Outsourcing Workload to Grow Your Business

Lesson 13 of 22

How and Why to Leverage Your Best Selling Product

 

Outsourcing Workload to Grow Your Business

Lesson 13 of 22

How and Why to Leverage Your Best Selling Product

 

Lesson Info

How and Why to Leverage Your Best Selling Product

So I know the title is called Product Production and so a lot of you are probably thinking oh, it doesn't apply to me, but what we're going to be talking about applies to digital products, too. So if you're a photographer, you're still using props, you're still using a lot of physical items, you may even create prints, or you might wanna create a product that's framing certain things. So there's a lot of ways for those of you with digitial products to think of bundling or using these manufacturing techniques that I'm going to be talking about. We're gonna be starting small and getting bigger, so it's not that you need 5, of any one thing to get started. So we've already talked a little bit about your products, so in this one, we want to dig down what are your best products. So we talked about your highest profit-producing product, that might not be the same as the product you sell the most of because if you're gonna build a product as a foundational piece of your business, you need to ...

sell lots of them. And the thing that you sell one of at a craft show may not be the same kind of thing that you can really sell 100 of. So I have a friend who's a weaver, Deborah Jarchow, and she wove this amazing, beautiful thing. It was a mummy-inspired weaving with skulls, a huge, giant costume piece, and she found someone who just loved it, favorite thing ever, bought it. That doesn't necessarily mean she could sell 1,000 more. So even if you have one person who's falling to bits over this one thing you made, doesn't mean that's your best-selling product. So let's think about, and this is a time for you to get out your worksheets and obviously, spend more time on it than we're doing right now, but what are your top three selling items? So this is in terms of quantity. What are you selling the most of? Before we were talking more about the profit on an individual item. Then, go ahead and calculate your top three profit earners. Again, these may not be ones you sell lots and lots of, but they're things that are allowing you to earn a whole lot of profit. And then I want you to think about what trends are driving these sales. So think about things like are these your eco-friendly items, are these the ones that really have hand-made as a component, are they things for babies, drill down a little bit more about what you think is driving the sales. Did they get some good ratings on Etsy? All these factors that you may not think of as intrinsic to your product can really affect sales. And this is what we're gonna have in the back of our minds as we're thinking about things we can do more of, things we can work from, and things we can make bigger parts of our businesses. And like I said, keep in my mind, just because one thing has been selling like gangbusters, like a lot of times people are like I've sold out, I've sold out of all two of them I had. Doesn't necessarily mean you're gonna sell out of 100, so keep that in the back of your mind. We're trying to think things that would do big quantities. So now that you have some of those in mind, again, spending more time offline, we want to make these things work even harder for us. So what would you do if you got 1,000 orders. So let's say you get that dream advertising placement, magazine profile, whatnot, what would you do physically if you had 1,000 orders? So we're thinking back to hiring help, could you find someone who would help you sell 1,000 bags? Would you even be able to source enough material for 1,000 bags? Those are the things we want to think about, like how could you even accomplish that because it's not always as easy at is seems. If you're using, let's say, a custom silk screen fabric, your bottleneck might be that silk screening producer. So it's not always obvious how you would turn a product that's doing really, really well at five a month into a product that can be 100 or 1,000 a month. What's your barrier hiring help? So this is something we touched on a little bit before. Do you need to make more money from the sale of each item? So let's say you're only making five dollars of profit an item and that's not allowing you to hire help. Well, that's not really a product that's going to grow very well for you because if the only way you're earning a living is by sewing these things yourself, and you can't afford to hire help on it, you don't want 1,000 orders, actually (giggles). Stop your advertising, you don't want anymore people to buy them. So think about this problem of what you would do to fill 1,000 orders, which components would you really like to be made easier? So one example might be, with our bags, if you could buy the purse handles from someone else, so a maker who makes handles, and then, building that into your pricing structure. Is there some equipment that you can buy that would make the process easier? What would it cost in time and energy to run a business that could handle thousands of orders? You might not make these changes right now, but you want to have in your mind what would it take to run that business because if your goal is sell this many purses, dresses, whatever, photograph this many weddings, you need to have a plan in place to do that. Now, you may decide oh, heck no, I would need a studio that's 2,000 square feet and three people and now, you've just told yourself that's not the path you want your business to go, so maybe you want to go more that route we talked about earlier, charging more per item, but doing fewer of them. We're just teasing those ideas out. Oh, that's why I alluded to it. So if quantity is just not gonna work as your end goal, which is true for a lot of people, how can you make your product more exclusive and more high end, does that change your marketing? Does it change the raw materials you want to use? One thing that different companies find is that it's more valuable for them to attract a customer and keep them as a recurring customer. So if you have a high-end product, maybe mouth-to-mouth referrals and, let's say you're a wedding photographer, and then parlaying those people into people who now have babies. Because it's the person you've already built trust with, they've already spent the money with you and now, you want them to spend more money with you. So that could completely change your marketing strategy. So again, when you have a lot of time, go ahead and really work on these questions because it's gonna change the shape of your whole business. What we're going to be talking about specifically here is we want to make more of our best products, and again, it could be quality or quantity, it depends. Here's some things to think of, if it's already a bestseller for you, that's a really good indicator of what's going to keep doing better. So think of your best selling product and what variations or products that would complement it could you add that wouldn't take terribly much more work. These are things we want to think about. One thing I'd encourage you to think about is, we're going with the purses, right, what is missing from your shop to make it a one-stop shop for blank. Let's say you sell handbags and great accessories, what's the one thing keeping it from being the one-stop shop for today's career professional woman? Is there an audience that if you added a couple of more things, someone would be like wow, that is the place I go to get all of my makeup for production work, or wow, that's the place I got to get all of my formal clothes, or that's the place I go to get all of my whatever. I aim to be the place you get all of your eyeballs from, I got the eyeballs. And that's also part of my business philosophy, too, with the crochet patterns. If you want to learn to crochet, you can get the whole thing from me, beginner, you don't need to go anywhere else. So I encourage you to think about, when you're doing your motto, what can you do to fully serve your customer and give them everything they need so they feel more comfortable coming to you and knowing that they're going to get absolutely all of the resources they need to rebuild their career, for example. Who's your customer, how can you cater to them more? How can you make their experience more fulfilling? Here's a good thing to think about, how can you make your bestseller deluxe? So let's say it's a purse, can you add a planner to it? Can you add a key chain? Can you make it out of leather? Can you monogram it? Take the bestseller and think about what you need to get it to a higher price point, and don't replace it, but have it as an add-on because a lot of times when people are buying a product from you, they're more than happy to also buy the next thing. And actually, there's an interesting phenomena that happens. Let's say something's $ and then you see a $200 one, wow, the $100 one looks cheaper now, doesn't it? So even if you have an item that you don't really sell a lot of, let's say it's a photography package that includes the whole family and the dog, and real estate photos. Not so silly, but even if you don't really sell that, having that holy cow exclusive pacakge can make the rest of your items seem more manageable and less pricey. So thinking of the deluxe idea and how it can round out your shop is a really great thing to think about. And we're going to talk about this more in detail, but who could you partner with to elevate your product a little? So I just threw out the idea of a planner. So if you are a purse maker and you know people who have purses to be organized, could you partner with a planner maker, like the day planners, as an add-on to your item? What kind of person would you like to partner with that would really make this deluxeness happen? I'm into the bags. Okay, so let's say your basic black purse is your bestseller in your shop. You also offer a red leather tote and a duffel bag, but maybe we've been talking about streamlining and that means cutting so many different kinds of pieces, and it also means stocking four different kinds of fabric. And it seems hard for you to figure out how to streamline it. Well, maybe you might only offer the black purse in six different colors, and only one pattern template. Or maybe you offer three different cuts of bag, but only in the same fabric. So think about your products as the whole line with regards to the techniques you need, the inventory you need, the descriptions. So if you have, let's say, this bag features these lovely orange clasps and that becomes a signature feature for you, now maybe it's confusing to have some bags without the clasps. So thinking about what makes your product unique and having it reappear across multiple products can really help you out. And we're talking about this in growing part, it might allow you to purchase more of your materials at a steeper discount if you're buying larger and larger quantities. So that's another goal because cutting expenses is the same as making money, really. So let's talk about margins and labor. So the margin is how much, basically, you're profiting after you make the money and then pay the expenses. So if you're selling bags, I have my numbers written down because I can't do all this math all in my head (giggles). If you're paying yourself $10 an hour and it takes 3 hours, you've made $30 extra above your materials cost. But let's say you can hire someone to do it, so now you have two people who are making things, you don't still need to profit $30 an hour because you're no longer paying yourself for your labor. So if you have a bag company and you're paying them $20 to make the bag, and you're still profiting $10, you can now sell hundreds of thousands of bags, but since you're not doing the labor, you're still earning an income because you still have a markup over the labor cost. So this is what we're talking about, hiring people who are faster, more streamlined than you to do certain tasks and if you're no longer relying on the profit as your hourly wage, but instead you're thinking of it as a margin above your labor cost, the whole system of your budget changes a little bit. So think about that because you might be able to not earn as much per item as profit, but if you can make up for it in volume by hiring others, than it might end up being more profitable overall. Okay, so I'm going to show you a case study on the Kit Club. So this was me capitalizing on my bestselling products. That's me at the table, so I was selling kits, which is a crochet pattern, yarn and eyeballs in a little baggy, and those were selling pretty well. And so I decided to try out selling more of these items. So what I did was I started a club, and it was a subscription service, and there are lots of really, really great things about it. First of all, I started with only a three month subscription, so it was something I could drop if it didn't work. So I started it out for kind of a trial basis. So you would sign up and for three months, you would get sent a surprise package, and I received the money... It was a set amount of money. They also received a surprise. So here, you can tell I have different colors of yarn. They received a surprise package, which meant I could control my inventory easier. So I could go to my supplier for yarn and say oh, you're out of green, whatever, I'll take blue. So I was able to make this product that allowed me to be more flexible with the colors that I was using, but it was still a good income earner. But I was using the economy of scale, I was shipping all of the boxes at once. I was only spending one day doing this thing. We're gonna watch how it grew, pros and cons of growth, pros and cons of growth. (laughs) It became really, really popular. So at the height of my subscription club, I had 600 members, which is a heck of a lot of packages to send out, just so you know (giggles). Because it was reliable income, I could move to purchasing the eyes, which I included in the kit, directly from the factory overseas because when you order eyes, you need to order thousands of each color at a time, it's a heck of a lot of eyes I buy. So taking the regularity of that product allowed me to buy more inventory, but cheaper. And then these I, then, could add to my regular shop. So I was able to basically broaden my offerings. I also could meet them... So I always included a goody, I could also meet a minimum order to buy form a new supplier to add the goody. So because I was growing bigger and I wasn't making the same margins on these individually, but because I was getting these large orders, it allowed me to get other benefits, like getting new suppliers. This club is what let me eventually pay for my fancy shipping software because I was shipping so many packages, it was now worth it for me to buy the shipping software. So back in the day, oh, $15 a month, that sounds expensive, but now, when I'm shipping hundreds of hundreds per shipment, it's super low to get the shipping software. So by capitalizing on my bestselling product, and I was making smaller amounts of profit per item, but the quantity allowed me to make a significant profit and sort of change the structure of my business a bit. So that was how and I don't think anyone needs to be convinced on why to leverage the bestselling product. The how is going to depend a bit on your business and what your particular product is, so if anyone wants to chime in anytime from the chat rooms, or in person- Is it always about identifying your bestselling product as opposed to a product that you feel like you can wrap your head around and- Yeah, I mean, there's so many different... So bestselling is easiest. It means lots of people like it, you have evidence it's already going out the door. It could be, as we talked about earlier, your highest markup product. So if you sell one bag with fringe whatever and you make a really good margin on it, but you only sell one a month, maybe that's what you want to capitalize on. Maybe you want to spend all of your marketing energy sending that out to high level magazines. It could also be, in some sense, this product you feel like most represents your brand identity. So maybe it's not bestselling yet, but you really believe that having eco-friendly cotton in a modern, trendy purse lifestyle is the path for you, and you want all of your future supplies to be oriented around that product. It's going to depend with each person, but I do want you to think about is, in a sense, how can you organize your entire business so that you're not just creating this product and then, this product and then, this product, but you're creating them all as an ecosystem that's going to lower your production costs, allow you to hire help, and kind of just create a more streamlined business altogether.

Class Description

Most small business owners begin by doing it all. But as you grow, you’ll probably find that you need help. But what kind of help? And where do you go to get it?

In Outsourcing Workload to Grow Your Business Stacey Trock will show you how to navigate the options for getting the help you need for your business. From bookkeepers and accountants, to graphic designers, photographers and web designers, to virtual assistants, to production assistants, to overseas factories, to marketing agencies...there is a whole world of freelancers able to help your business run more smoothly!

In this class you will learn the following:

  • The range of freelancers that are available, and what role they can fill in your business
  • How to write a procedures manual for your business, making the delegation of work as seamless as possible
  • How to hire a virtual assistant and streamline your business into tasks that can be carried out by someone other than you
  • The difference between a contractor and an employee, and the pros and cons of each
  • How to outsource the production of physical items for your shop, including working with local artisans and navigating the process of ordering custom items from overseas factories (via Alibaba)

By the end of Outsourcing Workload to Grow Your Business you’ll learn how to decide what is truly important in your business and what your time is worth.  The secret to successfully turning over portions of your business is to structure your workload into systematic and well-defined capsules, which can be handed off to a largely-independent freelancer; freeing you up to do the things that you really love!

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