When it comes to setting up your own business, there are a lot of factors to consider. Most importantly is managing your money. From budgeting your expenses to deciding on your retail price, Nicky will talk you through how you can manage your money when starting up your own small business…
Personally, I suggest creating a budget for your first two months in business, so you have a basic idea of what to expect. You’ll need to estimate the cost of supplies, equipment, and overheads. You should also budget in a wage for your time and effort as a business owner as well; after all, this is for you. There are a whole host of budgeting tools online that can help you with sorting your numbers or if you’re feeling confident you could create your own spreadsheet on Excel!
In the beginning, it’s best to keep your product line or service offering small and manageable.
So, for example, when I am advising those starting up their own candle or home fragrance business, I ask them to start by thinking about the candles and scents they like, what’s most popular with their friends and family, and also what fits their chosen target market.
When pricing your products there are a variety of different types of pricing strategies you could use. However, there’s no one guaranteed formula-based approach that suits all. Usually, pricing your products involves considering certain key factors, including pinpointing your target market, tracking how much competitors are charging, and understanding the relationship between quality and price.
This may sound a little daunting in the beginning but don’t worry. To simply put it, when setting up your initial pricing you need to add up all of the costs involved in bringing your product or service to market and set your profit margin on top of those expenses, that’s it.
A good starting point is the below formula which has been tried and tested over the years:
Cost of Materials (inc. packaging) + Your time / Labour x 2-2.5
ie: Materials £2 + Your time £2 = Selling Price £8 – £10
Why this pricing approach works – the most important element of your price is that it needs to sustain your business. If you price your products at a loss, or an unsustainable profit margin, you’re going to find it challenging to grow and scale.
There are also other important factors that your pricing needs to account for, like how you’re priced compared to your competitors, and what your pricing policy means for your business and your customers’ expectations.
Pricing isn’t a decision you only get to make once. In the early days testing the market with different price points is critical and will be very helpful in guiding you as to where you fit into the market.
After you have set up your platforms and sorted your pricing structure, you need to choose how you will accept payments. The most popular online payment service is PayPal as it can be added to multiple platforms and also used alone through its independent app and site. I have used PayPal for years as it’s a trusted service and when my customers see PayPal they are comforted that their money is safe and continue with their order.
For more information please visit https://www.nickystory.com