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byrondsouza wrote: ↑July 17th, 2024, 2:34 am
I have started a new business of wood carving figurines and more. It falls in the niche category and I have done a few sales here in India but I have a feeling that this might do well in the international market so I have already set up the business.
Question: What do I do, to scale up and get more customers from outside, maybe the US and UK? Also, I do plan to read the book "Niching up" in the near future but in the meantime, I just had this question.
Hi,
byrondsouza,
Thank you for your question!
I have some questions for you to help better understand the nature of your question:
1. What do you mean exactly when you say you have done "few sales"?
2. Why have you only had a "few sales" so far? Why haven't you had more than a few? Why haven't you had many?
3. Without hiring anyone new or making major changes to your business, what is your current capacity? For instance, how many could you sell per month, either as a total number of figurines/items or as a total dollar figure in revenue?
4. How close are you currently to maxing out that capacity? For example, if you could at most make 100 figurines per month and are currently only selling 3 per month, then you are only using 3% of your capacity.
There is a big difference between the following two things:
(a) Increasing your number of customers to utilize more of your current capacity
vs
(b) increasing your capacity
An example of the latter one, i.e. (b), would be if you owned a restaurant and it was doing really well, so you opened another restaurant of the same name serving the same menu on the other side of the same city, or you paid a contractor to literally expand the one restaurant to build more rooms so you could fit more tables and stoves and such in it.
In general, my advice is usually to not start getting involved in (b) until after you start to reach a ceiling with (a). In other words, until you start to be actually limited by your current capacity (meaning until you actually start hitting your current capacity at least occasionally), don't start working on or investing in growing your capacity, let alone working on or investing in exponentially growing your capacity.
For example, if you own a restaurant with 100 tables and you never ever have more being used at a time, and thus you never ever have any wait outside the restaurant at all, then it doesn't make sense to pay to have more space added to the restaurant or buy another location. This common-sense concept doesn't apply just to business but even to personal finance. If you buy a gallon of milk each week, and only drink half of it each week and throw the rest away, then it doesn't make sense to suddenly start 'scaling up' and buying two gallons of milk a week. If you aren't using the capacity you have, then it wouldn't make sense to invest in the cost of increasing your capacity.
Typically, adding new regional markets to your business is a case of increasing capacity. It's like opening another restaurant on another side of the same city or another restaurant of the same brand in a different city. Or, in your case, it could be adding international shipping and creating alternate versions of your ads and sales page for different locations/languages/cultures/currencies.
But such things tend to
not be a case of 'if you build it, they will come'.
If you have a restaurant that never has a wait and always has empty tables, buying even more tables to put in your restaurant or building another restaurant of the same name with the same menu in a different city to double your capacity won't increase your sales significantly but rather will just cut your capacity utilization in half.
Let me make that more clear and quotable by saying it like this:
Increasing your capacity does not increase your sales; it decreases your capacity utilization.
If you have a restaurant that is only ever half-filled at most, then you could say your capacity utilization is 50%. If you double how many tables you have in the restaurant or open up another branch of the same size on the other side of town, that will reduce your capacity utilization to only 25%. That will increase your costs without increasing your revenue.
Increasing capacity is typically a good thing if you are already currently maxing out or nearly maxing out your current capacity. Otherwise, it's usually a terrible awful counter-productive expense.
If you aren't selling well in India, where neither you nor your buyers have to pay international shipping and deal with customs and all those expensive and inconvenient obstacles, then it's probably not time to invest in expanding to other markets. That would be the equivalent of doubling your costs (e.g. rent, labor, electricity, etc.) by opening up a carbon copy of your restaurant on the other side of the city to double your capacity when your current restaurant never even has a wait. You won't make any more revenue, but your costs would be doubled. Why increase your capacity if you aren't using your capacity?
Keep in mind that India has over a billion people, including over 800,000 millionaires. That's millionaires in USD, not the local currency.
Even if your figurines/products/services were so luxurious and expensive that typically they would only ever be bought by a millionaire (i.e. someone whose net worth is over $1,000,000 USD), I'd still ask: What percentage of those 800,000 millionaires in India have bought at least one of your figurines? How many are repeat customers?
If your target buyer is not a millionaire but instead someone with a more common income and net wealth, then the numbers get even more in your favor in terms of India probably being the best place for you to sell for now.
If you can't sell it well where there are no international shipping charges and such, you aren't going to sell well where there are.
Make a tiny niche business that actually works extremely well on a small scale (i.e. that maxes out its capacity at that scale, which for you is local to India) before scaling up. Don't open a second restaurant until your first one is doing well and has 100% of the tables sat with a wait in the front.
If you told me you had a product that only millionaires would buy and that you had sold 8,000 of these things in India, which would mean 1% (and only 1%) of the millionaires bought it already, but now your sales are starting to plateau or even lower a bit, which would indicate you have saturated that market already, then it might be time or a good idea to expand. But to reiterate one of my questions from the start of this post: what percentage of people in your target market in India, which presumably includes a lot more than merely the 800,000 millionaires in India, have bought your product so far? 10%? 2%? 1%? 0.1%? 0.000001%? Why haven't the rest bought it? Why haven't more bought it?
Those aren't rhetorical questions. I'm genuinely asking so I can understand your situation better and provide advice.
But presumably, once I got the details, my answer would be to focus on increasing your sales in India, and if that doesn't work, then eventually the next step would be to say the market has spoken rather than to expand.
If the market does speak, and what the market says is that it just is not a viable scalable business, then you have the option of (1) closing up shop or (2) just re-classifying what you are doing as a hobby, not a business.
And sometimes not being able to make a beloved hobby into a full-fledged profitable business is a blessing. That's because often the best way to fall out of love with a hobby or even start to resent it is to turn it into a business. Sometimes we ruin play by turning it into a job. If you love cooking, opening a restaurant could be a ticket to learning to resent the kitchen rather than love it.
Are you in it for the money? If not, then maybe the best blessing and stroke of luck you might encounter will be the market speaking and saying, "No matter how much you push to ruin this beloved hobby by turning it into a stressful money-focused boring business, it won't work. You will only ever be doing this thing out of love for the activity, and you will never get paid well for it."
I'm
not saying that to you. I'm saying that maybe the market will say that to you, and maybe it won't. And if it does say that to you, it will actually presumably be a great blessing, even if it seems disguised at that time.
But the market doesn't answer unless you ask, and you can only ask it with actions, not words. So to get the answer from the market, you would need to truly test your product/business and truly ask the market by doing your absolute best to sell much more than a 'few' of your products in India. Then the market will tell you whether you need to expand or convert it back into a hobby. When you do it right in business, it kind of stops being a choice. The market tells you what to do by basically forcing it. Businesses don't choose to close up shop; the market puts them out of business; it forces them to close with unpayable debts and unaffordable costs and such. Businesses don't really choose to expand so much as getting forced to by the market. You have a line out the door of your restaurant every night with people begging for a table and waiting hours to sit down. They stand there with their money in their hands practically begging to pay you to make them food, only to be told, "Sorry, we are all booked up tonight. We can't take your money. We can't let you buy from us because we are once again at 100% capacity. Overcapacity really."
When you start getting would-be customers who are mad at you because they can't buy from you, then it's probably time to expand. In the case of a restaurant, that might mean building a second floor or buying a second building on the other side of town; in your case, it would mean allowing international shipping and taking on the expensive upfront investment of the development of the logistics to properly serve international customers.
With love,
Eckhart Aurelius Hughes
a.k.a. Scott
In addition to having authored his book, In It Together, Eckhart Aurelius Hughes (a.k.a. Scott) runs a mentoring program, with a free option, that guarantees success. Success is guaranteed for anyone who follows the program.
