In this guest post, first-time entrepreneur and Fundbox customer Marsha Kelly shares how she grew her beauty product business, eventually becoming one of the fastest growing in her state. She has appeared on the TV shopping channel QVC with Don Ho, and ultimately sold her company for over a million dollars.
She credits her success to lots of hard work, a little luck, and the smart use of business credit. Read on for her story and advice to other small business owners.
Bootstrapping a company in a fast-growing market by frantically reinvesting profits was and is an exciting experience for me. Suddenly seeing an unexpected leap in new sales feels terrific, but I often find that the actual arrival of funds in my company bank account can be frustratingly slow.
Closely managing accounts receivable and maintaining a strict collections policy only goes so far in keeping cash flow consistent. A shortage of financial security in the face of rapid growth means the difference between life and death for a lean startup or small business.
Here are some valuable tips I learned along the way, about planning, executing, and optimizing for rapid small business expansion.
Outsource to Draw on Worldwide Resources
The web has brought vast international resources to small businesses that once struggled with limited choices. In particular, small business owners can outsource tasks more easily than ever.
Even if you’ve grown up online and are familiar with popular social media platforms like Facebook, you might still be surprised at how many necessary but peripheral business functions can be outsourced efficiently. I’ve found that focusing on core business functions such as product design and strategic marketing leaves me feeling refreshed and ready to tackle new challenges. Payroll and accounting, and logo design, are some possible outsourcing targets, and the sky’s the limit.
Create a Memorable Brand
As any experienced business owner knows, an attractive, visually striking logo is indispensable for marketing and branding, especially for consumer products such as cosmetics. I wanted my own logo to be memorable and unique.
After looking around for solutions that fit within my budget, I found 99 logos, a marketplace where you can connect with talented freelance designers. I had the good fortune to work with a truly outstanding designer who understood my needs and helped me bring my vision to life.
When you’re creating a logo for your business, it’s worth putting in the effort to create something you love. After all, you’ll be living with it every day, and so will your customers. As it turned out, a significant portion of my business valuation, when I sold it, was related to intangibles such as my brand, logo, trademark and the customer goodwill I had built.
Optimizing Cash Flow Is Everything
Cash-flow optimization is always a big challenge for young businesses, and my business was no exception. It’s frustrating to miss an opportunity to sell more products or expand services with no ready cash on hand to design and test new products, buy necessary machinery, acquire more materials, or hire more employees.
Happily, the expanding world of affordable, web-based financial services for small businesses offers solutions to this classic problem of cash shortage. In particular, financing your accounts receivable invoices can be an excellent way to work around slow payment from retail chains and other big customers.
It’s hard to argue with the results I achieved: I was honored with an award from Pacific Business News and First Hawaiian Bank for being the second fastest-growing business in the state with verified annual revenues of at least $100,000.
Break Into New Markets
I started out by targeting a higher-end market restricted to the geographical reach of the Hawaiian Islands, since I wanted to overcome the limitations of increased shipping logistics and other costs. I decided to expand into the mass market with a lower-priced product, designed to appeal to a wider range of potential consumers. My company’s best-selling product at the time was a perfume spray inspired by the tropical fragrances of Hawaiian flowers. Extending this successful idea into scented candles, lotions, and soaps was a natural next step.
Maintaining my company’s high standards in these new products required extensive research and development, which inevitably cost money. The additional equipment, materials, and skilled labor required to manufacture quality beauty products required still more money, and I couldn’t skip paying artists to apply their design magic to the product packaging. I even added a line of men’s cologne to round out our expanded offerings.
Introducing an entirely new line of products under the umbrella of the original company brand was a huge undertaking. It would never have been possible without quick access to a business credit line, suitable for substantial, immediate capital outlays.
Jump on Unexpected Opportunities
One of the biggest opportunities of my entrepreneurial career came quite unexpectedly. Through a stroke of good fortune, the executives at the QVC shopping channel noticed my line of Hawaiian beauty products and invited me to demonstrate them in front of their live national TV audience. I was thrilled.
It might be a good problem to have, but I was also seriously concerned about accommodating a sudden flood of orders. As it happens, a line of business credit allowed my company to meet the demand for our products without falling behind on outgoing shipments.
Before long, the fast growth of the company led to a lucrative buyout offer of over a million dollars. I loved working on the business, but it was time to move on to new challenges, and I accepted the offer with an odd mixture of regret and exhilaration.
Reflecting on my business growth, I know that I wouldn’t have been as successful if I hadn’t taken a few risks in order to jump on those once in a lifetime opportunities. Sometimes, the ability to quickly access extra funds when I needed them was the most important factor in determining my business growth.
About Marsha Kelly:
Marsha Kelly sold her first business for more than a million dollars. She shares hard-won experiences as a successful serial entrepreneur on her Best4Businesses blog. Marsha regularly writes business tips and ideas as well as product reviews for business readers. As a serial entrepreneur who has done “time” in corporate America, Marsha has learned which products and services work well in business today. You can read about her shared journey with her business partner and husband here, and you can find her experience working with Fundbox here.