The internet is swimming with people who have made a buck online. It’s super easy to find a product, add it to an online store, and make a few dollars on that product. But chances are, you are looking to turn your startup into a full-blown business so you can create the life you dream of. Am I right?
Every single day we are contacted by people who are just starting their business, but they are floundering around because there is so much to do, and they simply don’t know where to start. When I looked online for information on how to start an online business, I found all kinds of advice about how to start SELLING but very little about building an actual BUSINESS. And believe me, there’s a difference.
Here’s a push in the right direction.
The Five "Ps"
Building a successful business takes lots of moving parts working together well to make things run smoothly. Here are the things you should care about right now… and forevermore.
Now, at the beginning of your journey, is when you want to sit down and put all your dreams on paper.
But first, start with your fears. When Scott and I first started Catching Clouds, we each took a pad of paper and wrote down a list of all of our greatest fears in starting the business by asking one key question: “What is the worst that could happen if we started this business and it failed?” We each came up with a full page of our greatest horrors, and when we were comfortable with the consequences of utter failure (i.e., living with our kids in my parents’ basement), we proceeded to envision what sheer success would look like.
I highly encourage you to go through this exercise. It disperses the fear because the bad is never as bad as it feels when you look out into the void, but the upside of your dreams is limitless.
Now that you know where you want to go, start developing your plan on how to get there. Don’t worry about making it perfect because nothing ever goes according to plan anyway. Put your dreams to a timeline like “I want to quit my job in six months” or “I want to buy a vacation home in Hawaii in five years.” Whatever it is, mark it down.
Now, simply work backwards. If you want to quit your job in six months, how much profit does your business need to generate monthly six months from now? What volume of sales do you need to achieve that profit? Focus on the most critical elements first… setting up a shopping cart, sourcing the right (high profit) products, maximizing lead generation and sales. Track your progress and pivot your approach as much as necessary while keeping your eyes on the prize.
Great book to check out: The 12 Week Year: Get More Done in 12 Weeks than Others Do in 12 Months by Brian P. Moran
Even if you’re currently a sole proprietor, you should be thinking about who is going to be part of your business one, five, and ten years from now. Hiring family members may feel like a good (i.e., cheap) solution now, but it can put a huge strain on your future personal relationships. You don’t need the drama while you’re trying to build your business.
Keep in mind that if you want your business to scale, you’re going to need help, and you’ll want the right people. Start thinking about how to attract quality team members.
It’s most important to always be thinking about the tasks you’re doing today that you can hand off to other people. Owning a business is a whirlwind of activity, and you want to make sure you have as much of your time dedicated to the critical functions of your business plan as possible… and as soon as possible.
Great book to check out: The 4-Hour Workweek by Tim Ferriss
It’s stunning how many different processes exist within a business. Just an accounting system alone can have hundreds of different workflows. Same for operations.
Even though you are already tackling a thousand things a day, you should take extra time to document every single process as you go. Not only will it help you identify problems in your systems that need to be fixed, but if each process is documented, it’ll be a breeze to plug in someone else to help you with necessary tasks down the road.
Clean processes are the key to efficiency, and efficiency is the key to high profitability. Do not underestimate its importance.
Sales are the lifeblood of your business, so another key pillar of your business is the products you choose to sell. You should be focusing on products that align with your business’ purpose and culture. Know your customers and what it is they want and need - and then fill that need.
Look for products that are high quality to minimize returns and complaints which are a drain on both your bank account and your reputation. Focus on unique and privately branded products, if you can, because they’ll have less of a chance of having to compete on price and eroding your profit.
And speaking of products, once you've identified the perfect high quality product to sell, make sure you protect your assets with strong internal controls.
Great book to check out if you’re thinking about selling on or to Amazon: Amazon Marketplace Dilemma: A Brand Executive's Challenge Growing Sales and Maintaining Control by James Thomson and Joseph Hansen
So many businesses focus on maximizing how much they sell instead of focusing on how much money they get to keep. When looking at the performance of your business, profit should be your key financial metric. (Cash flow is up there too, but that’s another topic for another day.)
SummaryThe five “Ps” of business: Plan, People, Process, Product, and Profit is really the key to making a strong and successful business. If you can focus on these main components, especially if you can do so at the very beginning of your business, you will build a solid foundation that’s primed for reaching your dreams.