4.01 – Finding Enough Product & People
The first test of feasibility for any business is ensuring you have enough products to sell or enough skilled people to provide your services. It’s crucial to confirm that you can produce your product at the necessary rate and quantity. Similarly, if you’re starting a service business, you need to ensure you can hire individuals with the required skills, whether they are housecleaners or web page designers.
If you’re buying into a franchise or joining an existing business or co-operative, many of these issues are already addressed. However, conducting your own assessment of the supply chain can provide valuable insights and familiarize you with the process.
How Much Is Enough?
The quantity of goods or services you need depends on your business ambitions and what the market can support. For instance, if you plan to open a restaurant in an area with a total population of 100 people within a 50-mile radius, the scale of your venture is inherently limited.
A practical approach is to work backward to determine this. If your goal is to earn as much as your current job pays, use that figure to estimate your initial output level. For example, to make a £10,000 profit before tax, a manufacturing or processing business typically needs to generate between £80,000 and £100,000 in orders. Subtract your anticipated profit from your sales target to find the value of goods and services you need to procure.
There are four main areas to check out:
Consumable Materials
If you’re producing items yourself, you need to identify reliable suppliers of raw materials. Even if you’re purchasing finished products, like in mail-order businesses, you should investigate your suppliers. Local suppliers are often preferable for consumables, as they can help build goodwill in your community and might even bring in business. Directories like Kellysearch and Kompass are excellent resources for finding suppliers of consumables.
Equipment
For businesses manufacturing their products, it’s essential to verify suppliers, delivery times, and payment terms for the necessary equipment. Ensure the equipment meets your output levels and quality standards. Again, Kellysearch and Kompass directories are valuable resources, listing information on millions of products and services from suppliers globally.
Finished Goods
For new businesses, buying products close to their finished state can be a better use of limited cash, allowing focus on high-value tasks like marketing and sales. Directories such as Kellysearch and Kompass list almost every type of finished goods supplier, making it easier to find what you need.
Premises
Finding the right location can be a significant factor for some businesses, like restaurants, coffee shops, and nightclubs. It can take time to find suitable premises and secure necessary permissions. Check with local commercial estate agents and have alternative locations in mind.
Assessing Human Resources
Unless you plan to handle everything yourself initially, ensuring the availability of skilled workers in your area is crucial. Look through the “situations vacant” section of your local newspaper under relevant headings to gauge the local job market. If there is high demand for the skills you need, you might face challenges in staffing your business.
Additional Considerations
When starting a business, it’s essential to consider the following:
- Local Economic Conditions: Understanding the local economy can help you predict demand for your product or service and identify potential challenges in sourcing materials or hiring staff.
- Networking: Building relationships with other local businesses can provide support and opportunities for collaboration. Attend local business events and join business associations to expand your network.
- Market Research: Conduct thorough market research to understand your target audience and competitors. This research will inform your decisions on pricing, marketing strategies, and product offerings.
By carefully assessing these factors and planning accordingly, you can increase your chances of business success. Ensuring you have enough products and skilled people is just the beginning. Continuous evaluation and adaptation are key to staying competitive and meeting market demands.
