chrishobson
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I'm hoping for some insight on any possible weaknesses in this approach, or ideas to improve upon it. I've had this staring me in the face for over 6 months now, and it never clicked until now. Thanks in advance for any help.
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My future father in law owns an apparel brand in the sports industry, and has been looking for ways to bring his family into the business and expand. He has been in this business for approximately 10 years, and has only slowly grown it since he has done all of his own sales. In person, face-to-face. He currently nets a decent profit from it, but it is essentially a slowlane business since he is limited by his time, and his scale has stayed local.
Originally he was looking for us to do sales, since he has had other individuals contact him about being independent sales people for his brand. Instead of being an independent salesperson, I want to ask for 50% of the business and fastlane it.
I think his business is ripe for fastlaning, but before I go to him, I wanted to run this past the forum and ensure it makes as much sense as I think it does.
He has already expressed interest in building his own manufacturing shop in the Philippines, where he is from, and where his current manufacturing is done. He also already has connections in the area through his current business. He has referred to being as big as industry leaders in his segment one day, but I think he just doesn't know how to go about it. But I know it is doable to make this a $1M annual profit business, and I know I can show him that too.
Here is my basic plan -
Step 1 - Build ecommerce/brand site. I've started this this week, and it has a way to go. This will also involve standardizing the product line, as it is currently all custom. Last year he actually had a small marketing company build a brand for him, and they did okay work. That should make this relatively easy to do. Worst case I hire someone to build the website.
This will help us better establish the needs and scale of our product. Based upon research both should be sufficient, but zeroing in on specific needs and problems beyond our experience will be huge.
Step 2 - Develop a network of independent dealers across the country. This will allow for a sales staff to show the products in person, which has been one of his key sales strategies in the past. The product sells because it is premium quality at a reasonable price, and the in-person viewing is the closer. I'd start slowly at first in our local region, and get the process down until it was very easy and efficient.
Having dealers will let the sales process be decoupled from my time and his time, and give us time for the next step. This will also help us grow our scale beyond our local region and the internet. We would retain control over the brand by only allowing dealers we considered high quality and with high ethical standards. I don't want every wannabe salesperson selling my product.
Step 3 - Develop manufacturing capability. Instead of using third party manufacturers, open our own factory with the best managers from the current suppliers. This would allow us to maintain or improve the quality when the switchover happened. And why train new employees when good ones are already there?
Owning the manufacturing will increase control, and provide a better margin on each unit sold under our brand. Entry here might be hard, but I plan on having already grown a sizable business through the dealer network by this point.
Step 4 - Provide private labeling service for specific niche competitors. Since we would have manufacturing capability I would want to expand into providing private labeling for other companies in the same market space. There are different niches within the industry, and this would allow me to piggyback off of someone partially exploiting one of those niches. Some of these niches can have over 100% markups, and I'll gladly take a piece of that for no work on the sale.
Margins on the sale in this industry can range from $10-30 per unit sold. He currently sells just above 2000 units/yr and has been growing. His limitation is his time. Taking into account the profit for the sales agent, and the lower margins for private labeling, I came up with some needed sales figures for $1M in annual profit.
With margins ranging from $5-11 per unit, monthly sales would need range from 8,000 to 17,000. I don't think those sales figures are unreasonable at all.
__________
My future father in law owns an apparel brand in the sports industry, and has been looking for ways to bring his family into the business and expand. He has been in this business for approximately 10 years, and has only slowly grown it since he has done all of his own sales. In person, face-to-face. He currently nets a decent profit from it, but it is essentially a slowlane business since he is limited by his time, and his scale has stayed local.
Originally he was looking for us to do sales, since he has had other individuals contact him about being independent sales people for his brand. Instead of being an independent salesperson, I want to ask for 50% of the business and fastlane it.
I think his business is ripe for fastlaning, but before I go to him, I wanted to run this past the forum and ensure it makes as much sense as I think it does. He has already expressed interest in building his own manufacturing shop in the Philippines, where he is from, and where his current manufacturing is done. He also already has connections in the area through his current business. He has referred to being as big as industry leaders in his segment one day, but I think he just doesn't know how to go about it. But I know it is doable to make this a $1M annual profit business, and I know I can show him that too.
Here is my basic plan -
Step 1 - Build ecommerce/brand site. I've started this this week, and it has a way to go. This will also involve standardizing the product line, as it is currently all custom. Last year he actually had a small marketing company build a brand for him, and they did okay work. That should make this relatively easy to do. Worst case I hire someone to build the website.
This will help us better establish the needs and scale of our product. Based upon research both should be sufficient, but zeroing in on specific needs and problems beyond our experience will be huge.
Step 2 - Develop a network of independent dealers across the country. This will allow for a sales staff to show the products in person, which has been one of his key sales strategies in the past. The product sells because it is premium quality at a reasonable price, and the in-person viewing is the closer. I'd start slowly at first in our local region, and get the process down until it was very easy and efficient.
Having dealers will let the sales process be decoupled from my time and his time, and give us time for the next step. This will also help us grow our scale beyond our local region and the internet. We would retain control over the brand by only allowing dealers we considered high quality and with high ethical standards. I don't want every wannabe salesperson selling my product.
Step 3 - Develop manufacturing capability. Instead of using third party manufacturers, open our own factory with the best managers from the current suppliers. This would allow us to maintain or improve the quality when the switchover happened. And why train new employees when good ones are already there?
Owning the manufacturing will increase control, and provide a better margin on each unit sold under our brand. Entry here might be hard, but I plan on having already grown a sizable business through the dealer network by this point.
Step 4 - Provide private labeling service for specific niche competitors. Since we would have manufacturing capability I would want to expand into providing private labeling for other companies in the same market space. There are different niches within the industry, and this would allow me to piggyback off of someone partially exploiting one of those niches. Some of these niches can have over 100% markups, and I'll gladly take a piece of that for no work on the sale.
Margins on the sale in this industry can range from $10-30 per unit sold. He currently sells just above 2000 units/yr and has been growing. His limitation is his time. Taking into account the profit for the sales agent, and the lower margins for private labeling, I came up with some needed sales figures for $1M in annual profit.
With margins ranging from $5-11 per unit, monthly sales would need range from 8,000 to 17,000. I don't think those sales figures are unreasonable at all.
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