Inspection Specification Sheets Prevent Embarrassing Shipments

Posted on by Kaylyn Perry

We’ve previously highlighted the importance of a product specification sheet (PSS).  A PSS aligns your expectations on the quality of your product with the quality of product produced by your manufacturing partner.  Where a PSS establishes expectations on product specifications, a product inspection specification sheet (ISS) outlines how those product specifications will be tested.

An inspection specification sheet aligns your expectations on product usability and functionality.

How to use inspection specification sheets

Kickfurther recently helped manufacture a hot/cold water bottle.  The PSS detailed the shape, logo, packaging, weight and materials. The product inspection specification sheet detailed the bottle’s functionality. The following were quality assurance tested for this water bottle.

  1. When assembled, the water bottle is filled with boiling water and cannot leak
  2. When assembled, the water bottle is filled with ice cold water and cannot leak
  3. When assembled, the water bottle is filled with ice cold water, emptied, and then filled with boiling water

Sounds straightforward, right? But you’d be surprised how many common uses of a product aren’t tested to ensure functionality if they aren’t specified. These listed tests form only a sample of the tests performed on the bottles to ensure the quality of their manufacturing.

Review your quality assurance testing with an ISS

We can’t offer direct recommendations on the tests you should conduct on your product without understanding what your product is, but an ISS is often formulated from the perspective of how the product is expected to be used.  Tests should typically include the following.

  1. Test description – What will be done to the product? Filled, pushed, pulled, etc
  2. Test amplitude – How much of (1) will be done?  For example, how much force will be applied, from what height will it be dropped?
  3. Test pass result – What result means the product passed the test? What margin of error is acceptable?
  4. Test fail result – What result means the product failed?

The benefit of these detailed tests is that not only will you know if there is an issue with your manufacturing process, the test results will often offer specific guidance on what product improvements should be prioritized.

Identify improvements & new product opportunities

Don’t wait to receive customer returns and or until after you’ve processed refunds to identify problems with product quality.  For example, a detailed test report might reveal 25% of your production is failing on a leak test, and 10% is failing on a drop test.  You would want to correct both, but you might be able to salvage a production run by just swapping out the rubber seal for your bottle.  Looking into the future, the inspection offered guidance on future product development or provided ideas on how to update your product specification sheet for the quality of product you need.

Without a PSS and ISS, you’re at the mercy of your manufacturer’s mood. But, with a PSS and ISS in hand, you’re the master of your supply chain.

Product Specification Sheets Prevent Disappointing Deliveries

Posted on by Kaylyn Perry

Avoid being surprised by poorly manufactured goods. Start with a product specification sheet.

Supply chain management can be a tricky thing to master and it can be hard to slow down and reconfigure it when you’re trying to ramp up. That being said, we’ve seen way too many brands get burned by manufacturers because they didn’t bother outline exactly (and we mean exactly) what they were purchasing with a product specification sheet when they submitted an order.

Take this horror story we heard and won’t soon forget: An entrepreneur found a great factory in China to manufacture his product at an incredible price point — 50% better than any other factory.  He jumped on the deal and initiated production right away. When production finished, he requested pictures and the products looked great. Unfortunately for him, when the products arrived (ceramic plates), he discovered the manufacturer had produced the plates in centimeters instead of inches.  He then had an entire container load of unusable products. It was a great price though…

In another example, a business ordered products and was extremely happy with the high quality of the pre-production samples. They later learned (much to their dismay) that the factory had used leftover materials for the pre-production sample and bought much cheaper materials for the main production run.

This is why we say to specify exactly what you need.

Do you really need a spec sheet?

In cases where a business does not get a product specification sheet signed by the factory prior to placing an order, they leave themselves open to the possibility of significant production mishaps.  In the most generous interpretation, these are honest miscommunications. A more sinister interpretation is that profit-driven manufacturers will improve their margins wherever they can.

Spending the time to create a product specification sheet has many benefits:

  • You can easily source quotes from other manufacturers when your product specs are clearly laid out.
  • You can understand where the costs are coming from in your product and either improve specific components or identify places to reduce cost and improve margins.
  • Most importantly, you ensure you’ll receive the product you are expecting to receive.

A little time, a big improvement

You know your product better than anyone else, so spend the time making sure everyone else gets it right: Enter the product specification sheet. Depending on the product, the specs you’ll need to identify will vary, but we recommend considering the following:

  1. Packaging – Materials, weight, printing, text; case size, case count, individual piece dimensions.
  2. Materials – Quality of steel, quality of leather, type of cloth, grade of plastic, etc.
  3. Assembly method – CNC, hand stitch, laser cut out, whatever it may be if it is important.
  4. Components – Zippers, type of chip, type of lens, type of button, brand of component manufacturer.

The above is not an exhaustive list for your product spec sheet, but provides a great launch point and highlights the areas you might overlook clarifying with vendors.

A final word on product specification sheets.  In 95% of cases, it will make no difference whether you have a product spec sheet or not.  However, when it does make a difference, it can make a huge difference. Often it happens at the most inconvenient time: Right when you’re placing a big order, your manufacturer realizes it can save $0.05 by switching to a cheaper and nearly identical component without understanding how badly that can affect your product and brand.  The time you spend building a spec sheet sets your business up for long-term success.

Share with us any other tips or best practices you’ve found with spec sheets.

Increase Margins With This 3-Step Process to Ballpark Production Costs

Posted on by Kaylyn Perry

When you’re building a product business, one of the best ways to increase margins is to lower production costs you’re paying to manufacture your products.  See the below example:

Cost: $1.00
Wholesale Cost: $2.00 50% Margin
Retail Price: $4.00 75% Margin

This pricing structure is often referred to as a double-double scenario, meaning retailers buy from you for double your cost and then sell to the customer at double their cost. Using that model, let’s see what happens if we increase our prices by 10% compared to reduce costs by 10%.

Inc .Cost: $1.10
Inc. Wholesale Price: $2.20 54.5% Margin
Inc. Retail Price: $4.40 77.3% Margin

Now, let’s see what happens if we reduce cost but keep our wholesale price:

Reduced Cost: $.90
Wholesale Price: $2.00 55% Margin
Retail Price: $4.00 77.5% Margin

If you’ve got a lot of brand equity, you can reduce costs while increasing prices to really juice your margins (looking at you, Apple).

Lower Your Costs, Increase Margins

Now granted, the margin differences between reducing costs and raising prices aren’t MASSIVELY different, but you also don’t lose any market share due to increasing costs.  There are many brands we see that pay 30-50% more than they should be for their products. So how can you secure lower prices?

A good starting point is knowing how much your products should cost.  One way we evaluate product costs is to grab a few data points to establish a price range of the final product. Here’s how it works.

  1. Open three tabs in your browser and navigate to Alibaba.com , AliExpress.com, and amazon.com.
  2. Search for your product on each of those websites.  If your product is a custom product, look for something similar (i.e. if you have some kind of camera product you could look up dash cams or security systems instead).
  3. Take prices from products that look similar to yours and plug three prices from each source into the yellow fields on this sheet.[Adjust the expected price up or down depending on the customization of your product. If it’s better materials, custom design, etc., adjust up.  If it is simpler or has fewer parts, adjust down.]

By averaging costs from supply sites and marketplace sites, you can identify a rough approximation of what your product actually costs to produce. This is a rough approximation of what your products probably actually cost to make.  By finding similar products on websites that are currently for sale you know you’re going to be in the right ballpark and the prices are very real.

What if you have higher costs?

Keep in mind there are some situations where you will be paying a significantly higher price.  When your products are custom, have expensive materials or have low order quantities, you may end up with a higher cost, but the above method can inform you on what long-term costs are achievable once you scale your brand.  When negotiating with a factory don’t be shy about sharing the links you found and explicitly asking them, “how is this product achieving such a low price point?” The absolute worst case scenario is you learn something new about your competitors; the best case scenario is they relent on pricing or introduce you to a manufacturing level where those costs are achievable.

The lesson here is you can shop around to lower your costs and increase your profit. Let us know if you’ve been successful negotiating your rates!

Good luck!

Crowdfunding or Business Loans: Which Is Right for You?

Posted on by Kaylyn Perry
Fundera Blog
This is a guest post from Fundera, the go-to financial resource for every small business—helping you face your challenges, achieve your financial goals, and grow businesses as big as your aspirations

One of the most common and pressing issues for small business owners is funding. Whether you’re a new entrepreneur or the owner of a well-established venture looking to expand, you’re just as likely to worry about having enough capital on hand.

There are many routes a business owner can take to avoid the fate of other businesses that folded due to cash flow issues, which is often cited as the number one reason why small businesses fail. Two of the most popular options are taking out a business loan and turning to crowdfunding.

These two concepts are fundamentally similar. They both involve raising capital from an outside party, and both may require you to pay back contributors in excess of amount received.

Each form of raising capital comes with its own set of pros, cons, and responsibilities. Whether one is a better choice for your business than the other will depend on your particular financial situation.

Let’s review both business loans and crowdfunding to see which one makes more sense for you right now:

What are business loans?

A business loan, also known as a term loan, is when a lender extends a chunk of money to a business owner, which will be repaid in regular installments plus interest.

Small businesses typically find it more difficult to obtain affordable business loans than large corporations do, especially from banks. In fact, the SBA loan program exists specifically to guarantee bank loans for small businesses, in order to help them find financing at affordable rates.

Online lenders have proliferated in recent years, and many of them can extend financing to small businesses in as little as one day, albeit at higher interest rates than what they would receive from a bank.

What is crowdfunding? 

Crowdfunding is when you finance a business or new project by raising money through contributions from a collective of people. Many popular crowdfunding platforms rely on small contributions from a large population to help launch a new business or product. Other crowdfunding platforms help finance larger financial needs for established or growing businesses. There are a few different kinds of crowdfunding but the most common is reward-based crowdfunding, when a business owner or entrepreneur might deliver small rewards in exchange for a contribution.

Just like online lending, crowdfunding has exploded in recent years; there are now hundreds of crowdfunding platforms that cater to different types of projects, different styles of fundraising (equity-, donation-, or rewards-based options) and different stipulations and rules. For example, some platforms will only let you take money from contributors if you reach your stated financial goal, while others will let partially funded projects receive funds as well.

Typically, to persuade users and strangers to contribute to your crowd fundraiser, you’ll need to create a compelling pitch, which could include photos, videos, testimonials, research decks, and other evidence that your concept or product will be a useful, legitimate success.

When is a business loan right for me? 

Business owners need to be very careful when considering a business loan. There is always a risk when you agree to take on debt, even if you’ve run the numbers and decided that the payoff is worth the potential issues.

That being said, a business loan is a good bet if you and your business can say the following:

  • Your business financials are strong: The most important factors that lenders consider when you apply for a loan are your credit scores, your time in business, and your annual revenue. If all of these are strong, you are more likely to receive offers for loans at affordable interest rates.
  • You need a large chunk of money: Banks and other lenders don’t typically lend to businesses looking for less than $50,000. In fact, the average size of all business loans is $663,000, according to recent data. You’re not likely to hit that number with a crowdfunding effort.
  • Your funding needs aren’t immediate, or, conversely, you need funds right away: This is a seeming contradiction, but it’s true: Loans from banks or through the SBA loan program will likely require an application process that takes months. Online lenders can sometimes supply you with funds the same business day at high interest rates. The middle ground—30-60 days—is where crowdfunding is a better fit.

Think of a business loan as a springboard to greater success, rather than a lifeboat. If your business is struggling, a loan may only help keep you afloat for a limited time; if you’re profitable and healthy, access to capital will help open even more doors for your business.

When is crowdfunding right for me? 

Although a relatively recent entry to business funding, crowdfunding is expected to grow to a $300 billion industry by 2025. For certain businesses and situations, it may be a perfect fit. For example:

  • You have a relatively new business: Startups have more limited options when it comes to affordable bank loans. Crowdfunding may be an easier and less expensive way to obtain funding without going through a bank, and can often provide faster access to money.
  • You have smaller capital needs: If you’re looking for less than $50,000 – $100,000, which many banks enforce as the minimum borrowing amount, crowdfunding can provide funding that better fits your needs. The average amount of a successful crowdfunding campaign is about $7,000. Although some campaigns for big-dollar amounts do succeed, they are the exception, not the rule. There are also newer platforms and options that cater to higher-dollar campaigns, in case your needs grow or you’re seeking a large infusion of capital right away.
  • You can offer valuable (but not costly) rewards: Be sure you can put together a list of potential rewards that won’t, in turn, take away from your crowdfunding earnings. The more non-monetary awards you offer, such as social media shoutouts and item preorders, the better.
  • You’re open to different forms of investment: Business loans are debt-funding, pure and simple. Crowdfunding can be equity-based (you sell a small piece of your business in exchange for capital), debt-based (you repay investors, plus interest), or donation- or rewards-based.
  • You are prepared to try again: Less than a third of all crowdfunding efforts successfully meet their goal. You may need to rework your pitch multiple times until you find pay dirt—and there’s no guarantee you will.

Both traditional financing and crowdfunding are appealing options to successful and promising businesses. You may find that a combination of both options is your best path forward or that neither makes sense for you at this time and you’ll continue to grow organically.

Either way, it’s important to recognize that both routes will take time and energy as you prepare your application and/or your pitch. The payoff, however—in the form of low-cost capital that can help catapult you to the next level, or get your excellent new idea off the ground—is worth it.

How to Build Your Brand with Custom Packaging

Posted on by Kaylyn Perry

Build Your Brand With Packaging That Stands Out

Traditional marketing involves a lot of branding strategies that take the product to customers in various ways. E-commerce allowing customers to shop without ever touching the product has turned this on its head! The rules of the game changed. You may say the game itself changed! Now a marketer must speak the language of digital, and use various tools like social media, search ads, banner ads, etc. to reach a potential customer.

Additionally, online shopping brought in another element to the shopping experience that didn’t exist in the strictly brick-and-mortar days: Today, packaging plays a huge role in the customer experience space, and as more people shop online, opportunities to stand apart through branding are only increasing. In fact, trade pundits attest that branding is one of the most critical factors in bringing in and retaining customers. In the e-commerce space, they say that the packaging is the brand; some brands have admitted that superior packaging has helped them catapult their product sales.

What Does Custom Packaging Involve?

What does it really mean to build your brand using custom packaging? Once an online shopper completes the transaction, the fulfilment process kicks in and the shipping process begins.

To service the different challenges of shipped delivery versus in-person shopping, ecommerce retailers can lean on a number of inventory, logistics, shipping and tracking resources, like ShipBob, Stich Labs, Volusion and Easy Post.

 

custom gift box for product packaging

Further, when combined with packaging partners like Arka, a brand’s shipping strategy gets well taken care of. A vital component of any brand’s shipping strategy is custom packaging. Arka helps you find innovative and cost-effective packaging with flexible service options.

If you’re also a Kickfurther customer, you’re in for a treat. Use the promo code ‘KICKFURTHER10’ for an additional 10% off on your first order with Arka! 

Shipping is a herculean task but it is the backbone of e-commerce shopping. Most e-commerce players start off small, managing the packing and shipping out of their own homes, small offices and so on. At some point, scale hits and you need additional help to add efficiencies.

As you scale, working with third-party partners like Arka and the above helps ensure that the customer experience remains superlative and builds positive brand experience as you grow.

Packaging as Your Brand

ArkaBoxes_500

To ensure that your branding is driven by custom packaging, you need to focus on making your packaging an experience that customers love. This could involve colors, imagery, shape and design, among other experiential elements. Custom packaging provides a great opportunity to communicate your brand voice and values.

The choice of packaging material speaks volumes about a brand. It must be durable, cost-effective, and in line with the brand attributes. For example, a seller of eco-friendly products must look to packaging that can be recycled. Working with Arka helps connect your ideas to materials and design that support your brand goals. Customers will begin recognizing your packaging as an emblem of the values for which you — and likely they — stand for. This helps build loyalty to your brand and develops long-term customers and brand ambassadors.

Statistics show that a considerable number of customers decide to drop a brand simply because they did not like the packaging, the quality of the product notwithstanding. Veteran marketers can tell you tales of brands forced to change their packaging to improve customer perception and then sales.

Custom Packaging Pitfalls

While it is true that custom packaging can help boost your brand and the revenue, it is also true that one should not change the packaging for the sake of it. Several worldwide brands that spent significantly and went all-in on a makeover were forced to move back to their older packaging!

So, what went wrong? Well, customers identify your brand with a certain kind of packaging. So, when a change is made without any proper market research and advertisement of the larger vision or strategy, the sudden change to packaging and/or branding could backfire as well. Loyal customers look for and like to stick to their liking of the product packaging; unwarranted change can be detrimental.

Why Custom Packaging?

Custom packaging is a vital strategic element that can help you build, enhance and solidify your brand. Think of what your brand should say to the customer. It may help to think about your own favorite brands and what they stand for and how they communicate those values through their marketing, packaging and overall presentation.

Your customers can experience the same connection with your brand, and packaging is one high-visibility way to build that connection. With Arka, high-quality and infinitely customizable packaging has never been more accessible to growing small and medium businesses!

Arka 
Arka offers incredible prices, low minimums, and high quality custom designs. You can choose from a range of Kraft boxes that are eco-friendly, durable and inexpensive. Or, if it is white boxes you want, then these are available in multi-color, clear print and with a high-quality finish.

Find out more by getting in touch with Arka today.

Meeting Richard Branson

Posted on by Kaylyn Perry

There are a lot of companies that champion a “work hard play hard” culture. Necker Island and the XTC are the embodiment of that philosophy. On one side of the beach, you have some of the most interesting and driven entrepreneurs I’ve ever met. On the other side of the beach, you have premiere kite surfers flying through the sky. During the events, the two sides intermingle.

It’s hard to describe what it’s like to hang out with the Mai Tai Global crowd. In a word, they are optimists. Unafraid to challenge the status quo or take on new challenges, these are people who are confident in themselves and their ability to learn whatever it takes to get them to the next level, sometimes literally. Pretty much every person I spoke to had deep domain expertise on a topic, whether it was branding, finances, AI, or how to load an edge and rip it 40 feet into the sky (just some kite surfing jargon). Above and beyond that most everyone could speak intelligently to any topic brought up. At the center of it all was the man we were all there to meet, Sir Richard Branson.

I’ve been a fan of Mr. Branson (Sir Branson?) for a long time – ever since I read about why he started Virgin Air and then learned more of his storied history as an entrepreneur. In China, they have a saying “it’s easy to ride a tiger, but hard to dismount” that relates to being an entrepreneur. We often start endeavors without a clear exit plan, knowing the way is fraught with dangers and the ride may not be smooth. Many people in the world will choose not to “ride the tiger” unless they can see a clear path to a safe exit. What does this have to do with Sir Richard Branson? He’s been riding the tiger since he was 16 years old and dropped out of school to start his first business. He’s had his fair share of scrapes and cuts and bruises, but he gets up and fearlessly throws himself back in the fray. I believe it is the combination of courage and competence that has made him such an incredible success.

Anyone can tell you that he’s incredibly perceptive and brilliant. I can also tell you that he is humble and vivacious. I think he was most enthusiastic when he was telling us about the time he got thrown in jail for an epic April Fools prank. He clearly has a great love of life, not just for his own life but for others. He believes in giving back and it shows on Necker Island. He houses and cares for multiple endangered species of lemurs on Necker Island (they’re super cute) and is a major conservationist. At dinner he had a big bite on his arm which he joked was from a shark (technically sting rays are kinds of sharks), and he told the story with a big smile on his face.

lemurs.jpg

In the end, Mr. Branson told me that above anything else he was impressed with my enthusiasm for my company. I love what we do, I believe in our vision and it’s easy for me to be enthusiastic about Kickfurther. Necker Island was full of people who took their ambition and kicked it further, I’m lucky to be counted among them.