Business Advice: Dont Forget To Calculate The Other Business Costs

I was just talking to one of my friends about starting a new business.

She has always wanted to start but unfortunately life happens and she has had to delay this for a long time.
Recently she had an idea for a business and she also already has plans on how the product is going to look and feel. 
Basically design, packaging all ready💪🏼

So she came to me; asking me to make this product for her

And my way of business is quite straight forward; if you already know what you want, just tell me your budget and I’ll create something accordingly.

Only; she wasnt sure about the budget. 

She knew how much she wanted to price it; but when i asked her about the marketing plan, distribution plan etc; she went blank!

For those who dont know; marketing plan is about what do you plan to do to get people to know you exist?

Are you putting it in social media? Are you doing leaflet? Are you putting it as video ads? 
All this is about getting people to know you exist. If people dont know your brand is there; they wont buy = business failed.

 This is one of the most important aspects of the business. i made this same mistake with my pharmacy before. 

Next; distribution cost; how do you plan to sell your product? Is it ecommerce? Is it consignment based? Is it selling outright?

All this will be costing some amount of money.

The cheapest is of course customer buying direct from you (offline or online) but even that; the minimum u need to hire someone to do it (the packing, the talking etc) so dont forget all this cost too.

Once all that is done; roughly; then only you can know your budget of producing one product.

Roughly if its selling yourself; heres how normally people will calculate:

Cost of product: 30%
Cost of marketing: 5-10%
Cost for fixed expenses (rental/ bills/ salary/tax etc) = 20-30%
Projected profit margin = 30-40%

So if you were to price an item at RM100, your cost should be around RM30 (ready to sell product incl packaging), and your profit will be roughly RM30-40.

But if let’s say you dont set it now; and suddenly you decide to sell in wholesale; then you have to give discount to your customer; which will eat up your profit margin. 

Same goes with selling it in sho*ee or ti tk shop. The commission there itself not including ads is 20-25%. So that takes from your profit too.

Hence when it comes to pricing a product; if possible; get these correct first. Find out all the additional costs that come with it.

Or if you are planning to start a business but not too sure on how or what to do; join our online class (click here) that teaches people how to start handmade business in Malaysia. 

I have 2-hour prerecorded video on all the necessary things when it comes to starting business including, law, regulations, taxes, finance and marketing. its FREE

So kesimpulannya: always know your cost and margin! 

Dont simply just decide one day ‘i want to sell product thats the cheapest and the best for skin’ coz even if you have this product; if people dont know you exist; you still cant sell😩

❤️Nisha