5 Ways To Start A Business That Survives
Opinions expressed by Entrepreneur contributors are their own.
The last few months have been tough for brands, especially indie beauty brands. Several have announced they are closing, including Lilah B., Sigil, Meant, Biophile, Makeup Geek, Bite Beauty, La Bella Figura and the State of Menopause. While it’s easy to blame the insanely crowded beauty industry (which is true), the reality is that starting a business today is much more about surviving than it is about launching.
The entry price to launch a business has decreased across many industries, including beauty. Ecommerce sites are pretty easy and turnkey to set up, especially when using Shopify. It’s become easier to find manufacturers willing to do smaller runs, and all the expertise you need (digital, marketing, Amazon, design, etc.) can be easily found on sites like Fivrr.
Anecdotally, it seems like many pandemic babies were born — pandemic business babies, that is. These were brands launched during Covid as founders sought other ways to regain control of their lives and exited the corporate world. But these pandemic business babies didn’t necessarily think through their business beyond their launch — and several that I know are already shut down.
So if you’re considering launching a beauty business (or any business), know that launching it is most likely the easiest part. The hard part is staying in business. And in my experience, most beauty investors want to see some traction before investing, so the hard part of getting momentum will likely be all on you (unless you have a rich aunt who can’t wait to fund your idea).
Consider this a reality check. You will need to consider five things before you launch your business.
How long are you comfortable funding the business if you can’t secure investment money? And how much of your own money can you stand to lose? Or course, no one wants to assume they will fail, but one of the most significant factors in startup failures is running out of cash. You need to be honest about this, or you can find yourself mortgaging your home, tapping your IRA or worse. I can assure you that whatever you plan on spending, it will end up being more.
Related: The Relationship Between Funding and Marketing
2. Customer acquisition
How will you acquire customers? It’s become harder and harder to rely on the same digital strategies to grow your business profitably. Plus, according to our own experience, most beauty customers need 7-12 touchpoints with your brand before converting. This means you must be prepared to surround your customers with several activities — from the top to the bottom of the funnel. It’s difficult and requires much expertise to manage content across multiple channels.
3. Role allocation
Who is going to do the work? Many founders find themselves knee-deep in minutiae, not wanting to spend the money to outsource or hire the capabilities they need, but conversely, not putting their talents to the best use. I completely understand this, but sometimes bringing in help is precisely what you need to do to grow the business. Understanding your priorities and how you will get the work done is key. And then, of course, you must find people you trust to build your team. The last thing you need to worry about is micro-managing your team.
Related: 8 Things To Know Before Starting A Business
4. Target audience
Is the world really waiting for your product or service? We like to think so, but most of the time, our products aren’t that essential to our lives. If your product went away, is there another one that would replace it? Or would it genuinely leave a hole? If it’s replaceable, you will have to work much harder to carve out your customer base — and convince customers to keep coming back to you.
Remember that many customers (up to 93%! according to Statista) have become trained to use a coupon code. So you need to think about the long-term value of your customers and how to make your product as irreplaceable to them as possible.
Related: The Step-By-Step Guide to Finding Your Niche and Target Market
How flexible is your business model if things change outside your control? Change was the reality for brands that launched during COVID-19, but it seems now like it’s just the way it is these days. If your strategy relies heavily on brick-and-mortar or a particular channel, you might want to build some contingencies in your business plan. Think about what strategies you could deploy to keep your business going. And understand the financial implications of pivoting.
So think about building your business not just for the launch but for longevity. After all, as venture capitalist, Vinod Khosla says, “I always tell start up hang on long enough to give luck a chance. If there are ten factors in success, five depend on what you do, three on luck and two on competitors.”