advertisement
advertisement
The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

A series of little-known secrets to business success

Starting your own company requires a skill set that comes from experience, not an advanced business degree.

A series of little-known secrets to business success
[peshkov / Adobe Stock]
advertisement
advertisement
advertisement

In a startup, the stakes are high. It might be tempting to ask for advice, especially if you know any MBAs or Harvard-business-graduate types. But in my experience, what they have to offer at this stage in the game will only discourage you.

advertisement
advertisement

Business experts learned what they know from other business experts. But usually, their scope is limited to being experts in running a large business or enterprise that’s already well-established, not starting one from scratch. And there’s a big difference between starting your own business from nothing and running a business that’s already been built.

These little-known secrets helped me build several multimillion-dollar companies from nothing, and they can help make yours a success, too. Here’s how:

KEEP THE BIG PICTURE IN MIND

Think outside of the normal business acumen of profit margins alone. We once sold luxury makeup collection briefcases on wheels with an $1,800 value for $900 (the cost to produce was $600). Based on profit margins alone, this might seem crazy. Every other cosmetic item we sold had a 100% margin (keystone), but consider this: A single sale of one of our $45 stacks of makeup colors made a $27 profit, while one briefcase sale made over $300!

advertisement
advertisement

Big-picture thinking helps your business grow. I once tripled my business overnight by taking on one big client who bought almost my entire inventory but at just over my cost. I was making almost no profit, but as a result, the increased buying power I had and improved cash flow dramatically increased margins on all future raw material purchases. When you think macro, not micro, you can feel confident making no money for a month if you know the next month could be your highest ever.

LOOK TOWARD THE FUTURE

With every business decision you make, ask yourself what the long-range consequences are of that decision. Many people make decisions for immediate income or results, but this can prevent you from realizing better opportunities that may arise. Project the decision you want to make right now a year or two down the road and ask yourself how it might still be impacting your business. Sometimes, you can give up some profit margin today for a larger profit down the road.

For example, in anticipation of Amazon Prime Day, while everyone else was focused on profit, we spent nearly 100% of our revenue on advertising for two brands with the highest incidence of reorders. We lost money on every sale but built up a bestseller rank and some momentum. By the time Prime Day hit, we killed it but still kept the advertising turned high, again sacrificing profit on Prime Day.

advertisement

While it did hit us in the P&L that quarter, we gained way more in new customers over the next six months, and their reorders helped us grow exponentially in the long-term. We ended up with our best year ever for online sales and thousands of new, brand-loyal customers.

ALWAYS BE EXPANDING

When you find yourself running a business at full capacity, that is not the time to get comfortable—it’s the time to expand. Whether it’s a bigger facility, more equipment, or new production, there’s more business out there; and if you don’t take it, your competition will. If your customers see a competitor offering similar products but faster delivery or a larger selection, they’ll go with them. Soon enough, if you’re not willing to expand capacity, your customer base or offerings will likely contract.

You might think you’re simply staying the same, but you’re either expanding or contracting; that is the cold-hearted truth. The company that’s expanding is going to take more of the available share of business, leaving competitors with smaller and smaller slices of the pie. If nothing else, inflation will eat away at your margins, so expansion is always necessary.

advertisement

WORK ON BUILDING RELATIONSHIPS

Decisions to help your business grow should include nurturing the relationships that helped you get where you are. I was shocked to hear an MBA I contracted (“business expert”) propose we raise all our prices by 99 cents. Many might not notice, but anger just one distributor with this obvious profit grab and all that money you thought you’d make is lost when the distributor quits. Instead, figure out how to create a better relationship with your distributors by finding out how to help them so they buy and sell more, bringing in more revenue in the long run.

Additionally, fully understanding who your customer is helps you find where your customer is, even if it might seem unconventional. With our skin and hair care products, we knew we were looking for women concerned with preserving their skin and with the disposable income to afford our upscale price points. To find them, we needed to know where that exact demographic was. We concluded that people who attended home shows were ready to spend money on remodeling, even amidst a recession. We weren’t selling home renovation, but nonetheless, it was our exact target market. They asked us over and over why a skincare product was at a home show, and we simply answered that we knew that’s where we would find them!

Starting your own company requires a skill set that comes from experience, not an advanced business degree. Discovering these secrets is what helped me build my businesses from the ground up. Of course, these tips are only successful in combination with effort and confidence. If you believe in your business model, know others will love the product or service you provide, and you have a passion for driving it, your persistence can turn any good idea into a successful business.

advertisement

Chris Estey is Founder & CEO of Private Label Skincare Florida, one of the largest, fastest-growing manufacturers of organic skincare products in the U.S.