Whether generating a few sales in the early days or trying to control the expansion of your company, managing the growth of your business is no easy task. However, if you get it right, the challenge becomes incredibly exciting and very satisfying.
The advice below is aimed at start-up and growing manufacturers and retailers alike in the craft sector. I know the industry well as I set up my own crafts supply company from my bedroom whilst studying at university in 2005. Today, my business has grown into an international company with offices in the UK and USA that designs and manufactures crafts and supplies thousands of products to enthusiasts across the world.
Starting with the numbers
First and foremost, managing any kindof business starts with managing your finances. Start-up companies and budding entrepreneurs in the craft world; it’s an absolute must to have a good handle on the businessbank account (and if you don’t employ someone who does). If the business is too small to justify a specific finance person then choose a good accountant, one who will get under the skin of your business and understand it so they become an extension of your internal team and advise you properly and are deeply involved in your decision making.
A common mistake many companies make is that they can generate sales, but they find further down the line that they aren’t making any profit. More often than not, this is because they don’t see all the hidden costs and don’t have a good enough handle on the finances.Carefully selecting an accountant will avoid this pitfall and help you keep a handle on those all important numbers.
You should choose to live by the saying –“turnover is vanity, profit is sanity but cash is reality”. Don’t have your head in the clouds and run away with big ideas and dreams that are going to deliver lots of sales if they are just that – sales. The fundamental aspect of any business should be to make a healthy profit.
Cash is king. If you can manage cashflow
The end to the above saying is “but cash is reality”– true, but that cash needs to be managed. Cashflow is the biggest killer of small businesses,you can be making sales and they can be incredibly profitable, but if you don’t plan your cashflow, then you could end up in a sticky situation. Not having short-term cash availability to see you through a growth period can be fatal for your business, especially at a time when banks are not as helpful as they were a few years ago. In order to combat this you must look at all the opportunities facing your business and ask these three key questions:
It is as simple as that. Weigh up the opportunity cost of each option and understand that you physically can’t do everything at once, you won’t have the resources let alone the cashflow!) So, you need to select the options which are going to give the greatest return for the least amount of resource and cashflow.
Know your strengths but recognise your weaknesses
Another point to consider is why you started up in business in the first place. You need to be asking yourself: ‘What am I good at?’ If you focus on your strengths, this is where you can add the most value to your business.
Once you have accepted you cannot function as a one man band, hire someone to do the things you aren’t so efficient at – one of my tutors at York University taught me a valuable lesson very early on. You must always play to your strengths, and then surround yourself with good people who can fill in the gaps of your weaknesses.
For example, I know that my key strengths are product development and sales. I’m not so good at the technical stuff. So, when I first started the business I quickly realised I needed a website and decided to take evening-classes in web design. My tutor pointed out that this was a very bad use of my time as it would take me three times longer to build a website than if I enlisted the help of one of my classmates at University. Furthermore, what they could make for me would far surpass what I could have designed myself – thus giving me a stronger start with my website, plus my time was better spent developing products.
Surround yourself with good people – the best that you can afford, no matter what size your business. When I first started out there was just me, and I couldn’t’ afford to hire people so I used freelancers and consultants to specifically fill the areas where I was weaker. I built a strong team, but one where I didn’t have the responsibility of finding a huge pay packet at the end of the month (or filling their time).
As we’ve grown at Crafters Companion, we’ve gradually brought skills in-house and we have been fortunate enough to expand the team. However still now, with 47 in-house staff, we still use many freelancers and consultants. I ensure they feel just as valued as my permanent staff and see them as an extension of my workforce - involving them in staff-meetings, and keep them up to date on what’s happening in the business across the board (not only in their areas of speciality).
Another trap to avoid at all costs in impatience. Do not try and grow too fast! If your business model is sensible and sustainable then success will come but it will take time, which is a good thing. If you chase too many opportunities all at once the chances are you’ll spread yourself too thin and won’t do anything well. Also at the very beginning, you’reunlikely to have the cash resource to undertake many projects at once so if you do you run the risk of losing money as projects may have to be pulled before completion.
To round up my core advice is: do something you enjoy, be sensible with your money and delegate tasks you’re not so great atto good people. If you cover all of these bases then you should be onto a winner!
Sara Davies is founder of Crafter’s Companion and head of board at the Craft and Hobby Association UK (CHA-UK). At just 28, the entrepreneur regularly features on TV via Ideal World and Create & Craft as well as equivalent shopping channels in North America and Europe. Sara also undertakes various roles that involve her supporting, mentoring and investing in other businesses and entrepreneurs to promote business growth, export and job creation in the UK as part of Gabriel Investors and UKTI.