Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash (15 page)

From engineering to production, quality is key, and that starts with your vendor. Be sure to ask specific questions about their commitment to quality. Depending on your particular business, you may wish to make a site visit and evaluate the company yourself.

Reliability:
Diane Sawyer once said, “Great questions make great reporting.”
For the entrepreneur, great questions make great business. And this couldn’t be more true than when it comes to choosing vendors. Ask questions—lots of them. In fact, if you don’t feel at least a little embarrassed by how many questions you’re asking, you probably should be asking more.

It’s imperative that your vendors demonstrate the utmost reliability and dependability. If they break promises to you, you’ll be forced to break promises to your customers—and that can ruin your company’s reputation. Find out about their
history, what their capacity is like, and how many other clients they’re working with. Do they have enough inventory in stock to fulfill your orders in a timely manner? Is their organization run well? Don’t be afraid to ask for a list of references. The findings you uncover will play a critical role in your decision.

Pricing:
The more it costs to produce a product, the less profit you’ll end up making. Therefore it’s essential to choose a vendor who can offer competitive pricing. But don’t just go with the lowest bid. You know what they say: if it seems too good to be true, it probably is. For instance, if one vendor gives you a quote that’s 50 percent lower than the rest, you’ll want to make sure you know exactly why they’re able to offer such a low price. Are they underpaying workers? Skimping on quality? While you want to get the best deal possible, it’s never worth working with a vendor who regularly cuts corners just to save a couple bucks.

Payment options:
As you learned in Chapter Seven, cash is king. When choosing a vendor, it’s important to fully understand their specific payment terms. Will you be responsible for issuing payment when an order is placed, or will you have a certain period of time to settle the invoice? And if it’s the latter, exactly what kind of allotment will you have? The more time you have to pay a vendor, the more time you have to bring money into the business. Be sure to understand the terms before signing any agreement.

Service:
It’s guaranteed that at some point there will be a miscommunication or misunderstanding between you and your vendor. That’s just part of doing business. So it’s always a good idea to choose a vendor who is service-minded and committed to supporting clients. What happens when orders are late? What if there’s an order that can’t be fulfilled? How
do they handle support and technical-related questions? It’s important that your vendors are communicative and available, especially in times of hardship. Learn as much as you can about their commitment to service and make sure it aligns with your expectations.

The vendors you choose to work with will have a significant impact on your business, so you’ll want to acquire as much information about them as possible. Ask questions; run credit reports; or consult various government agencies, like the Better Business Bureau, about any questionable activities in the vendor’s history. The companies you decide to work with will end up playing a crucial role in your business, so be sure to choose wisely.

Before officially launching your company, you must also decide on the physical location your business will call home.

The importance of location and office space will vary depending on the type of organization you’re starting. If you’re opening a retail store, for example, location is critical, so your options may be more limited. If you’re starting a technology company on the other hand, you will have seemingly endless
choices. No matter what type of company you’re starting, there are many factors to consider.

The first and most common choice is to work from home. This allows you to build your business without the added pressure of extra expenses. For the bootstrapper who’s starting a business on the side, working from home may be the very best option. But it isn’t without its challenges. When you work from home, you often miss out on the human interactions that occur in a traditional work space. As an entrepreneur you should cultivate your network, and that’s not easy to do from a living room.

There are also some financial and logistical hurdles that come with working from home. First, if you plan on writing off your “home office,” you need to make sure the space is used
strictly
for work. A rental office space is a full tax write-off, whereas proving the legitimacy of a home office can be a bit more challenging. Additionally, you may need to get supplemental insurance when working from home, because most home owner policies do not cover work-related damages. For example, if your house is broken into and your inventory is stolen, it’s unlikely your home owner’s insurance will cover it. Make sure you have the necessary protections in place.

If you have a little extra cash to spend and you’d rather not work from your house, you may consider renting an office space. Depending on the resources available in your area, your rental options may range in size and price. Be careful not to get a larger or more luxurious space than you’ll actually need. Some business owners make the mistake of thinking they must project a certain image to score bigger deals. While this can occasionally be true in very specific industries, there are plenty of creative ways to get around having to pay double or triple your monthly rent just to impress a potential client. The goal
should be to start small and expand as your business does the same.

When renting space, always be particularly mindful of the lease. Starting a new business can be risky and you don’t want to get locked into a commitment you can’t honor. For instance, you shouldn’t sign a two- or three-year lease for a business you’ve just built. Work with the landlord to come up with terms that make sense for both parties. It’s worth paying a little more each month to avoid being stuck in a long and binding contract.

If you live in a major metropolitan city, you may wish to seek out a coworking space. A coworking space is just what it sounds like: a shared work environment. Often made up of entrepreneurs, freelancers, and even a few corporate types, coworking is the new big thing in professional real estate—and there’s a good reason why. A great coworking space offers affordable rent, shared resources, and most importantly, a vibrant, well-connected network. Not only can it be a great environment to work from, but it can be the launchpad for your business. Search online and find out if your city has a coworking space that fits your needs. It may just be the perfect solution for your business.

Your final option is to purchase an office space, however most startups are nowhere near ready to make such a commitment in the early stages of building a business. Buying an office is not only a cost-intensive activity; it can also eat up valuable time and energy. Most businesses should wait before attempting to purchase an office space of their own, especially when there are so many other options available.

The location you choose to work from is more than just a building; it’s the physical representation of your business. Whether it’s a room in your house or an office in a nearby
corporate complex, you’re going to be spending a lot of time there. Make sure it’s somewhere you really enjoy being.

You’ve evaluated yourself as an entrepreneur, assessed your big idea, and even made it official by incorporating your business. Your vendors are lined up, your office space is chosen, and your product or service is ready to ship. Now it’s time to take all that preparation, all that legwork, to the next phase. It’s time to transform your effort into action. It’s time to launch your business.

First things first: you need to choose a launch date. There are likely to be a number of internal factors that play a role in your public unveiling, and depending on the type of business you’re starting, there may be some important external ones too. If you’re opening a sweater company, for instance, you probably don’t want to launch in the summer. Conversely, if you’re starting a swimsuit line, it may be best to avoid the wintertime. Your launch should be as strategic as possible.

Trade shows and events can be great places to launch a new business, as media and potential clients are already gathered together in one place. Many technology companies, for
instance, choose to launch at events like SXSW in Austin, Texas, and Social Media Week in New York City. As a general rule, you’ll want to avoid Fridays, as weekends are notorious for killing momentum. You should also stay clear of holidays, even minor ones, as you may need access to a bank or other businesses that could be closed.

Since you’ve already done plenty of research about your industry and competition, coming up with the sufficient launch date shouldn’t be particularly difficult. But no matter which day you choose to share your business with the world, you must first decide if you’ll open with a soft launch or a hard launch.

During a soft launch you introduce your business to a select, limited audience. This is good for the kind of business that wants to enter the market slowly. If you’re trying to determine whether your business idea is valid (also known as achieving “proof of concept”) or you lack the necessary infrastructure required to deliver your product or service on a mass scale, this may be your best option.

One of the great benefits of a soft launch is that it provides additional time to get everything up and running. Whether that involves training staff, building your supply chain, or just getting your financials in order, a soft launch generally provides the company with a bit more breathing room and flexibility. Keep in mind, however, that time works both ways. A soft launch can provide more time to build, but that also means it may take more time to gain customers and start making money.

While many entrepreneurs choose to go with a soft launch, especially if it’s their first time starting a business, large corporations that already have resources in place almost always favor a hard launch.