Can you deliver your Crowdfund project?
The age of dreaming up new innovative concepts and been able to turn them into a reality has arrived. Crowd funding is now a way for new and old entrepreneurs to get their project off the ground through this global funding phenomenon. Start-ups can now quickly development a proof of concept and initial production run for new product innovations through pledged funding contributed from backers globally donation for a taste of the future concept.
Some of the leading crowdfunding sights include Indiegogo, GoFundMe and Kickstarter with new players like Smashfund, based on a combination of traditional crowdfunding and social media platforms are popping up all the time, all these options are making it easier for anyone to have a start-up. Alternatively, if your game enough you can join the success of Shark Tank in the hopes of been aired on a global TV network. This journey will not only raise capital, add an experienced partner and mentor to your team, but the market exposure will also propel sales at such a rate that most participants can’t support the influx due to insufficient inventory or supply chain infrastructure.
There lies the challenge, while most entrepreneurs are product innovators, and if they are capable of raising the funds they are already decent marketers and business planners, but not so many are supply chain experts. We all know it’s hard to wear many hats, resources are further exacerbated in small start-ups when there are more hats than heads.
It is fascinating to watch Shark Tank’s, Beyond the Tank or review Kickstarter project reviews to learn about the challenges that happen in the supply of the product to funders or customers. While with Shark Tank, a good majority of projects are past the stage of proof of concept and in the infancy of building a business, many crowdfunding projects have not moved past proof of concept and may have only completed a prototype leaving room for cost, quality and delivery risk.
Inexperience in supplier accreditation and the product development process lead to challenges in the supply chain, especially in the initial stages of product inception where there are cultural, language and distance gaps. These challenges alone can contribute to the process falling over but as in any new relationship, a new undeveloped process along with assumptions of the perceived quality value can further complication the outcome.
Once you have completion of the proof of concept, the journey is ready to move to its sales cycle. Most start-ups fail to get the buy quantity right, either losing margin due to MOQ surcharges, not been able to fulfil customer orders due to capacity limitations or ramping up too much and having excess manufacturing capacity or inventory affecting cash flow. Aim for steady, controlled business growth that ensures consistency of supply and maintains an inventory that results in high turn sell through at retail.
While no one can predict the success of a start-up, remain optimistic that sales will be positive, plan to allow for various contingencies that may occur through the lifecycle. Unless you have forward orders, purchase small and frequently basing order quantity on non-surcharge MOQs that can support a desirable margin. Develop a plan of how quickly you can ramp up to achieve growth, reduce COGS, improve margin and sell at lower wholesale prices to volume retailers that will improve the quantity of scale. Flexible and scalable vendors will reduce the risk.
To make all these steps happen as a project on your own can be very formidable when you are a small start-up. IDGC can help you work through this process from an initial free consultancy to help you work through what is needed from a global sourcing and operational perspective, understanding your business and market to know the need through to creating the value outcomes that are necessary for your supply chain to succeed.
IDGC will ensure you get what you ordered from the vendor. We manage your sourcing, development, production and logistics process as a strategic business partner; we take ownership of the entire offshore supply chain through sourcing evaluation, vendor compliance, development and manufacturing process. IDGC will help ensure success in delivering customer and brand expectations.
For numerous projects, ID Global Concepts has provided sourcing of raw materials, components, finished goods for consumer brands globally. We can add value to your start-up operation either through consultancy or management contract to ensure your business is using a vendor that is the right fit for your brand and meets your value expectations.
If you would like to learn more or wish to discuss other supply chain opportunities, please email us at email@example.com.