Launching a Creative Business: What should I spend my money on?
This is a question I hear a lot: what should I spend my money on?
There is no “right” answer to this question as it really depends on what kind business you have, and what stage it’s in, so I’ll just share my own experience with launching Bloomtown, my body & skincare business!
Stage 1 Spending
One thing we obviously did spend money on in the beginning is packaging and ingredients. It can be tempting to order everything in huge quantities to reduce unit costs, but smaller quantities at first can help you test the waters and keep your cash flow under control. That doesn’t mean you should splurge on the most expensive ingredients and packaging, though, if it’s not sustainable. Calculating your margins and pricing your products accurately if for another episode, but you should keep pricing in mind when deciding your ingredients and packaging.
IP stands for intellectual property - this means trademarking your brand name and any important phrases, as well as buying your website domain.
We learned this the hard way! While we did trademark “Bloomtown” right away, we made the mistake of assuming that one of our product names would not need a trademark because the wording was so commonly used amongst beauty brands, but the law has changed and it’s now up to individual trademark holders to pursue violations, which means any number of people can hold the same or similar trademark and nothing will be done unless one of them contests it!
In our case, another small local company saw our product name and decided to trademark it from under our noses. And we didn’t have the funds to defend ourselves legally, even though we had clear evidence that they were acting in bad faith and that our product existed first. Not a fun situation to be in, but in the end, it all worked out in our favour as we ended up just throwing away the handful of labels we had left in stock and doing a complete redesign of the product, which was a huge hit and continues to be a best-seller! Just a little lesson that every cloud has a silver lining and, sometimes, adversity actually forces you to innovate, which can lead to a far better outcome than you could have hoped for.
I’ve also found it useful to ask myself the following in business: If I take my ego and emotion out of the picture, is this worth pursuing financially and strictly from a business point of view? Should I spend thousands trying to defend this, or should I spend thousands just doing something far better? The answer is usually pretty obvious when you frame it that way!
Nevertheless, I highly recommend spending some money getting your intellectual property protected from the get-go so that you can breathe easier and be more appealing to buyers / investors should ever go down that road (and don’t assume you won’t! Keep all options open - what you think you want now may be wildly different from what you want later on…)
Branding / Design / Photography
I don’t have a background in design (at all), but I ended up doing all of the branding and packaging design for Bloomtown myself, except our logo, in order to save money. I do NOT recommend this! It took me weeks of 16-hour days to learn how to use Adobe Illustrator proficiently, and I was never truly happy with the result (though I do appreciate how far it’s gotten us).
You can use services like 99 designs to get really amazing work by up-and-coming designers without the bleeding eyeballs! Sure, it’s satisfying to learn a new skill (and there are other perks, like being able able to edit and design new labels quickly and affordably,) but I wish I had just hired someone to create a look for me that I truly love!
That being said, if you look at many successful brands, their initial designs almost never look as professional as their later rebrands, so don’t be afraid to just start somewhere. The only thing separating you from that slick branding is money. Seriously. That is all. And money can be made by creating AMAZING products that people fall in love with. Create a movement - create something meaningful, and the money will come to later revamp if need be.
The exception to this is photography. This is not something I recommend doing yourself unless you have a strong background in product photography. We took far too long to get cut-out photography of our products. As soon as we did, we scored several high profile accounts that we had been wanting. Even mediocre packaging and design can look pretty darn good if photographed well!
Social media: Stock photos of bikini clad bums dipped in sand interspersed with inspirational quotes just doesn’t cut it anymore! More and more, people are looking for authenticity. But authentic doesn’t have to mean dimly lit and blurry. Authentic can be strategic and visually appealing, too. We worked with a very affordable, boutique branding agency called The Mouse Potato (now Sofi Evans) to create a really great Instagram strategy that alternates our own brand photography with appropriate user-generated content, relevant word-based visuals that inspire, and freely available photography from sources like Unsplash. So, take it from me, you don’t have to spend a ton to get 11.6 k insta followers in 2 years!
Marketing - It’s funny, within just a few months of launching our business, our products appeared to be everywhere on Instagram - there was definitely a bit of a buzz around our brand, and people had the impression that we were raking in the cash! But we did not make a profit in year one, we broke even. Why? Because we spent a lot of money making products that we gave away for free! And I’m glad we did because it helped us get our name out there and by year two, we made a substantial profit…online! without having to stand around at markets or fairs. (P.S. I am not a fan of doing anything for my business that I wouldn’t pay someone else to do. Unless you are okay with that kind of business, where you are tied physically to each sale and don’t really care about growing, that’s fine. But if you want to grow your business online, then you need to focus your money and creative energy there.)
There’s a business between selling products and building a brand; and getting your products out there and into people’s hands - especially those on social media - can really help to do the latter.
Let’s talk about technology. About 6 months into launching my business, I spent what seemed like a small fortune on a Macbook Pro. My husband/business partner nearly had a heart attack! We couldn’t really afford it, but I was tired of trying to do really important work on a crappy laptop that couldn’t handle my style of work - massive programs like Illustrator open at all hours, multiple browsers, multiple tabs. My Macbook has not failed me once and has earned our business around 60 times what I paid for it in the first year. My iPhone is also an indispensable tool. Don’t skimp of powerful tools that can help you do tasks with less effort and stress - they will pay dividends.
Let’s move on to talk about Stage 2 spending…
A year and a half after launching Bloomtown, we were required to VAT register. A little word on this - unless you have lots of big purchases to offset the VAT, you should avoid VAT registering for as long as possible because it is a real stinger. Unless you’re ready to really hit it out of the park and far surpass the £85,000 threshold, it’s actually better to try to stay under the threshold. You don’t want to be giving 20% of your sales to the tax man if all you’re doing is hovering at £86,000!
A very helpful tool for tracking your sales and VAT is Quickbooks Online. I also use it to raise invoices for all my trade accounts. It’s so easy for my accountant to use all this data to submit our returns and do our end-of-year accounts. Easy peasy!
Next up is trade shows - As I mentioned in my last episode, we recently exhibited at Top Drawer, which is a big London trade show. It took us 2 and a half years to do our first trade show as they can cost upward of £2000 for a teeny tiny space - not to mention the cost of decorating your stand, props, hotels, etcetera. Was it worth it? Well, we got a few new stockists out of it, but we already get several stockist enquiries a week through our website and social media, so I’m not really sure. I think if you pick the right show it can be worthwhile - next time, we’d like to do the Indie Beauty Expo as it’s more focused on our industry. We found Top Drawer to be geared more towards gift shops.
Moving on to facilities - I wish I could say we have really swanky digs, but our workshops / office consists of three pretty shady looking porta-cabins in the middle of an old abandoned mine. It ain’t pretty! But it is cheap! We pay just £300 a month for 3 comfortably sized cabins where we make, pack and store everything. Low overheads mean we can be fair with our pricing and get our products out there. Unless you want people to come visit you, don’t feel like you have to spend a ton of money on state-of-the-art facilities right at the beginning - that can come later!
This was a big one for us: employees. We had to hire our first employee only 6 months after launching because we scored a huge stockist, and there was just no physical way I could handle all of the admin and online stuff plus make all of the products. It’s really scary to hire your first employee. I had a hard time letting go - after all, these products were by babies! I had lovingly formulated each one from scratch. How could I possibly trust someone else to make them? Trust me, that feeling only lasts a day! Once we found the right person, we did not look back. It totally transformed our business because it freed me up to focus on what I’m good at, which is product development, growing the business, and all the online stuff.
Let’s talk machinery - If you go onto our instagram, you’ll see our newest addition - a labelling machine! I don’t recommend splurging on really expensive machinery from the get-go, but after 2 and half years of meticulously applying all of our labels by hand - thousand and thousands of labels - we certainly earned this one! It not only applies labels 4 times faster, but it doesn’t require any skill, which means anyone can do it quickly and accurately. Our next major purchase is going to be a filling machine so that we can finally retire the ice cream scoops!
So, there you go, I hope you’ve found this behind-the-scenes look helpful - if you have any questions, feel free to leave a comment below.
Tune in next time to learn about a life-changing technique I’m using called 5-min goals + some things I’m loving, until then, have a fabulous week!