Entrepreneurs: Are You Prepared for Your Big Break?
by Margot Carmichael Lester, Staples® Contributing Writer
Youve been working hard on your product or service, and now its ready for the big time. The only question is: How prepared is the actual business? If you got your lucky break today on Shark Tank or a nice mention in an influential magazine or blog, would your operation be able to handle your newfound fame and the spike in demand that goes with it?
Theres an old adage about dressing for the job you want, and the same is true for your business: Function like the successful company you want to be. That means getting a few key things in place and tested before theyre truly necessary.
The best advice I got as an entrepreneur is luck always happens when opportunity meets preparedness, says Ben Kusin, who, with brother Eric, successfully pitched their Reviver product on Shark Tank. Always be looking; always have plans, contingency plans and contingency plans for your backup plans. If you're prepared, you'll be surprised by how much opportunity is out there and you could be lucky, too.
Here are seven things to do to prepare for your big moment.
1. Web operations. Dont assume your website and related web- or mobile-based software and applications can function correctly at a new scale. Talk to your Internet service provider about how much volume their servers can handle, and about fast response times and little or no downtime so your eCommerce and information-capture capabilities function properly. Then, test and test and test through the shopping cart checkout process because if your site fails, it'll be because of the bottleneck that happens when a more-than-usual amount of customers tries to make a purchase. Its also critical to have all your social media channels covered, from Twitter, Facebook and others that your customers and partners frequent to a LinkedIn profile for you, your management team and your business. This means not only setting up the accounts, but assigning someone to monitor, post to and manage them.
2. Customer service and relationship management. Can your email service provider, social media accounts and phone system handle high volume without crashing? Do you have the people required to monitor them and respond quickly? Better find out now. If you dont currently have a customer relationship management system, now is a good time to get one or upgrade to one that can grow with your business. Tracey Noonan, co-founder of Wicked Good Cupcakes, learned a valuable lesson after her successful proposal on Shark Tank: We were so concerned with product and execution that we left the customer service side short, she recalls. We didnt have enough people answering emails, we didnt have enough phone lines or even people to answer the phones. We were so inundated with emails and phone calls that it took us a week to dig ourselves out of just listening to messages. So as you can imagine, we were late getting back to people, and that was sort of a black eye for us. But we regrouped and put a really strong customer service panel together. Your customer is everything to you, so make sure youre ready to answer all those questions, answer all those calls and provide the best customer service you can.
3. Logistics. A key component in customer service is prompt delivery. Will your shipping provider scale with your business, and offer automated label generation and order tracking, plus pickup schedules that work for you and your patrons? And dont forget to ask about discounted rates for high-volume customers, and processes or technologies you can deploy to earn even more savings.
4. Protect your intellectual property. If you have a proprietary process or an innovative product, you should have already secured the right protections for it. Aaron Krause, who partnered with Shark Tank investor Lori Greiner to make the Scrub Daddy smiley sponge a household staple, offers this advice: Make sure you have a way to protect yourself, either in intellectual property or in some exclusivity. Otherwise, you could spend a lot of time and money on a small idea and find out that you're either infringing on someone's patent or a giant company will say, What a great idea. Thanks! and squash you, he explains. A meeting with your attorney is definitely in order.
5. Inventory. If youre lucky enough to have some lead-time, you can stockpile inventory. The Scrub Daddy team estimated the number of people who would convert to sales the night the Shark Tank episode aired and in the following days. We had that inventory in house and packed, Krause says. You need to be very careful here in your estimates so you don't have too much or too little supply. We did this based on the total viewership of the show and used a conservative estimate of how many people would convert. A good estimate is only a few percentage points of the target market. For instance, if 7 million people watch and youre selling a women's product, you need to cut your number in half, then multiply by 1 to 2 percent conversion for a comfortable estimate of anticipated stock.
6. Production capacity. You dont want to get a major opportunity and not be able to consistently produce high-quality product. Audit your property, plant and equipment to make sure it can accommodate higher production loads. When purchasing equipment or contracting with a manufacturer, confirm that it can quickly scale to accommodate higher demand without sacrificing quality. If you run your own production facility, verify that you can find qualified staff to manage extra shifts and that you have the money to pay them.
7. Cash flow. Of course, all these preparations cost money. Meet with your banker or business manager to ensure you can fund the necessary activity, then address the potential lag between expense and revenue. You make the goods, you ship them, you have to lay out money every time, explains Stephen Hersh, the entrepreneur behind Biaggi, the product he successfully pitched to the Sharks. The factories need to get paid right away, but your customers are not necessarily paying you right away. It has to catch up to you. After a few orders, that whole cycle of paying out and getting paid isn't as draining on your bank account anymore, and some of that money you could actually put away. Do you have enough cash on hand to cover these expenses and still fund the operation? If not, explore options for a working capital or expansion loan now.
Follow this advice, and when your big break comes youll be ready to make the big bucks.
Watch Shark Tank Fridays 9|8c on ABC.