from the perspective that every business uses it. Nowadays, we’re living in a digital society and technology has progressed to a point that the majority of us use it in our day to day lives to make things easier and more convenient for ourselves. Things are no different in the workplace, with the vast majority of people using software in their day to day roles. No matter what you and your staff do, chances are, software will be involved at some point in the process. Going to send an email to a team member, client, partner or customer? You’ll use software to do this. Want to update your website? You’ll use software for this too. Editing product photographs? Software. Storing data? Software. Organising your work? Software. The list goes on. So, you need to make sure that you’re choosing the right software for each and every task. Some forms of software can be bought outright. Some are subscriptions. What’s important is that you browse your options and find the right ones to tick your business’ boxes at the right cost to suit your budget. Nowadays, there’s software out there for practically any task, from helping with predictive analytics insurance to editing videos for your website. If you can’t find software that does exactly what you specifically need, there’s also always the option of getting in touch with software developers and asking them to create custom software for you!
Of course, you can have a perfect product, but it’s priced too high, you’re not going to make any sales. On the other hand, if you have a perfect product and you price it too low, your going to make losses or only just break even, and your business is going to suffer and fail. So, profitability is just as important for your business as affordability. You’re going to have to put work into determining how much your products make and how much you can actually charge for them while maintaining sales. The gap between these prices will be your profit margin and the higher this is, the better for your business.
Figure Out the Costs of Your Raw Materials, Components or Ingredients
When you develop the products that you intend to sell, you need to consider two main areas. The first is the cost of the raw materials, components or ingredients used in your product’s production. Make sure to total up the entire cost of all the raw materials, components or ingredients that are required for your product to become a reality and then bear in mind that the costs of these items could potentially fluctuate over time for a variety of reasons. Demand could drop elsewhere, causing a drop in prices, but equally, a rise in demand could result in prices increasing. Make sure to come up with a total cost, but make sure to also add in room for predicted price fluctuations to make sure that your products have longevity to them. Your profit margin needs to be sufficient to accommodate fluctuations.
Figure Out the Costs of Manufacturing and Production
Next, you’re going to need to add on the costs of manufacturing and production. It’s all good and well having the elements you need for your products ready to go, but they’re going to have to be combined or built to create your final product and someone’s going to have to be paid to do this. The two most common choices businesses opt for when organising this are outsourcing and building an in-house manufacturing team. Outsourcing is commonly chosen by smaller businesses. It is a practice where you will distribute certain aspects of your work to an independent third party or agency – in this case, manufacturing. This is beneficial for smaller businesses, as you won’t have to invest in factories, machinery or other major costs that are required to create products. You also don’t have to train or recruit your own manufacturing staff. If your products don’t sell, you simply stop manufacturing them and don’t have to worry about as many losses, factory leases, selling machinery and making staff redundant. Instead, you can choose to sell another product and switch to a different manufacturer who can make it for you. However, outsourcing means paying for your products to be made and paying a cost that ensures that the third party you’re using makes a profit too. As your business grows and expands, with your products experiencing higher levels of demand, it may be cheaper for you to start bringing things in-house. The cost of the machinery you invest in will quickly cover itself with profit from products that you have sold.
These are just two areas to focus on, and they’re pretty complex in and of themselves! Hopefully, however, they’ll give you a starting point to work from!