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Kevin Mako is a leading expert on hardware startups.  He is the Founder of MAKO Design + Invent, the pioneer firm for providing world-class end-to-end physical consumer product development tailored to inventors, product startups, and small manufacturers.  Est 1999, Mako Design is a 30-person team with offices in Austin, Miami, San Francisco, & Toronto, has developed over 1,000 products for clients and has earned over 25 design and business awards including Red Dot, Inc5000, Entrepreneur360, Indigo Gold, Creative Pool Gold, Best Places to Work, Lux Magazine Best Design Firm in North America, and many others.  Kevin lectures at the Masters of Engineering program at Ryerson University, sits on a number of entrepreneurship and education boards and holds the Duke of Edinburgh Gold Award designation. He is the host of The Product Startup Podcast, the hardware development industry’s leading podcast.

The financial formulas for scaling a consumer product business are really only applicable if your goal is to build a scalable venture. If you're just looking to run a lifestyle business you can disregard this article -  but if you want to build a scalable consumer product business,  these are the numbers that you need to understand. Use the financial formulas to compare the efficiency of each channel in your consumer product business and increase or decrease your resource allocation to the most efficient channel or customer segments.  

So you’ve got your amazing product idea, and maybe you even have a prototype. But now you’re considering larger scale manufacturing and you’re speaking with factories that are halfway around the world where English is not the native language. You’re also talking about spending tens of thousands – or even hundreds of thousands of dollars on your production run, and it’s starting to dawn on you how much could potentially go wrong – and how much those mistakes could cost you!  One of the most important factors in the factory/designer relationship is how you communicate your product requirements. And that’s where TECH PACKS come in. Belinda Jacobs is a technical fashion designer from London (now based in California). She had her first job in fashion at the age of 15, stapling swatch cards together! Belinda has been designing & creating tech packs for more than a decade for household brands and independent designers alike

Thinking of auditioning your business to appear on a show like Shark Tank or Dragons Den? In this episode, I cover SoYoung's experience from the audition to taping to the deal itself. 

Hiring decisions are some of the most crucial decisions you will make as a small business owner. A great employee can take your business to new heights and open up new opportunities for growth, while a poor hire can set you back months and thousands of dollars, causing undue stress and frustrations. In this how-to podcast, I’ll lay out a step-by-step hiring process for small business that will help give structure to your decision making and increase your odds of bringing on a great employee.    

Julie Ellis a co-founder of Mabel’s Labels, one of Canada’s greatest small business success stories.   Back in 2002, Julie and her three partners Julie Cole, Cynthia Esp and Tricia Mumby decided  they could do better than the scribbles on masking tape that were being passed off as labels to keep track of for kids clothing and personal items. So, after much research, they brought a brand new product to market in the form of personalized waterproof name labels and tags. From its humble beginnings Mabel's Lables has grown into an award-winning, market-leading company loved by Moms and kids alike.   Mabels labels was recently sold  to paper and label giant Avery Labels which lead to Julie’s exit from the business she had founded and run for nearly 15 years   Julie is now entering a new phase of her career as she shares her experience and expertise with other entrepreneurs helping them gain clarity and accelerate their success.   Mabels Labels hadn't been looking to sell the business when they were approached by Avery but quickly realized that the idea acquirer “checked all the boxes” and helped them address some big questions: how they would finance further growth and who of the 4 founders would ultimately lead the company.   Julie adds that what’s best for the business may not be what’s best for you personally and what you would do as an autonomous leader is much different than what you would do as part of a 4-person team   While selling a business is often the end goal for many entrepreneurs, the experience can be bittersweet as it was in Julie’s case. As someone who is used to giving 110%, she says it took her at least 3 months to accept the idea that she was able to take some downtime.  

Want to quickly ramp up your sales while generating extra cash to finance your next production run? Then it’s time to grow your global distribution channel. Finding distributors for your products in foreign territories may seem like an overwhelming prospect if you’ve never done it before, but it’s certainly possible.  SoYoung now has distribution in 8 territories including Mexico, Australia, The Netherlands, and Korea – with more in the works.  In this week’s post, I cover the pros and cons of distribution and outline some of the best ways to find distributors in foreign markets.   What is distribution Distribution means granting the rights to sell your products in a specific region to another business entity or individual. This is typically done to cover a part of the world in which you have a limited presence and lack the internal resources or knowledge to cover the region. In essence, you are outsourcing the management of your brand in that region to a 3rd party who will handle all sales, fulfillment and management of customers in the defined area, for a defined period of time. The pros of distributing your products Increased Sales Revenue The most obvious benefit of growing your global distribution channel sales is that it increases your bottom line. These tend to be large bulk purchases that can instantly add zeros to your revenues. They also tend to be repeat purchases.  Since the distributor has more skin in the game than your typical retailer skin, they will be more invested in growing your sales in their territory, leading to predictable increases over time. The ability to establish your brand in new markets without an upfront cost Distribution gives you access to new markets with relatively little investment. Typically your distributor in the region is assuming all the risk for launching and selling the product in that territory.  This allows you to increase your overall brand presence while outsourcing most of the work involved. While the agreement may be exclusive, typically a distribution contract includes a clause that allows you to end the agreement with a certain amount of notice and or at the end of a certain time. You may continue to maintain the relationship indefinitely, but if you plan to eventually own the region yourself, you will have already established a brand presence as a foundation for further growth. Increased buying power and cash flow Unlike a wholesale relationship, a distributor will typically purchase your products in bulk and have them shipped directly from the factory. Usually, a distributor will pay you a deposit towards an upcoming production run that you can take to the factory to help finance production. With the net new sales that the distributor is projecting, you will also be able to increase your minimum orders which may increase your buying power with your factory, lowering your manufacturing costs or simply making a manufacturing run possible. The cons of distributing your products Distributors require time and effort to manage While it is tempting to view distributors as a low maintenance sales channel, this may not be the case. All relationships require some level of administration and management. Distributors may negotiate for better pricing when they get some traction or may have issues specific to their region that you have never dealt with before. Also, if a distributor is underperforming, you may be tasked with the uncomfortable process of ending the agreement. Negative impact on gross margins While distribution is a generally a lower risk channel – since you are taking distributors orders and deposits to the factory – it is also a low-margin channel. Distributors will typically ask for a discount off of your wholesale price that can range from anywhere between 25% to 50%.  Assuming you have the margins, this is the price most brands are willing to pay for guaranteed sales. However, when looking at your overall financial results, you will s

Over the last seven years, Joseph Hanson has built and sold four e-commerce based companies and is currently a managing partner to three businesses that help sellers succeed on Amazon Buy Box Experts, Prosper Show, and Marketplace University.   It was Joseph’s experience as an Amazon expert that put him on my radar, So I’m excited to get his insights on what for SoYoung is of one of our single biggest revenue sources also  the most frustarting and confusin channels and platforms that we deal with. Critical issues for brands   Brand equity: Brand equity on amazon comes through   Search Reviews Long term history and traction on the channel   2) Managing counterfits and knockoffs   3) Having transparency or understanding how profitable their SKUs are and how each product is performing can give you a big competetive advantage. If your product is good and desirable, it’s going to be sold on amazon   If you want to control the way your products are displayed on amazon you need to either   Invest the time required in really owning your Amazin presence Develop an exclusive relationship with an expereince 3rd party seller 55% of consumers start a product search on Amazon, so you need to be there   At the end of the day price is going to be the biggest determining factor in where people choose to purchase their products. If they’re prime members, that will be a huge incentive for them to purchase directly from amazon   How amazon pricing actually works   Amazon prices reactively and you can’t set a MAP with amazon.  If you’re having MAP pricing issues on Amazon, it tends to be because you have distribution problems, selling to grey market people who are then not honoring map, forcing Amazon to do the same.   Key to controlling your Amazon channel is having airtight distribution and reseller agreements in price. The prosper show   James founded the Prosper show to address the needs of Amazon sellers and help them with an educational based show with a level of transparency that discourages self promotion in favour of real objective education on how to best leverage Amazon.  

If your products have a proven audience and you are ready to start driving serious traffic to your site, the 2 biggest games in town are Google and Facebook.  In assessing Google vs Facebook advertising for consumer product brands, I’m going to share my experience in marketing our line of lifestyle bags. Other products and businesses may experience very different results   How and why we use Google and Facebook advertising We primarily rely on Google and Facebook for top-of-funnel activities. In other words, this is where we first lure a potential customer to visit our site. To align with this goal, we set up all of our campaigns to prioritize click-throughs to our products. For a full explanation of the marketing funnel and some examples of other techniques we use see the post:How to increase website traffic and conversions Some other context We do not have a good way to track the ultimate effectiveness of various types of traffic, since we assume that a first time visitor will make several more visits before actually purchasing a product. So, by the end of the sales funnel people may have come through one channel, been retargeted by another and then Googled our brand name to make their actual purchase. We also use a service called Criteo for retargetting, which does offer better tracking of purchase activity. However the majority of our “new” traffic comes through Facebook and Google. I will not be covering Criteo here but may in a future post. Google Advertising for Consumer Product Brands I’ll start with Google because they are the incumbent, and for many years have dominated the online ad space. The Pros of Google Advertising Search Intent Google’s unassailable advantage is that it owns the world’s most popular search engine,  giving it the ability to target people as they seek a product just like yours. Someone who enters a search query tends to be a much more motivated buyer than one who happens to stumble upon an ad the you’ve served. Because of this, some businesses can build a very valuable stream of traffic off of just a few key search terms. Reach Google’s advertising products have the ability to reach 90+% of the sites on the internet. Accurate analytics Because it is free and extremely powerful, Google analytics has become the defacto standard for tracking your online traffic and performance. Google’s ad products integrate seamlessly with Google Analytics to provide a single dashboard for assessing your campaigns, though you will probably end up spending a significant amount of time in the Adwords dashboard also. Variety of products Google’s wide variety of products can get a bit confusing, especially as they continue to evolve under new names and with enhanced features. I’ll just cover the main concepts/products that would be relevant to indie consumer product brands. Adwords/Text Based search campaigns This is Google’s “classic” product: campaigns that serve up a text based ad alongside organic search results. This approach can be extremely effective if you are selling a niche product that does not have a lot of competition for keywords. Google Shopping/Image-based search campaigns Like AdWords, this is an ad with a product image that is served in response to a specific search query, where you control the keywords. This is best for lifestyle and fashion products, where a visual image can be a key differentiator. Since you will only pay for click-throughs to your site, it can be more cost-effective if you have a product that will only appeal to a certain segment of the audience for that keyword. For instance “Leather tote bag” – will only attract buyers who respond to your preview image in the search results. Video You can use video both as pre-roll to a requested youtube video and as a banner ads. We have tested video on youtube but did not see a lot of click-throughs. I think the issue is that people are interested in seeing the selected video – not yours

Budget for 5 videos: Professional Voiceovers: $200 We hired a premium voiceover artist. There were others out there that were much less expensive that probably would have done a comparable job. Background Music: $50 – through premiumbeat.com Equipment and Software: Sony A6000 Camera: Aprox $600 – shoots great stills and video, and includes autofocus in video mode Amazon Tripod: $30 Final Cut X Video Editing Software: $300. You could easily use iMovie instead, free if you own a Mac. There are plenty of windows video software options, many for less than $100.   The process we used to create our product videos One: Write your Script The first task is creating the script that will form the voiceover of your video. You should cover all the distinguishing features of the products and your brand. If possible you should aim to keep your video less than 60 seconds in length as attention spans on the web are short! This works out to about 100 – 150 words. As you’re crafting  the script, focus on demonstrable benefits and facts. Avoid superlatives,  (“amazing” “incredible”, premiere”) as they tend to undermine credibility when coming from the brand or manufacturer. Be conscious of how the script will flow by picturing the accompanying shots. Order the descriptions of features appropriately to any scene you might shoot.   Two: Record your Voiceover I would suggest checking out a service like https://www.fiverr.com, where you can preview a number of voiceover artists and choose the one you feel is best suited to your brand. A pro will generally cost more than $5 but will still be a relative bargain. They should provide you with a fully edited, professionally recorded file which can be inserted directly into your video.   Three: Plan your Shoot There are three tasks associated with the planning phases List of Shots You should be able to make a list of shots based on the video script, since you are essentially just shooting a quick demonstration of each of the product’s features. Location Scout You may already have a setting in mind, but if you don’t, scout out a few potential locations and make sure they have everything you need to support your shoot, including appropriate space, backgrounds and light (natural light is best). Note where you might place the camera in each location and do a general plan of your shots. List of Props, People, and Wardrobe (if applicable) For Soyoung this meant deciding what items we would show being put into the bags in order to demonstrate their carrying capacity. There were some shots of people wearing the products also but we were able to shoot these on the tail end of a photo shoot.   Four: Shoot your Clips If you want to elevate your video to the next level, I would strongly suggest shooting each major scene from at least two angles. For instance, we shot Catherine packing each bag from the side and the top, which allowed us to cut the shot in the middle of a movement, giving the video a more professional look. You will need to be aware of consistency between the two shots by rehearse the series of movements being performed. Lighting is the other thing you will have to check. If you can find a space with natural light that is ideal. If not, you may want to bring a floodlight that can be pointed at the shot. If using natural light you will again have to keep an eye on consistency. If the light changes you may have to reshoot previous scenes. Finally, review all of your shots on a computer before you wind up the shoot to insure you have the shots and quality you need. It’s a lot easier to redo a scene.   Five: Create your Edit This is potentially the most time-intensive part of the process. However, if you’ve planned your shoot well it should be fairly straightforward. Once you get the hang of it, editing is a lot of fun, so consider this a great opportunity to learn a cool new skill. If you are on a mac, iMovie is perfectly adequate for editing your vide

Just as Rome wasn’t built in a day, we didn’t put all of these strategies together over a weekend. It’s been a slow steady, incremental layering of tactics combined with a whole lot of trial and error. A marathon rather than a sprint. However, the combined effect of having these systems in place has helped us dramatically increase eCommerce traffic and conversions, which continue to grow upon themselves. In this article, I’ll lay out a complete playbook of strategies we use to promote our online store at www.soyoung.ca and increase eCommerce traffic and conversions.   I’ve grouped the strategies to increase eCommerce traffic and conversions in terms of where they fall in the marketing and sales funnel sequence. For those unfamiliar with the concept of “the funnel”, top funnelactivities are designed to attract new visitors who are unfamiliar with our products to our website. Mid-funnelactivities are designed to build a relationship with the user, who is still warming up to our brand. Bottom funnel activities are intended to convince people who have an interest in our products to actually make a purchase.   Top Funnel Strategies to Increase eCommerce Traffic and Conversions  While SEO is the best way to get traffic, it is generally only going to deliver substantial traffic when you are selling an extremely specialized product that has very little online competition. For everything else, you will need another strategy to increase eCommerce traffic and conversions. As the purveyors of lunch boxes, backpacks and diaper bags, there was no way we could compete for these valuable keywords in organic search, so here is what we do to get new visitors to discover our products: Paid Blog Placements Being featured on the blogs of influencers is a great way to generate traffic and build instant trust in your products. While we do a fair bit of PR and get free coverage on many sites, some of the biggest hits we’ve gotten have been paid placements with well established bloggers who align with our audience. While not cheap, in some cases we have seen our traffic temporarily increase by a multiple of 10 with a single mention on a blog. This can be a very effective way to drive traffic and reach a new audience. Facebook and Google shopping ads There are a lot of ways to do banner advertising online, however we have found that Facebook and Google Shopping are most effective for reaching people who have no awareness of our products. Facebook allows for very tight targeting allowing us to reach exactly the type of profile that we have found are most interested in our products – mainly mothers of children between the ages of 3 and 10 with some university education. The “lookalike audiences” feature in Facebook allows us to upload lists of our past customers so that Facebook can use its algorithm to find similar targets. It’s been a very cost effective way to generate valuable new traffic. Google Shopping is great because, given the visual appeal of our products, prospective customers see an image of our designs in response to a specific search query.   Mid Funnel Strategies One of the biggest mistakes you can make is to pay for traffic to your site, then fail to capture the opportunity to continue marketing to that visitor. Rarely will people purchase a product they have just stumbled upon, so you need strategies for keeping them in the loop once they’ve visited your site and have an idea of what your brand is about. “Win this” email call to action In order to capture email addresses, you need an opt in offer that is compelling enough for a first time visitor to fill out. While we have used coupon codes in the past, the most effective strategy we’ve used is a pop up offering the potential to win a substantial prize: 5 of our products valued at over $300 to anyone who subscribes . We use a third party service called Opt-in monster to create pop-up with an “exit intent” trigger. This is a popup tha

Are you a craftsperson or an entrepreneur? This is a personal lifestyle choice - but be clear on which you have chosen.  As a craftsperson, you can be perfectly content creating handcrafted products in low volumes and selling them to a niche audience. If this describes you, you can ignore the rest of this post. You just need to cover your material and living expenses in order to continue doing what you love. However, if you are an entrepreneur with a vision of building a scalable venture, you need to understand and adhere to established business principles, such as standard markup pricing.  Even if you’re small now, you need to plan for big. If you’re just starting out, you may not realize how much margin you will need to build into your retail price in order to build a viable, long term business. While selling solely through a website is a great first step, most brands need to explore other channels to accelerate their growth. If you get your pricing and margins wrong, you’ll be in for a rude awakening when you start approaching retailers (and you’ll probably end up with a greater appreciation for why so much stuff get’s manufactured overseas!) Combining standard markup pricing with market research. If you’re basing your price strictly on a multiple of your costs -also known as Standard markup pricing you’re starting at the wrong end of the equation. I strongly suggest starting with a target retail price and working backward to see if your product will be viable. You will still need to ensure you are able to generate a sustainable profit margin - thus the need for standard markup pricing - but you’ll be imposing an additional level of discipline by aligning your numbers with the reality of the marketplace. Here is a step by step guide to using the Indie Brand Builder Margin Calculator to determine standard markup pricing: STEP ONE: Research your industry and competitors to determine high and low retail price thresholds You will need to determine how the quality, features and benefits of your product measure up against both direct and indirect competition. By direct competition, I mean any other product that has similar features and is used to solve the same problem or address the same desire of the consumer. By indirect competition, I mean products that aren’t in your category but provide a similar outcome or function for the consumer (ie - a book vs. an e-reader). Make a quick spreadsheet listing each competitor’s name, product features and retail price. STEP TWO: Pick your target product price After doing your research, you should have a reasonable idea of the general price range you expect consumers will be willing to pay - also known as the MSRP (manufacturer's suggested retail price).  You will now need to choose a target price that you think represents an optimal balance between generating revenues and generating demand. At this point, the price is simply a hypothesis as you will still need to factor in manufacturing costs  Keep a laser Focus on your gross margins.  Anything less than 50% - 60% and you may be headed down a slippery slope  STEP THREE Plug the numbers into the Pricing and Margins Spreadsheet Calculator  Input your target retail price in on the far right to match your figure Next, plug in your target wholesale price at half of your retail price. You will now see your “retailer” margin at  50%. Adjust the freight and duty percentage as required. By default, it is set to 20% - which is a conservatively high ratio (SoYoung's freight and duty is typically around 17% coming from China) . Before making any final decisions, you should validate this by talking to shipping and customs brokers. You can also use this estimator tool. Start playing with your manufacturing cost numbers to see what they should be to get your gross margin to 60% This will allow you to target an acceptable manufacturing cost STEP FOUR Negotiate with your factory or suppliers. Now that yo