I figure at some point others here might have the same issues good or bad, or maybe not at all but thought id share some business insights. I'm not even sure the title is right It's been a while since I posted something long form so here is my ramble about growth and solutions I guess :/
Building a moat can be your down fall to growth
I’m a massive fan of building moats around a business if you don’t know what that means.
Essentially you build everything in house so it makes it harder for a competitor to copy you or for someone new to enter the market and become a competitor.
You start by integrating everything in house:
- Manufacturing
- Distribution
- Marketing
- Brand
- Fulfilment
- Logistics
You have something that’s harder to duplicate from day one.
The way I see it anyone can set up an ecommerce brand or company, spend £1000 on ads and list products on Amazon and become an overnight success that’s the beauty of those systems.
But in reality what makes that any different to the next guy? You find your self in margin wars, trying to compete or spending more money to grow.
So instead I do what I call “build all the impossible shit first” we manage everything in house from day one.
Everything we do (apart from our own distribution network) is a fully vertical integration business. It means I control every aspect of my company no external factors can really effect me. I don’t need to stress about supply chains I am my own supply network and so on.
This is great but growth is SLOW. I’m slowly reaching the point where I need to be doing ads, amazon and other channels to expand and grow the business.
If I was starting over today would I follow that same procedure? Possibly not, I think I could have gotten where I am now in half the time by not becoming so obsessive with making everything so complex and worrying about a competitor that didn’t really exist.
Going back in time and doing something different is often a question you see get asked in business but no one in my opinion is brutally honest about it.
Id focus on ONE thing and do that well, better than anyone else out there and scale that to improve the business via systems and buying up smaller businesses in the same niche and leverage those for growth.
Id set up 2-3 websites offering the same product but priced differently for different sectors of the market make all of these focus on exactly the same thing. If buying or building up an additional website(s) was not my focus id aim to acquire smaller business and build those into my companies 100s if not 1000s of businesses are up for sale daily.
Buying a business and integrating that and using an existing company to scale my growth would be key.
Id maybe still do ads but the problem with ads when starting out with any business is everyone is in a rush. Being in a rush = mistakes.
Not impressing anyone, wins.
This has never really been an issue for me, mainly because I stopped caring what anyone else thinks. They don’t matter.
People think to be successful you need to show that with things that cost money.
This is how the world works:
A person driving a top of the range Mercedes-Benz is deemed to be doing well because of the car they drive but only has £50 in the bank each month.
A person driving a beat up Honda is failing but has £5000 left in the bank each month.
As humans we go off perception success = fancy things. It doesn’t have to not when your building a business.
In my opinion looking back at why I’ve failed so many times to try and duplicate a business I had previously is that as soon as I hit £1m in turn over I started to live a life style that wasn’t sustainable to the business.
As soon as you start taking money out of the business you begin to kill it and are on the route to downfall.
All businesses need money to grow once you remove that element you remove growth.
I’ve been lucky enough to be in a situation where this lesson doesn’t apply to me so much now but I do sit back and look at some investment decisions with in the company and think if I hadn’t of done that how much more growth could I have funded now.
Look at your own business, your own goals and what your doing. It’s great having something flash to show for your time, but if your goal is growth and scale could you be doing something more with that £700 a month car lease.
If like me your growing every year 20-30% (we used to grow on average 33% a year) it all takes money to re-invest into stock, equipment and marketing.
If you pull money our your stalling your growth. If you didn’t have that £700 car lease and invested that in marketing how much further would you be ahead now?
Being frugal and patient helps fund and grow the business. Have the fancy things later.
You don’t need to be cash strapped each month just pay your self enough to maintain your current life style and have 1-2 “extra” treats a month. Having a extra meal out once a week isn’t going to hurt and it helps keep resentment at bay.
It keeps the focus there for what is possible later down the line.
Be honest what you want your business to do. Be honest about what your business needs to actually grow:
- Stock
- Marketing
- Equipment
- Staff
If you need those things to grow and your pulling cash out for your self, then you are starving growth.
Once the business reaches a point where having nice things does not effect the day to day operations nor growth then you have something you can fund a more lavish life style with.
Let the business compound. Just like a savings account. The longer you can do it the bigger the returns.
The 90210 post code problem
I’ve been fortunate due to my location as everything is “cheap” well not anymore but having an office when starting most see as key.
I’m not a fan of operating out of your living room.
However you don’t need to be based in the best post code in town or in a city location because you think that’s where the action is.
If your business does not require a self serving entry point i.e is not reliant on customers coming in through the door then you don’t need the fancy post code.
By choosing a cheaper location with lower rent you have high margins, higher margins means more money for customer acquisitions which in turn fund growth.
As an ecommerce business it doesn’t matter where you are based as your dispatching products anyway.
If being in the city does not help you acquire customers in a way that justifies the cost. Then you don’t need to be there.
Optimize for location because rent, labour and council tax is often much cheaper than operating out of the city. All of this effects the bottom line enabling funds to be funded directly back into the business and growth.
Hiring your right hand man
This is a lesson that took me a long time to figure out. I’ve been obsessed with trying to hire my no.1 or no.2 depending on how you look at it. I wanted someone I can sculpt and mould to run my business do everything I can do and train them up to be the next t2van.
I spent years looking for that person and tons of money on books to help me find that person only to discover they don’t exist.
I think everyone spends time looking for this person. It’s been one of my biggest mistakes when it comes to growth.
Focus on building teams and departments that’s your right hand man there.
As business owners we do it all, marketing, accounts, design, posting, packing, operational, logistics and more
We can’t do it all. It’s impossible.
I found the best way to move forward is to create job lists for EVYERTHING thing you do daily and the one job you can’t do that day (in a standard 8 hour day) or for 2-3 days on the trot, because there will be one is the first hire you need to make.
This slowly builds departments within your business and as those areas require more time and energy spent they start to develop with department head and teams and structures.
These people don’t need to come from the local job centre.
My entire customer service departments is made up of a team from the Philippines just because the experience I can buy there dwarfs anything I can obtain in the UK. Plus that kind of job in the UK… there’s a bit of entitlement but that’s another story.
My head of CS (Customer Services) comes with 10 years industry experience as a team leader working for Apple, HSBC and Insurance companies. She came in and helped me build out that department introduced processes and procedures I didn’t know I needed as well as when the time came helped hire and build a team below her.
My CS hire was one of the best hires I ever made costs me a fraction of what it would in the UK and speak and write better English than myself.
Opening the door to remote working allows the hiring of people with a skill set at a more affordable rate than you thought was possible previously.
All that extra money and savings goes back into the software needed to run those departments and teams as well as back into the business.
Knowing your margins for growth
Every business should know it’s margin for growth. Every business has one. Most service based businesses have a 20% margin.
If you don’t know what your margins are then ask AI, find former employees at competitors or ask distribution companies for a sales list of products and start to get a basic ideas of what things buy and sell for.
Can you take those numbers excel and perform a complete break down of where your money is going to be spent.
- Marketing
- Stock
- Staff
By understanding competitors margins can you duplicate those numbers?
IF not why? If you can’t don’t start it this business will never thrive.
This why understanding an industry and competitors is so important and knowing your margins is key for growth.
Lots of small business owners when starting will sell cheap to get sales through the door and while this can and does work you tend to see them close up shop in a year or two because they don’t understand the margins.
If your business scales and you can’t optimise your margins for growth then you starve the business of funds, selling cheap is great for customer acquisition but when you have bills and staff to pay you quickly run out of cash or more often than not spend money you don’t have.
Building a moat can be your down fall to growth
I’m a massive fan of building moats around a business if you don’t know what that means.
Essentially you build everything in house so it makes it harder for a competitor to copy you or for someone new to enter the market and become a competitor.
You start by integrating everything in house:
- Manufacturing
- Distribution
- Marketing
- Brand
- Fulfilment
- Logistics
You have something that’s harder to duplicate from day one.
The way I see it anyone can set up an ecommerce brand or company, spend £1000 on ads and list products on Amazon and become an overnight success that’s the beauty of those systems.
But in reality what makes that any different to the next guy? You find your self in margin wars, trying to compete or spending more money to grow.
So instead I do what I call “build all the impossible shit first” we manage everything in house from day one.
Everything we do (apart from our own distribution network) is a fully vertical integration business. It means I control every aspect of my company no external factors can really effect me. I don’t need to stress about supply chains I am my own supply network and so on.
This is great but growth is SLOW. I’m slowly reaching the point where I need to be doing ads, amazon and other channels to expand and grow the business.
If I was starting over today would I follow that same procedure? Possibly not, I think I could have gotten where I am now in half the time by not becoming so obsessive with making everything so complex and worrying about a competitor that didn’t really exist.
Going back in time and doing something different is often a question you see get asked in business but no one in my opinion is brutally honest about it.
Id focus on ONE thing and do that well, better than anyone else out there and scale that to improve the business via systems and buying up smaller businesses in the same niche and leverage those for growth.
Id set up 2-3 websites offering the same product but priced differently for different sectors of the market make all of these focus on exactly the same thing. If buying or building up an additional website(s) was not my focus id aim to acquire smaller business and build those into my companies 100s if not 1000s of businesses are up for sale daily.
Buying a business and integrating that and using an existing company to scale my growth would be key.
Id maybe still do ads but the problem with ads when starting out with any business is everyone is in a rush. Being in a rush = mistakes.
Not impressing anyone, wins.
This has never really been an issue for me, mainly because I stopped caring what anyone else thinks. They don’t matter.
People think to be successful you need to show that with things that cost money.
This is how the world works:
A person driving a top of the range Mercedes-Benz is deemed to be doing well because of the car they drive but only has £50 in the bank each month.
A person driving a beat up Honda is failing but has £5000 left in the bank each month.
As humans we go off perception success = fancy things. It doesn’t have to not when your building a business.
In my opinion looking back at why I’ve failed so many times to try and duplicate a business I had previously is that as soon as I hit £1m in turn over I started to live a life style that wasn’t sustainable to the business.
As soon as you start taking money out of the business you begin to kill it and are on the route to downfall.
All businesses need money to grow once you remove that element you remove growth.
I’ve been lucky enough to be in a situation where this lesson doesn’t apply to me so much now but I do sit back and look at some investment decisions with in the company and think if I hadn’t of done that how much more growth could I have funded now.
Look at your own business, your own goals and what your doing. It’s great having something flash to show for your time, but if your goal is growth and scale could you be doing something more with that £700 a month car lease.
If like me your growing every year 20-30% (we used to grow on average 33% a year) it all takes money to re-invest into stock, equipment and marketing.
If you pull money our your stalling your growth. If you didn’t have that £700 car lease and invested that in marketing how much further would you be ahead now?
Being frugal and patient helps fund and grow the business. Have the fancy things later.
You don’t need to be cash strapped each month just pay your self enough to maintain your current life style and have 1-2 “extra” treats a month. Having a extra meal out once a week isn’t going to hurt and it helps keep resentment at bay.
It keeps the focus there for what is possible later down the line.
Be honest what you want your business to do. Be honest about what your business needs to actually grow:
- Stock
- Marketing
- Equipment
- Staff
If you need those things to grow and your pulling cash out for your self, then you are starving growth.
Once the business reaches a point where having nice things does not effect the day to day operations nor growth then you have something you can fund a more lavish life style with.
Let the business compound. Just like a savings account. The longer you can do it the bigger the returns.
The 90210 post code problem
I’ve been fortunate due to my location as everything is “cheap” well not anymore but having an office when starting most see as key.
I’m not a fan of operating out of your living room.
However you don’t need to be based in the best post code in town or in a city location because you think that’s where the action is.
If your business does not require a self serving entry point i.e is not reliant on customers coming in through the door then you don’t need the fancy post code.
By choosing a cheaper location with lower rent you have high margins, higher margins means more money for customer acquisitions which in turn fund growth.
As an ecommerce business it doesn’t matter where you are based as your dispatching products anyway.
If being in the city does not help you acquire customers in a way that justifies the cost. Then you don’t need to be there.
Optimize for location because rent, labour and council tax is often much cheaper than operating out of the city. All of this effects the bottom line enabling funds to be funded directly back into the business and growth.
Hiring your right hand man
This is a lesson that took me a long time to figure out. I’ve been obsessed with trying to hire my no.1 or no.2 depending on how you look at it. I wanted someone I can sculpt and mould to run my business do everything I can do and train them up to be the next t2van.
I spent years looking for that person and tons of money on books to help me find that person only to discover they don’t exist.
I think everyone spends time looking for this person. It’s been one of my biggest mistakes when it comes to growth.
Focus on building teams and departments that’s your right hand man there.
As business owners we do it all, marketing, accounts, design, posting, packing, operational, logistics and more
We can’t do it all. It’s impossible.
I found the best way to move forward is to create job lists for EVYERTHING thing you do daily and the one job you can’t do that day (in a standard 8 hour day) or for 2-3 days on the trot, because there will be one is the first hire you need to make.
This slowly builds departments within your business and as those areas require more time and energy spent they start to develop with department head and teams and structures.
These people don’t need to come from the local job centre.
My entire customer service departments is made up of a team from the Philippines just because the experience I can buy there dwarfs anything I can obtain in the UK. Plus that kind of job in the UK… there’s a bit of entitlement but that’s another story.
My head of CS (Customer Services) comes with 10 years industry experience as a team leader working for Apple, HSBC and Insurance companies. She came in and helped me build out that department introduced processes and procedures I didn’t know I needed as well as when the time came helped hire and build a team below her.
My CS hire was one of the best hires I ever made costs me a fraction of what it would in the UK and speak and write better English than myself.
Opening the door to remote working allows the hiring of people with a skill set at a more affordable rate than you thought was possible previously.
All that extra money and savings goes back into the software needed to run those departments and teams as well as back into the business.
Knowing your margins for growth
Every business should know it’s margin for growth. Every business has one. Most service based businesses have a 20% margin.
If you don’t know what your margins are then ask AI, find former employees at competitors or ask distribution companies for a sales list of products and start to get a basic ideas of what things buy and sell for.
Can you take those numbers excel and perform a complete break down of where your money is going to be spent.
- Marketing
- Stock
- Staff
By understanding competitors margins can you duplicate those numbers?
IF not why? If you can’t don’t start it this business will never thrive.
This why understanding an industry and competitors is so important and knowing your margins is key for growth.
Lots of small business owners when starting will sell cheap to get sales through the door and while this can and does work you tend to see them close up shop in a year or two because they don’t understand the margins.
If your business scales and you can’t optimise your margins for growth then you starve the business of funds, selling cheap is great for customer acquisition but when you have bills and staff to pay you quickly run out of cash or more often than not spend money you don’t have.
