Starting any business from the ground up is not an easy endeavor. Just ask someone who has tried. The successful formula is universal for any business. You need a strong vision, unparalleled desire and, of course, investment and working capital. Successful entrepreneurs would also argue that the shining stars “see solutions” to complex problems while embracing technology. This article addresses these essential elements from the perspective of a supply chain management business.
Few would debate that supply chain management is white-hot in today’s digital world. Ten years ago, the term “supply chain” was almost unheard of outside industry circles, but today, according to Fortune magazine, it is a $1.3 trillion industry. Supply chain management has made its way into the common man’s everyday vocabulary.
What is supply chain management? At its most basic level, it is getting the right material to the right place at the right time. Supply chain strategy is key for every company in the manufacturing, retail or distribution space. The military cannot succeed without reliable supply chain principles. In fact, any company that holds physical inventory must learn to perfect its supply chain in order to succeed. One can easily say that the supply chain is the lifeblood of a successful business strategy.
So, what are the essential elements for building a successful supply chain management business?
1. Develop Trust-Based Relationships
To start a business from scratch, you must be committed to working harder than your competition and building trust with your customers. How do you do that? The answer is simple: networking and not sounding like a salesperson. After placing yourself in a position to meet the right people, you must master the art of conversation.
People buy from those with whom they feel most comfortable. Comfort and trust are developed through conversation that is both genuine and meaningful. Learning what the prospect wishes to achieve or what problems they wish to solve are keys to your success.
2. Design The Future
Combine your expertise, experience and drive to succeed with solutions that uniquely meet the needs of your customers. This must be done in a way that the competition has not tried or has not done well. Your ability to design the future is your competitive differentiator.
Say, for example, your customer needs to cut freight costs. The competition’s likely approach is to ask freight carriers for lower rates. Your approach will be to determine the root cause of the escalating freight charges. The answer might be in different packaging or an engineering change enabling the product to be folded or dissembled during transit to create greater density and lower rates. Alan Kay, a former Xerox engineer, once said, “The best way to predict the future is to invent it.”
3. Realize Money Doesn’t Grow On Trees
No business can launch without funding. If you are looking at a supply chain management business, you might be considering a one-off consultancy where you hang out a shingle and work from home. So long as you can follow steps one and two above, you can make a go of it without much capital. Acknowledge, however, that unless you have some special supply chain expertise, you will be in a pool of independent consultants all vying for the same opportunities while competing against internal forces at companies that believe they don’t need a consultant (even if they really do).
Others pursue their own supply chain management business through franchising. These would-be entrepreneurs can enter the market with an identifiable national brand, tried and true technology, effective processes, broader depth of service capability and strong marketing help. Sounds great, doesn’t it? It is, but this is where investment and working capital are key.
Sources of funds vary from savings and investment accounts, 401(k) conversions and small-business loans. Taking on a silent partner is also a viable idea. These funds will be required to subsidize your initial franchise fee, as well as a variety of additional startup costs, to comply with mandatory franchise system requirements. Working capital is a significant concern because, as a startup, you may not see income from customers for six to nine months after opening your doors. Work with your accountant to forecast working capital needs. Include anticipated business expenses as well as trying the best you can to support your current standard of living. Never forget the old business axiom that “cash is king.”
4. Your Business Plan May Turn Out To Be Your First Novel
In my time, I’ve written several business plans for companies I started from scratch. Years later, I went back and read the original business plan and wondered, “What in the world was I thinking?” The lesson learned is that, as the owner of a startup, you cannot imagine all the curveballs that will be thrown your way. The answer is to be nimble, consult with your team and do what makes sense in the moment.
5. Skate To Where The Puck Will Be
While the origins and applications of this idea (often attributed to Wayne Gretzky) are hazy and debated, the advice rings true here for our purposes. As the story goes, Gretzky bested his opponents by anticipating where the puck would go and arriving there ahead of everyone else. As a supply chain management services CEO, your most compelling characteristic will likely come from a technology solution, and you shouldn’t wait until the industry arrives there to embrace such a solution.
While it is not realistic to assume you will create a technological solution on your own, you can align with a franchisor that specializes in delivering optimization models for network, inventory and freight into the SMB market, where these types of solutions are scarce. In this manner, you will be the creative solution designer who generates savings and efficiency for customers.
Following these guidelines will help you on your quest to become a problem-solving visionary, driven to offering world-class supply chain solutions. That, my friends, is called success.