How do you sell products you can’t afford to buy?
Mark Harrison, founder of highly successful online digital photography site camerasdirect.com.au, faced a big challenge when he started up – he couldn’t actually afford to buy in the products he wanted to sell.
“Importing product meant paying for it upfront. I started with literally $20 or so and a borrowed computer. The first 12 months was about being creative with making sales from small ticket items with larger margins and moving volume.”
This slow-and-steady approach was crucial in building a strong company. “I learnt that a passion for what you do is more important than the money you have to invest, so long as you are prepared to give your baby time to grow,” Harrison says.
Katie May, founder of online parents directory KidzSpot, faced a hard slog in building her business with a small team of sales people in an outbound call centre.
“It was so difficult for us to convince a small business operator that online was essential to their marketing – just think of a fairy party or jumping castle operator taking our call as they’re en route to a party. They were not convinced about online and trying to get them to a computer to show them was impossible. Needless to say, there was a lot of rejection in the first six months.”
Keeping the team going was hard work, and May says she had to invest relentlessly in fun incentives and motivation to keep the call volumes and staff spirits up.
“It was hard. I suppose the biggest learning on this front was that you can motivate a team on more than sales results. Because results were few and far between in the early days, we learnt to motivate based on other metrics, such as total number of presentations in a day. It took us months to realise that salespeople need to feel like they’re winning each day. That worked and kept them motivated until the sales did come more regularly.”
Plenty of unproven start-ups struggle to earn the respect of investors, customers and suppliers. But when you are only 22, winning these groups over is even tougher. Just ask Costa Anastasiadis, co-founder of Crust Gourmet Pizza Bars.
When he started business as a stand-alone store, he quickly found that suppliers were hesitant to deal with him because of his age and relative inexperience – not a great situation when you’ve got big growth plans.
“My strategy was to make sure I paid all my suppliers on time, week in week out, to build a professional reputation. Being a good payer gets you a long way.”
Inovia IP, founded by Justin Simpson, have revolutionised the way patents are lodged in foreign jurisdictions, slashing the cost of the process through the clever use of technology. One of the company’s main customer groups is patent attorneys – who naturally weren’t exactly impressed at the idea of a new service that could slash their revenue.
“The business challenged the status quo and there were (and are) strong vested interests held by patent attorneys in maintaining client relationships and the ‘old’ way of doing business,” Simpson says.
The key to solving this problem was in the positioning of the company.
“We learnt to position our brand and services as an opportunity to attorneys instead of a threat and in doing so have won more than 50% of our business through this market.”
Jim Noort, founder of toilet hire business Viking Rentals, has a simple message for those brave start-up entrepreneurs who go into a sector they know little about.
“I knew absolutely nothing about portable toilets and liquid waste. I had to teach myself and when you make mistakes in this business it can be very smelly.”
I don’t think there’s a start-up entrepreneur who would disagree with that.
To enter SmartCompany’s Business Start-Up Awards see here.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
