3 Tips for Start-up Producers

Essentials to Survive and Grow

As much as you may love your product and know that everyone else will love it too, you still need to master these three essentials to survive and grow.

1) Cash Flow Management

Reduce your costs by how you buy. Extend your credit by how you pay. Get paid faster by how you sell. Here are a few suggestions:

  • Treat your vendors like you treat your customers. They can cut your costs and extend your credit. Sell them on your product and its future. Make them strategic allies – if you grow, they grow. Call them with a payment plan weeks before you miss a payment. They have payments too, and will appreciate working with a customer who cares.
  • Buy in quantity whenever possible with terms. Your supplier’s goods are more valuable to him as a receivable from you than they are sitting in his warehouse without a buyer. If you produce your product on an as-needed basis, you may be able to get your supplier to hold your purchase in their warehouse until you need it.
  • Offer discounts to your buyers who purchase in large quantities and pay on delivery. Generally, when retailers buy big, they sell big. They sell quickly to create more space in their warehouse. They are more likely to discount it to their own customers. This helps create new customers for the retailer (and ultimately, you). It also puts money in your bank account before your bills are due.

2) Channel Distribution Management

If you have a product that will get sold by a retailer, it has to go through the distribution channels. Every part of the distribution system buys your product for a different reason. Here are just some of them:

  • Sales people or brokers buy it for the commission. They understand the benefits, and see how they can sell their customers, distributors, jobbers, or chain stores. They think it’s a winner and will put in the extra effort to get it established.
  • Distributors buy it because it fills a gap in their product offerings. Your product addresses a market segment they want to sell to, or one of their large buyers wants to buy it from them. They want to have the exclusive in their territory.
  • The General Public buys it because it has proven to be an exceptional value and it is in stock. If it’s out of stock, they’ll buy something else. The biggest challenge for any start-up with an excellent product is keeping it in stock.

3) Human Resource Management:

No matter what you are producing, you’re in the Human Resource Management business. Your staff is your greatest asset. They represent your company and your product. Reduce turnover and preserve delicate buyer and vendor relationships by considering these critical elements:

  • Make sure they know exactly where their check is coming from. It’s not from you; it’s from the customer and everyone else who helps you get it to them. Show employees a graph of how the money flows from the customer back to them with all the steps in between.
  • Employees do what they are paid to do. As a cash-strapped start up, you can’t afford to pay for attendance alone. Pay for performance. Non-performers can’t afford to work for you; performers can’t afford to quit.
  • Once you find top people, find out what they like to do and reorganize the company so they can excel at what they to do best. Training and mentoring are only the beginning. They have to be convinced that you have their best interests at heart. Keep them loyal with public acknowledgement for a job well done.


About Michael Houlihan & Bonnie Harvey

Starting in a laundry room with no money or industry knowledge, they built the iconic Best-Selling Barefoot Wine Brand - without advertising. In 2005, they monetized their brand equity and now offer proven business principles and real world experience. Visit our YouTube Channel →

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