For many new entrepreneurs, starting their business isn’t actually when they run into problems. Many find it easy to choose the products they want to sell, add a catchy name, create a website and begin marketing.
If done correctly, their business grows. And grows. Suddenly, they have a shop with way too many orders and no plan to handle them on their own.
Becoming too big too quickly is actually not that terrible of a problem. That is if you’ve created a scale up business from the start.
But, many business owners don’t think ahead about what will happen if they get too big. There is no plan. No idea how to handle a crazy amount of orders at one time. And I hate to tell you, but “just rolling with it” usually isn’t a great solution.
If you own a handmade business, too many orders can become an even bigger problem. As a one person shop, if orders come in too quickly or in such a volume that you can’t make them yourself, suddenly you might find yourself turning down orders.
I see shops close briefly all the time, especially around the holidays. This isn’t exactly a bad thing, since they’re taking the time to complete the orders and get their businesses in organized.
It does mean, though, that they were not ready to scale up their business. Undoubtedly, they’re losing money. How do I know this? Since the orders were flooding in before they shut down and they would have continued flooding in if they were still open, all those extra orders have been lost. Gone. Never to be seen again.
If the shop had a plan to scale up their business before getting too busy, then could have continued taking orders. They wouldn’t have had to turn money away. And I hate turning money away from eager and willing customers.
I was reminded of the importance of creating a scale up business model by my tax accountant. He was quite surprised how quickly my stationery shop was growing. But this surprise came with a dire warning. If we continued to grow that that level, would I be able to continue making handcrafted invitations quickly enough for customers to enjoy.
Scaling up your business is a funny thing. Choosing how and when to scale up are some of the toughest business questions you will face. It’s hard to predict when you want to put additional resources into certain areas so you can grow with your audience. You also don’t want to lose money from your investment.
No matter what you decide, though, you want to create a plan to on how you can scale up business early on. That way you can implement it when you’re ready.
Knowing where the resources to grow will come from and having an idea how to move forward will alleviate some of the chaos when the day arrives.
One of my favorite business stories comes from a fellow stationery design TomKat Studio. Kim started out making swirl lollipop invitations out of paper. She used the design for a birthday party for her daughter. Kim shared it on her blog and viewers started requesting to purchase handcrafted lollipop invitations for their own children’s parties. Eventually, Kim opened up a shop on Etsy and took handmade orders for these invitations.
Kim had no idea how popular her lollipop invitations would become. She ended up with way too many orders and had to shut down her shop in order to complete them.
While she was creating hundreds of lollipop invitations in her studio for eagerly waiting customers, it dawned on her. What if my customers could do this themselves?
Kim created the first ever printable design. A lollipop invitation that she would edit and email to the customer. The customer could then print, cut out and assemble themselves. This process was a lot faster than her making them.
Selling a printable version took away the limitations on how many she could handcraft. Kim no longer had to turn away customers. And it allowed for her to scale her shop. She built an amazing brand in the end – mainly because she changed how she did business.
I’m still figuring out what level is the breaking point when I need to truly scale up. Although we’ve come close, I haven’t had a Kim situation yet.
To be prepared when that does happen, I’ve started creating a plan to grow my business even larger when it (and I) is ready. Here are some ideas to make your handmade or small online business more ready to scale up.
Have good suppliers
Many years ago, candy tubes were the biggest hit for favor packaging. They were mostly used as gumball tubes and showed up all over the birthday, baby shower and wedding markets. They were a trend.
I decided to get in on the action and we sold them (and still do) in our shop. They were a creative favor idea and I didn’t want to be left behind.
The problem was sourcing the tubes. We had placed a large order of tubes into the manufacturer when Hurricane Sandy hit. Our supplier was located in the direct path near New York. They got wiped out, so tube production ceased. We didn’t receive our order for months.
I had not predicted a weather delay. We ran out of the tubes that we had quite quickly and customers started contacting us for large wedding orders at the same time. It turns out everyone got their candy tubes from the same supplier. When they were closed, we all lost our candy tube supply.
Sadly, I lost out on hundreds of dollars of orders because of Hurricane Sandy. I had to cancel existing orders and couldn’t accept new ones. It was a huge lesson in supply and demand.
I know that it wasn’t the supplier’s fault, but I wish I had been more prepared with a back up plan. Another supplier or contact that could have gotten me a similar product.
If you choose to sell supplies, products or rely on others to get you supplies to make your product, have a number of good suppliers that you can rely on.
Also, it’s important to build relationships with your suppliers. If they aren’t located too far away, set up an appointment and go meet with them. See where your products and supplies are being made. Make sure that their methods fit with your business practices.
In Rubies in the Orchard book, Lynda Resnick always went to the factories in China that made their products to make sure their methods matched her company’s ideals. Although you might not have the means (or the need) to travel that far, try to build those relationships. They go a long way when there’s a crisis (such as a hurricane) and you’re trying to get products out the door.
Handmaking your products is a lot of work. And the process requires man power. Actual people (not robots) that make something beautiful. If you rely on handmaking to create your goods, the only way to scale really is to get more hands.
If you have enough money to invest, hiring some help when you’re ready might be a good solution. Another idea to consider is automating some of the process. Are there parts of your handmaking that someone or something else could complete to make creating your product faster?
I have always been really nervous about automating any piece of our stationery production. After a year searching for the right paper stock, I am not confident having someone else print our designs. What if the paper isn’t a great quality? The envelopes are flimsy? The colors are distorted due to how the printer reads them?
Yeah, I haven’t quite embraced automation yet myself. I do look at it for the future, though, and have started shopping around for printing options.
You always should have a plan of automation in your pocket. You never know when someone will knock on your door for a wholesale opportunity and you’ll have to jump into manufacturing your product at a greater speed.
Find Alternative Income Sources
Although I’m sure you’re proud of the handcrafted creations that your shop makes, the handmaking process can be tiring. Especially when your entire business earnings depends on this one source.
One way to scale up your business is to develop alternative income sources – also called passive income. These are additional ways to bring in income that don’t rely only on you handcrafting your goods.
These alternative income sources allow your business to grow more healthy and sustain itself over a long period of time. If one of your income sources fails one month, you have other income sources that you can rely on.
A great way to create an additional income source is through digital products. You could make your designs into blueprints, create coordinating printables, make patterns, share your knowledge through online classes and write e-books. There are lots of ways to share your expertise without having a handmade product.
One example is the maker Ashleigh who shares her crochet talents on her blog Sewrella. Her business model is the perfect example of balancing multiple income sources to scale your business.
Instead of just crocheting handmade items (although she might still do this), Ashleigh creates instant download crochet patterns and sells them in her Etsy shop Sewrella. Not only does she sell printable patterns, though, she also sells supplies of hand dyed yarn. Another great way to add to your income – adding similar, but different product offerings.
In addition to her Etsy shop, Ashleigh also started a blog where she shares more crochet patterns, gives advice on crocheting and shares other information about blogging (because, doesn’t everyone talk about blogging these days!).
She is a perfect example of how a business needs to differentiate their income sources to thrive. According to her last income report in May 2018, she made over $10,000 for the month. That probably seems like a lot of money in one month – hats off to Ashleigh. But the important part is how she made money.
Instead of putting all of her time and talent into her Etsy shop, she differentiated her income into multiple sources. She has advertising revenue, sponsored content, YouTube videos and affiliate marketing. Even after expenses – which are really low since her entire business is based digitally – she still makes a decent income.
Create How-To Guides Early On
Most handmade businesses have a lot of steps that keep them running every day. You have specific ways that you make your product, communicate with customers and organize business tasks.
As we learned during my last maternity leave, there is a huge risk when only one person knows these processes. It limits your growth and others can’t help you.
If you create a series of how-to guides about the things that you do to run your business, you will be able to hand off important tasks when necessary. This might not be because you are going to scale. You might want a family member to start helping you or you might get sick and have to hand off tasks unexpectedly.
By having simple sets of instructions for others to follow, your business doesn’t have to stop if you are taken out of the mix. Instead, you can continue growing. It also helps if you decide to hire a VA or another person to assist. A how-to guide will let them get started and actually help faster, than if they rely on you providing all of the information.
Write these how-to guides as soon as possible. Don’t wait until there is a need. By having them on hand, you make your business ready to scale up production and face an unexpected crisis.
Save Money from the Beginning
When your business starts making a profit, it’s only natural to think that you can spend those funds on the things you want. After probably months or even years of working to build a profit earning business, there is finally some money to show for your efforts.
Instead of spending that money as you make it, it might be smarter to put some of it away in savings for when you do decide to scale up. You will need cash to make the changes necessary to successfully scale up. By having a healthy savings account for your business, you’ll have enough money when you decide it’s time to scale.
If you need more money than your savings account will provide, it might be time to look into small business grants and loans. There are several wonderful grants including the Fed Ex Small Business Grant contest that want to provide you with seed money to grow your ideas. You can even find a number of grants that are specifically for woman run businesses. You can never have too much financial support to take your business to the next level.
These days, there are lots of freelancers, VAs, web designers and other business experts out there to help us do our jobs. It’s hard to sort through all of the noise and choose the best ones to get our extra tasks done.
I’ve noticed it on Facebook. Every day there are at least ten new business coaches or other experts popping up in my feed. Each has a professional pitch trying to get my attention and sell me their services. What used to be a small set of individuals peddling their services has ballooned into a huge marketplace of options.
When you do decide to outsource, start by getting to know the experts around you. Really well. Ask for recommendations from your fellow business friends.
Don’t have any business friends yet, check out Facebook groups for your topic. They are a great resource to find advice and help when you need it.
Look for experts who have accomplished what you’re trying to do. They are the people that actually know the ropes and how to help you because they’ve done the work themselves. These experts have been in your shoes. They know how difficult it is to do it all and many focus on the tasks that they’ve been the most successful at. These are the people that you want by your side.
Once you identify who you want to learn more from, sign up for their free information sessions. Follow them on social media. See if they speak to you and your personality. Is this a person you can naturally learn from and will provide guidance that you’ll follow?
I have met a lot of business coaches over the years. Many of them are more boisterous than I am. They have good advice, but I find them a bit louder than me. It’s tough to follow someone when you can’t even watch their videos.
Before fully committing to working with someone, apply one of their suggestions to your business first. I followed a business expert for awhile and tried her product development plan. It failed horribly for my business. I quickly realized that even though we shared a similar passion in products, her ideas didn’t work for the way I created. No worries. Just move on until you find some people that work for you.
Invest in Smart Technology
We live in the technological revolution where the right app or plug-in can change how we run our businesses. In order to scale your business, it’s important that you have the right technology in place. There are thousands of apps, plug-ins and other tools that you can use to make your business more efficient.
You also want to make sure you have the fastest computers, tablets and other mobile devices to do your work on. As someone who likes to cut corners in these areas, I don’t recommend trying to save too much money in the technology department.
In order to scale up, you will also need to learn about the new apps and plug-ins that can make your website work faster. Follow technology business blogs and other experts on biz technology and see what’s in the marketplace. If you have a specific problem you are trying to solve – such as how to collect and pay taxes on your Shopify site – do a search. There are so many business solutions out there.
The most important thing to remember about scaling is that you don’t want to wait too long to think about it. If you don’t start your business with a plan of becoming a successful larger entity, you could find yourself in a financial predicament when you do want to grow.
Scaling up your business takes planning. You need to set up the right models from the beginning – good outsourcing, reliable supplies and solid savings – in order to be ready when the time comes. The timing may surprise you. A lot of business is based on economic conditions and trends.
You also want to be prepared for when new opportunity comes knocking. You never know when a wholesale retailer will show up or your approached by Target to carry one of your designs. Don’t get caught off guard.
Now, time to get back to work. You have a business to build.