BEN TYSON: Hello, and welcome to 2016 and the Google Small
Business Community.
My name is Ben Tyson.
And it's a new year, so that means it's time
to start that new business.
So with that in mind, we've invited small business expert
and author Julie Gordon White to give us
her best tips and tricks for business planning.
Julie, thanks so much for being here.
JULIE GORDON WHITE: Hi, Ben.
It's great to be here.
BEN TYSON: Can you tell us a little about yourself?
JULIE GORDON WHITE: Sure.
Well, I've had the pleasure of working with thousands
of small business owners over the last 12 years
with my boutique mergers and acquisitions firm,
through my book, "Exit!
12 Steps to Sell Your Business for the Price You Deserve,"
and my company, The Well, for women entrepreneurs
in the online training program called Accelerate.
BEN TYSON: Fantastic.
Well, today, we're going to talk about starting
a product-based business.
And I wanted to share a statistic with you
that I found very interesting.
According to the Product Development and Management
Association, for every seven product ideas, only four
enter development, and then only one succeeds.
So what are some special considerations
people should keep in mind when they're
looking to launch a product?
JULIE GORDON WHITE: Yeah.
That's a great question.
That statistic is disturbing, though, isn't it, right?
So really right out of the gate, they
should really consider what patents and licenses
are required for this idea, this wonderful idea and concept.
So you can go right to the patent and trademark website
and poke around and see what other concepts are
out there that are like yours.
So you can add your own flavor and make
sure you're not going down kind of a path that might not be it.
Another idea is to test, test, test, right?
Get that little prototype developed
and go out and talk to people.
I think a lot of entrepreneurs get nervous about sharing
their idea.
You know, someone is going to steal it.
But all that feedback from customers
is just really golden.
It's just invaluable to get that feedback because you
want to make sure you're building something
that people want.
You don't want to go too far down the road.
And then after all that feedback,
once you get the go and the green light,
that's the time to go and secure funding
because building a product company costs money.
BEN TYSON: Absolutely.
JULIE GORDON WHITE: It's a little different than a service
company where you can kind of grow organically.
But product, you need capital.
So that's the time to make sure you really
have investors or banks or wherever you're
going to get that capital from.
You need to go out and secure that at that time
because there's nothing worse than having
a big go with your new product, getting an order,
and then you don't have the funds to build and produce
more.
That's the sad thing, right?
BEN TYSON: Yeah.
And what's interesting is when you talk about getting capital
investments, a lot of investment firms
want to know what your profit margin is, right?
JULIE GORDON WHITE: Right.
BEN TYSON: So what is the ideal profit margin for a product?
JULIE GORDON WHITE: Right.
So on the margin side, the important thing
is to understand that you want to have as healthy a margin
as you can, right?
Because it's different for every industry.
But when you have a healthy margin, that makes up
for any mistakes that you might make because, of course,
you know, you've got to factor in the cost of production,
the materials, and the labor.
And so if you have other expenses in your company,
if you can keep that margin healthy,
then that's going to protect you in case
you have any unexpected expenses or you
have to take back product or things like that.
So a healthy margin is probably the most important piece.
BEN TYSON: OK.
And how can I find and negotiate deals with vendors
to help build my product?
JULIE GORDON WHITE: Yeah.
You know, the first thing is to ask, right?
So go online, Google it.
Search it and figure out where those people exist.
BEN TYSON: Nice plug.
JULIE GORDON WHITE: Do you like that?
OK.
Where those manufacturers are for your product.
There's also national associations
for almost every industry.
I think they're golden.
So find the state or national association
that usually has all of those types of players in them,
from the vendors, suppliers.
And go ask them, how can I negotiate
special terms with you?
Can you do a small run for me?
You might pay extra for it, but it's a great way
to test out further and go take your product
into the marketplace without going, again, too far down
the road, end up with a garage full of stuff that didn't sell.
So just go out and ask.
BEN TYSON: Interesting.
How would I manage the cash flow in that process?
JULIE GORDON WHITE: Yeah.
That's a really important piece.
When you've got that cash flow, you
want to make sure that, one, you're
paying your invoices quickly so you start to establish credit.
And that way, in the future, they're
going to give you better terms, which
is another thing to negotiate so you can
take a little longer to pay.
Because especially if you're selling to a large company--
a large department store, let's say--
it's going to take a while to get paid.
So you want to make sure that you have enough cash flow
to manage through that time where you have to produce it,
then you have to ship it, and then
you have to wait 90 days after that to get paid.
So it's really critical.
It goes back to that whole capitalization thing.
BEN TYSON: Absolutely.
And to sum all this up, what is one thing that you
want every business owner to remember
when they're just starting out?
JULIE GORDON WHITE: Yeah.
I love that.
Well, I just want to add two.
Don't forget to stay lean, right?
Especially when you're managing your cash flow.
So I'm going to throw that into my last statement here.
Stay lean.
But also think big.
If you're going to work that hard and have this great idea,
think big.
And then start right where you are, because when you do
think big, then there's that kind of feeling of paralysis
that can sink in.
So just take the next best step.
And then lastly, you've got to sell your way to success
because sales covers up a lot of mistakes.
So sell, sell, sell.
BEN TYSON: Awesome.
And if you want to learn more from Julie,
you can attend her free webinar every Wednesday
at 10:00 AM Pacific called "The 21 Day Business Plan."
We'll also post more details on how you
can sign up in the community.
Julie, thanks so much for being here.
JULIE GORDON WHITE: Thanks for having me, Ben.
BEN TYSON: And thank you for watching.
As always, all of our content is available at g.co/gsbc.
And please, follow us on Twitter, LinkedIn, Facebook,
and of course, Google+.
Until next time, I'm Ben Tyson.
Thank you so much for joining us here in the Google Small
Business Community, the place you
go to get the help you need to succeed on the web.