expressed opinion entrepreneur Contributors are themselves.
In the current inflationary environment and looming economic economic recession, doing business seems riskier than ever.In fact, 89% of small business owners have raised the price their product or service since the global health crisis, 60% are concerned about the financial health of their business because inflation.
Even so, brands are rolling out every day, but not without some necessary pivots. For brands to thrive, they must make tough decisions about ingredients, packaging and distribution. Understanding risk factors and the ability to implement risk management strategies are critical before launching your brand.
Lay the foundation for your risk management plan
Taking an idea from the brainstorming stage to product development and launch can be difficult. Having a risk management plan for your small business is essential.
The first thing you need to calculate is start-up costs, including your marketing and sales plan. Solidifying with specific numbers will give your work a solid foundation.
Next, be sure to assess and understand your Targeted market Yes and build your unique selling point. Your product or service should fill a void, and knowing the gaps you fill will help you and your employees stay on track.
Finally, you need to have realistic goals for where your product will be sold. Are you going to be an e-commerce, online store? Brick and mortar stores, or do you choose to sell your products through retailers like Amazon? Developing a solid business plan that addresses these core areas and issues is key.
Once you have addressed the risk factors as a company, you can launch your brand. Below are four key strategies to help you reduce your risk.
1. Consider risk in your business plan
Your business plan is your guide. It should be very detailed, containing information about every aspect of the business, including a snapshot of the industry, preferred marketing strategies, financials, personnel, and various other operating procedures.
To do this, ask yourself the following question: What is the current state of the market for this type of product (think supply and demand)? What is our ideal customer profile? How does the competitor fit into the environment? how are we different What is our profit margin? How are we going to pay off our debt? Do we have proper contracts?
Last but not least, be sure to plan your first launch. According to the U.S. Bureau of Labor Statistics, According to Fundera, about 20 percent of small businesses fail within the first year, 33 percent within the first two years, and 50 percent within the first five years. Having one-, three-, and five-year plans and extensive company knowledge that you may need to adapt can help prevent business failure.
Taking steps to avoid risk doesn’t mean you’ll be safe from the threat of failure, but a business plan will help you re-route more quickly. Setting this expectation with your company ahead of time will help you mentally prepare for potential obstacles, viewing them as opportunities rather than setbacks.
2. Establish Your Position in the Market Before Scaling
You don’t need a huge collection; you need a pain point and a solution.According to research from CB Insightsthere are two most common reasons startups fail: failing to validate market demand and spending money poorly.
It’s easy to get caught up in size and scale, but consumers are looking quality authenticity and a Compelling Brand Story. Focus on these things first. A quick way to get your brand off the ground is to sprint too fast with no clear direction. Find your place in the market, develop a really good product first, and the rest will follow.
take Sarah Blakely’s Take form-fitting shapewear brand Spanx, for example. While the company is now branching out into more categories of clothing, the brand was founded in 1998 when Blakely only had $5,000 in her bank account. Cutting the legs off a pair of pantyhose is how Blakely first created her shapewear prototype. Thus, Spanx was born.
You can always innovate your product later, but establishing yourself in the market is key to building your brand reputation. When it’s time to maximize growth, you’ll be ready.
3. Find a manufacturer who can help you expand your minimum order quantity
Make sure your manufacturer has what it takes to meet your needs, from facility size to quality and speed.You don’t want your initial brand launch to be like Jaclyn Cosmetics did in 2019 when people found its highly anticipated makeup line full of Mold, hair and air bubbles.
The reason for this error? The fibers from the cleaning towels are left in the vat where the lipstick is mixed. While it wasn’t the brand’s fault, it took a hit and its reputation never recovered.
knowing what to look for in a manufacturer is essential. Don’t be afraid to ask questions on the front end before deciding to commission a manufacturer. Browse their websites, read reviews and visit their factories. Invest in a manufacturer like you invest in your own brand.
4. Conduct small pilot runs to gauge consumer interest
Gathering feedback on product performance doesn’t have to be expensive or a daunting task. To gauge consumer interest, test your product in the market. This could look like a soft product launch on your website, or take advantage of a more general third-party sales platform. Rather than buying 500 units, place 50 per SKU and measure product performance against key KPIs.
Once a product is released, keep an eye out for customer reviews. Criticism doesn’t have to be fun, but take it to heart and respond accordingly. This information is a goldmine that can help you develop the best product on the market. Wondering what your customers want? listen to them.
The truth is, there are risks when launching a brand. With costs rising, it may feel like too much risk right now. But with the right plan, maker and mindset, you can run a successful business while nurturing your own unique space in the market.