This guide is intended to be a quick and very general overview of how to start a profitable physical product business using the smallest amount of time, effort, and mental strain. As a result, there are a ton of lists. I hope you love lists, because I sure do 🙂
The #1 reason entrepreneurs fail is that they never begin.
Step 1 – Choose your product
This is an obvious and necessary step that can be a lot of fun, but is also where most people stop. Mom, Tom, and all their uncles have business ideas. You or one of your friends may have seen a TV commercial and said, “Oh man, I totally had that idea five years ago!” Well, don’t be that person anymore! People with ideas and no follow-through are “wantrepreneurs”.
Don’t be a wantrepreneur, be an entrepreneur.
Guidelines for Creating a Streamlined Product.
- Avoid products that utilize computers, complex electronics, or digital features
- A similar product should already exist (alternatively, you can just copy something)
- The product must be something that you like or are knowledgeable about
These guidelines are important because it minimizes hiccups in production/development. I’ve had manufacturing problems creating simple toothpicks. So, don’t make things complicated by adding electronics or inventing something completely new unless you want to spend a lot of time and money building a product (that you don’t even know will sell).
Additional Tips for Choosing your Product:
- Ignore excuses (eg. I don’t have enough money to do that… I’m not smart enough… There are already too many competitors…)
- It helps to choose something you don’t only like, but love
- Think about something that you already use and figure out how it could be better (Maybe the item just needs some polka dots or fun colors)
Step 2 – Make your Product
You’re going to make your product one of three ways:
- With your own hands
- By someone you know
- By an established manufacturer
If you’re trying to open an Etsy store, making the items yourself is fine. I know someone who put herself through college by making wire jewelry and selling it on Etsy. There were already hundreds of other stores making the same thing, but she was able to make $1,000 – $2,000 per month. (She stood out by having better product photos.)
However, most of you will choose a product that you can’t make yourself. Well, I’ve got you covered. AliBaba has most of the world’s manufacturers listed on their website (Alibaba.com) and they’re all itching to develop something for you. Simply type your product into the search bar and hundreds of listings will show up. Choose a product that’s most similar to what you want to make and contact the manufacturer. Ask them if they’d be willing to make your product and how much it would cost to create a sample. If their company profile says, “ODM or OEM”, they will almost definitely make whatever you need. ODM means “original design manufacturer” and OEM means “original equipment manufacturer”. Find at least 3 companies willing to send you samples. You want options and the opportunity to pick the best of the bunch. Sample costs vary depending on what your product is, but many manufacturers will refund the sampling costs when you put in your first order.
If you’re having a hard time finding someone to make your product or already know of a similar product that you love, then you can find any company’s overseas manufacturer by searching their bills of lading (BOLs). Unfortunately, this won’t work for American-made items because BOLs are a record of a company’s imports. But, honestly, very few things are made in the US anymore.
So, your product idea is a new type of fidget spinner, you can search the BOLs of your favorite fidget spinner company, “Best Fidget Stuff, Inc”. You’ll inevitably find where their imports are coming from (aka where their product is being manufactured). Then, it’s a simple Google or Alibaba search to find that manufacturer’s contact info. My favorite BOL search website is Port Examiner.
Once you’ve received some samples and decided on your favorite manufacturer, you must figure out the cost of your first order. Ask the company’s sales person about their Minimum Order Quantities (MOQs) to find out how many items you are required to buy. Also speak to a freight forwarder and/or customs broker about getting the order to your home or warehouse. I’d suggest using DHL Air if your items are small and lightweight or DHL Ocean Freight if they are larger and heavier. Give them a call instead of sending an e-mail because freight forwarders tend to be pretty old school.
Step 3 – Get Funding (optional)
Now that you know how much your first order is going to cost, you have to ask yourself:
“Do I have enough money?”
“Do I want to spend that much money?”
This is where the rubber hits the road and the first time you will face significant financial risk.
- Spend your own money
- Crowdfund your startup costs
- Spend your own money AND crowdfund
DO NOT take out a loan or leverage any form of credit. You don’t know if you’re going to make any money with this business yet. So, don’t take on a bunch of debt that may cripple your personal finances and credit score for the next seven years.
Everyone should do a crowdfunding campaign because… Why not? All you have to do is use your samples to film a 1-minute video with an iPhone about why your product/idea is awesome. Setup the campaign on Kickstarter or Indiegogo. Then, send it to all your friends/family via e-mail or text with a heartfelt message and cross your fingers. 50%+ of the money for most crowdfunding campaigns come from friends and family.
Step 4 – Build your Business
So, you bought your inventory and are thinking, “Now what?” Well, you gotta start selling! Start with one sales channel, but try to utilize at least three ASAP.
Examples of Sales Channels:
- –> Your own e-commerce store <– (You must do this! Shopify or Squarespace are best)
- Online marketplaces (e.g. amazon seller, walmart.com, thegrommet.com)
- Farmer’s Markets
- Local “mom & pop” shops
- Your own brick & mortar storefront (this is the most expensive and least desirable option)
Keep in mind that customers WILL NOT start buying your product just because it’s on the Internet. You need to market your product to get it in front of people’s eyes and prove that it’s awesome (aka worth their hard earned money). This is 99% of owning an online business.
Here’s where you should start:
- Make sure your e-commerce landing page describes your product and what it does (aka benefits)! You’d be surprised how many people forget to do this.
- Create social media accounts for your brand: Facebook, Twitter, and Instagram are minimum requirements.
- Build a mailing list. This is the bread & butter of any online business. (Use Mailchimp)
- Ask all your friends and family to spread the word about your business and give them a “friends & family” discount code to share with the people they know.
- Advertise online. Use Facebook and Instagram if your product is highly visual (e.g. clothes). Your photos don’t have to be professional. Cellphone pictures are fine. Use Facebook, Reddit, and Twitter if your product is less visual and requires a detailed explanation to understand. (Avoid Google Adwords until you’re well-versed on these other platforms.)
- Once you have a small following, start running promotional sales with lots of messaging that encourages sharing of the sale/your product.
Congrats, you have a business and will be making an extra $1,000+ each month in no time flat. Now, you can optimize your business to make more money, create social change, have more personal time, or some combination of them all. Just remember to keep moving forward because stagnancy in business is the first step to death, especially in the fast paced world of e-commerce. Be mindful that entrepreneurship has many facets and can make you feel like you’re spinning plates. So, pay attention! Don’t forget to give each plate a twirl now and again, but if you drop one, as you inevitably will, don’t be discouraged. Plates are a dime a dozen, put another one up and push towards your next big goal.
If you’re a nurse and want to start a business, check out my online entrepreneurship course at TheNurseStartup.com