How Cheap Can You Do It? The Question That Determines The Success of A Start-up
How cheap can you do it? The question that determines the success of a start-up By Rohan Widdison, CEO of New Laboratories
I recommend that all start-ups learn how their suppliers’ businesses operate. You should learn about their manufacturing and production processes and find out who does what in the business.

By Rohan Widdison, CEO of New Laboratories

If you want your start-up to succeed you need to stop asking “how cheap can you do it?” When was the last time you asked this question and how did that turn out? 

The quality of products and services and achieving brand loyalty with customers are the two factors that lead to business success. You cannot achieve either of these if your main focus is on landing the cheapest price for a product you are either going to on-sell to customers or use in the manufacturing of a product to sell to your customers. 

As the CEO of a cosmetics contract manufacturing business, “how cheap can you do it?” is a question I get asked often by a lot of new businesses. I believe these entrepreneurs are not thinking about the long-term success of their business as cheap does not equal quality and it definitely does not equal success. 

Not only do these new start-ups not understand the value of building a relationship with their suppliers, they’re also failing to deliver on the promise of quality that customers have come to expect. 

In 1997 I did a joint venture with a Chinese and a Belgian company that really put the Chinese market into perspective and provided me with some invaluable lessons. This joint venture, along with my background in manufacturing meant that I was able to provide invaluable knowledge when it came to upholding quality standards across multiple markets, and it made for a good working relationship as we were able to really work together to identify what products were going to fire in different markets. 

Along with quality products and achieving branding loyalty, the success of a start-up can come down to the relationship with your suppliers. In trying to produce quality products, which in time leads to brand loyalty, your suppliers will be the ones that will help you solve a problem if you’re having a product issue with a client. If you make a mistake and need to ask a favor of your supplier, do you think your suppliers are going to go the extra mile for you when you need to rush an order through if the foundation of your relationship is built on gaining the cheapest price? 

At the start-up phase of your business, you will need all the help you can get. Your suppliers are a huge lifeline during this time, especially if you are looking to your product suppliers for advice and want to draw on their experience. If this is the case, your suppliers are not going to spend time with you if you have whittled down their profit margin within an inch of its life. 

A valuable quality manufacturing partner will have a long history in your industry and be able to share the hacks that add value to your brand, drive innovation while also understanding who your end customer is. They’ll work with you collaboratively to drive value into your product, and tick the boxes that they know consumers love – think quality and value.

I recommend that all start-ups learn how their suppliers’ businesses operate. You should learn about their manufacturing and production processes and find out who does what in the business. This will hold you in good stead if you need to ask them to go above and beyond for a specific order or if you need their assistance to help you solve a problem. 

A good business philosophy for all entrepreneurs to keep in mind is to treat your suppliers how you want your customers to treat you. That is 1) be a pleasure to deal with, 2) don’t try and haggle on price (quality comes with a cost), 3) pay on time. This doesn’t mean you don’t question invoices if they are incorrect and or don’t raise issues of poor quality, this simply means thinking about your ideal client and replicating that behaviour. 

If you are in an industry similar to the beauty industry where we need to place a focus on what new formulations we can learn about before our clients even know about it and where the importance is in being on the front foot, finding the right supplier that you can build a relationship with, where it becomes more of a partnership in achieving consistent quality end products, is vital. 

Be strategic when engaging your suppliers. Think long term and align yourself with companies that share the same values. Pay attention to those who take care and have respect for their brand, and who demand the same standards of excellence and quality that you expect. 

In a competitive economy where cutting costs is fast becoming the norm, it’s a great irony that to make more money and survive you must first spend money on quality. Businesses that cannot or will not uphold product standards for their customers will be the first casualties of consumer belt-tightening. Don’t become one of them.

About the author

How cheap can you do it? The question that determines the success of a start-up By Rohan Widdison, CEO of New LaboratoriesRohan Widdison knows that beauty is more than skin deep. The Chief Executive Officer of New Laboratories has 34 years of experience in the sector with a demonstrated history of working in the cosmetics manufacturing, formulation & distribution industry. What sets Rohan apart though is his continued focus on looking outside the box. Rohan believes that ‘In a fast-paced industry such as cosmetics it isn’t just about what’s new around the corner but how things can be done better.’

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