Planning and Developing Your New Subscription Box Company
This is Part 1 of a series on developing and launching a new subscription box company.
Running a subscription box is an extremely gratifying business, and it can be very lucrative in terms of freedom and creating revenue. What can be the most confusing and challenging part of launching your own sub box business is the early stages of developing your concept, finding your product, and planning your launch. I’ve been answering a lot of questions on topics related to getting started and hitting the market, so I thought it made sense to start my series on launching a new sub box from scratch with a breakdown of everything involved in the planning stages, and where to spend the most time.
Where to Start
Take a deep breath. You’ve made it this far, so you’re obviously considering starting something. That’s a pretty big first step. The number of things that can quickly fill your to-do list is endless. So where do you start? The beginning, obviously.
It’s easy to get overwhelmed and paralyzed in the planning stages of starting a new venture, and a subscription box concept is no different. There are a lot of moving parts and many things to consider. The one thing that I want to stress at this point is to not worry. Don’t get too worked up. Write. Use pen and paper. Be reasonable. That will give you an edge as you start to plan. Keep track of what you’re doing. Know where you are going. There is always plenty to do, so just keep working toward your goal.
This is the first place where people get stuck. There are so many options. It doesn’t take much time or Googling to find a list of great businesses or products to sell. You’ll likely see a couple topics popping up over and over again as a way to find something to sell. Find a profitable niche. Find a problem and solve it for your customers. Looks for a hole in the market. Do something that no one else is doing.
This is all excellent advice, but it’s the type of advice that can keep you isolated and paralyzed from actually moving forward with your ideas. Start by making a list of your favorite subscription companies. You’ll probably start to see a pattern or trend. Next, make a list of the ideas you already have. Keep a running list of all your ideas. I use a Field Notes notebook to keep a list of ideas running all the time.
The other thing to remember about ideas is that they don’t have a value. Ideas, by definition, are worthless. It’s only when you start to do something with them, and execute your ideas, that your idea and your business starts to have real value.
Keywords and Niches
I mentioned finding a profitable niche early in my list above. There is a reason for that. It’s something that you are going to hear over and over again as you start to research starting a business of any kind online. Subscription boxes are no different.
There are plenty of ways you can find great subscription box niches. You’ll hear about doing things like keyword research and niche research. These are absolutely things that make a lot of sense to do. Researching keywords helps you find a way to target people via search, and gives you an idea what people are looking for online. Finding a great niche is a great way to start a business.
Here’s the thing, though. Keyword research and niche research have a tendency to create busy work. They give you something to do while also giving you an excuse to never actually launch or create anything. You can get trapped in the process of looking for an idea. So what do you then?
Sell something you love (or even just like)
I think the best way to get going quick is to pick something you like and that you would buy, and start there.
Ideas are really easy to come up with. They shouldn’t be a stress point. It’s also important to note that ideas have no inherent value. The execution of the idea is the thing that makes your business worth something. Don’t confuse the two.
Should I worry about competition?
Yes and No. Don’t worry about starting a box that has similar boxes out there. The only exception might be directly competing with giant subscriptions, like Lootcrate, or Dollar Shave Club. Even then I might advise you, if you are starting out, to give it a try.
Why is that? The giant subscription companies have proven that there is a large market for their product. If your idea is strong enough, there is a proven customer base who will spend money. It wouldn’t take a lot of work to carve a small crowd out of those larger crowds.
My only concern for competing against the larger companies would be sustainability. They have the ability to out-market you up front, so the work required to maintain and grow your slice of their audience is daunting. It is doable, and it has been done many times. There are plenty of beard and shaving supply companies out there.
The one suggestion I want to make on this point it to be sure you have your own angle. Don’t directly copy someone else. It’s just not cool. Can you add something to what they are doing? Simplify? Improve? Do that. Don’t copy. Do something more interesting.
What sort of business knowledge do I need?
You will need a basic business knowledge. You’ll need to know how to track your spending, and how to track you revenue. Business communication isn’t what it used to be, but it does help to be a little more professional when communicating with suppliers. Accounting, operations, customer service, logistics. Those are all areas where you will want to focus on learning as you grow.
There are plenty of resources available to help you get your feet wet with the business side of your box, and I suggest spending some time learning about business in general.
What You’ll Need To Start
Once I’ve made up my mind on a product and a concept, I start thinking about names and branding ideas. The first thing I do is start checking usable domains/URLs. I’m not super romantic about business names, and I think that you have a good chance of making just about anything work as long as you can tie it back to your brand or concept. When I find something that works, I snatch it up pretty quick. You should absolutely do the same.
Likewise, once I’ve locked down the URL I’m going to use, I pick up all the possible social media accounts to go with it. Always grab Facebook and Instagram for what you’re working for. I always pick up Twitter as well, and depending on the site I’ll grab a Pinterest account.
The next thing you are going to want is a way to collect email addresses. Don’t wait for this. Get it set up. Make sure you have it. I like Mailchimp because it’s free when you are starting out and still has a lot of power, but there are a lot of great alternatives out there, like ConvertKit or Aweber. Collecting email addresses is going to be a big part of your early strategy, so don’t skip this step.
You’ll need to know exactly what is included in your box. See below for a more thorough explanation, but the main idea is that people are going to want to know what’s in the box, and you need to be able to tell and show them.
You’re also going to want Email and document creation tools, specifically Spreadsheet creation (I know, I know, how lame). It’s worth the money to get a Google Apps account and use Gmail and Google Drive, but there are other options, including free email options and online spreadsheet creation tools.
Having a dedicated email account for your business is a must once you start taking orders, and it’s a big help in getting things running early. I suggest just setting up your name to start, I use chad@whatever for each site I have. I also set up hello@ and forward those to my main address as a secondary or support feature.
In terms of documents, I use spreadsheets for everything, from tracking accounting and inventory, to planning boxes, to keeping track of every detail for each business.
Your also going to need a Backend for your subscription business. At the basic level, this is how you take payments and process shipments. Cratejoy is going to be the best option for you if you are starting from scratch. It’s quick and easy to get setup, and it will give you the backend of your site as well as provides you a solution to make your customer facing website as well. When you grow larger, you’ll have a lot of options for alternatives, but starting with Cratejoy is a solid foundation to stand on.
The other thing I would suggest is some form of Accounting Software, like Quickbooks or Xero. It’s going to help make things easier for taxes and accounting, and having all your information in one place and easily available is a great resource. If you are bigger the 10 subscribers, this will be a big help.
Be sure that you check what’s required in your local area in terms of business licensing. You’ll need a retail sales permit in most cases, and a business license in others. Check with your Country and City and State to make sure you have what you need. There are plenty of resources to help you out with what you’ll need.
Business structure can be confusing. Don’t fret it. I highly suggest just starting as a Sole Proprietorship. Get a DBA from your county and just start. With a retail sales permit and your social security number (and in some cases an EIN) you can open a business bank account and just jump in. Do your homework, find out what you need in your area, and start. Don’t wait. It’s easy to form an LLC later. Wait until you start driving revenue.
Planning Your Box
You are going to want to spend a little time planning your box, and working through as many of the little details as possible before you start shipping orders. These are the things I would consider as early as possible.
Branding is another point in the process where you can get really stuck. While obvious that you are going to want clear branding, the depth to which you go on your branding efforts is something to be careful of. When I’m starting a new project, I do a couple things.
I create a Text Logo, or a Wordmark or Textmark. I find a font I like and a style I like and I get something out there to the world as fast as possible.
I also create at least one branding image. This might be a graphic-based logo idea, or simply just an image to include on a Facebook cover photo. I make it something that easily relates back to the brand overall and something that I can use in different places if need be.
The thing to keep in mind here is that if you are just starting out, you can always go back and change things. Your logo can change, your color scheme can change, the boxes that you use to ship can change. You don’t have to dive in as deep as you think you do. Remember, at this stage, you’re trying to get the product in front of people and get customers paying for it as quick as possible.
What’s In The Box?
The next thing you are going to want to have 100% figured out early is What’s In The Box? If you look through any of my idea notebooks, you’ll come across that phrase many times. I can’t stress enough how important it is to be able to quickly and easily describe what will be included in your box.
Start by developing at least 3 months of “Test Boxes.” You can physically do this by going out and buying the products, or you can simply start with pencil and paper, or a spreadsheet. Put together a list of the products you would include in the box. Having 3 months gives you a chance to look at the concept more holistically, rather than just staring at a single box on it’s own and trying to make your decisions based on that.
Once you’ve planned three boxes, if you haven’t purchased the goods to physically put a box together, now is the time to do that. You’ll get a couple things out of the experience. First, you’ll get to see your product laid out for the first time. It will become very real. Second, it gives you your first chance to take pictures and start to develop marketing materials and social media content. Finally, it will give you something to reference when you start talking to potential customers and they ask (trust me, they will) what’s in the box?
Have a plan in place for creating and distributing marketing materials. Without a plan or strategy, you’re going to just be sitting on your hands, waiting for inspiration to strike and waiting for something to post or write about. Having a plan gives you something to work on. If you know how often you are going to post on Instagram, and what you are going to post, you’ll have a goal and a target and something to work toward.
Products and Suppliers
While you’re in the planning stages, you’ll want to start a list of potential products and the suppliers you’ll need to get them from. Wholesale purchasing can feel wildly insecure, and foreign, but it’s actually rather simple. You need a product. Someone will sell it to you at a price that lets you be competitive and create value for your customers.
The final topic you are going to become obsessed with is Traffic. Traffic is the amount of people going to your website. It’s what all your marketing and and social media is aimed at creating. There are thousands of websites that will teach you how to get more traffic. You’ll likely get hooked on them. I’m sure I’ll cover traffic more here. Get people to your site. Do it honestly. Talk to your customers. Tell them what you’re doing. Keep them engaged. Traffic will develop naturally.
Planning Your Launch
This is going to be a post of it’s own. The key here is that you need to plan your launch. You need a plan and a strategy to follow and execute. This will include things like emails to suppliers, emails to your list, social media posts, attention grabbing campaigns, involving influencers, things like that. I’ll cover it in-depth.
Getting Ready for Orders
It’s important to get into the mindset of being ready for orders early. Do you have shipping supplies? Do you know how to tape a box? Do you know how to pack a box for safe shipment? There is a lot of little things in this process that you will either love or you will hate. If you have never worked in a warehouse or a shipping operation, there is a learning curve for operational tasks that you will have to deal with.
Each month, I get boxes, shipping supplies like tape and labels, and I make an assembly line for packing. Boxes get loaded with products, and sealed, and then set aside. I go back and label them after that.
Things You Aren’t Prepared For
One of the most challenging tasks, especially if you’ve never had to do it, is to pick, pack, and ship your orders when it’s time. There are many services you can use that will pack and ship for you, but it’s extremely important that you do it yourself for the first few months (I recommend at least 6). It’s more work than you think to get all the items into a box or shipper, seal it, get postage on it, and get it in the mail. It’s the one area that I consistently see company founders wildly underprepared for.
The amount of time it takes to run this business
You’re going to be doing a lot of work to run your business. It takes a significant amount of time. However much time you think you are going to be spending, I’d at least double it in preparation. From communicating with suppliers, to buying inventory, to customer service (see below), all the way down to printing shipping labels and hauling shipments to the post office. Everything takes time. And it takes more time than you are ready for.
These are the extra things that you include in your shipments beyond just the products. Most boxes will include some type of insert. Think the magazine that comes with Lootcrate, or thank you cards, or a product list. While you are starting out, design thank you cards, and some type of insert that explains what is included in the box. SCRIBE uses thank you cards and a monthly letter. Your customers will appreciate the extra info. It also gives you an excellent branding and sharing opportunity. Make sure they have a call to action to share on social media.
The extra tools you’ll need
You are going to find more and more things that you wish you had to make your business run smoother. You’ll start drooling over those pictures of Amazon warehouses running with conveyors and robots and fork-lifts. I hope that you get big enough to need those things, but for now, you don’t. You might need some extra things that you won’t expect as you grow. These are the things we ended getting.
Postal scale – Good to have if your weight changes monthly. I like this one. It’s cheap and great.
Label printer – If you think you are going to grow, or if your pre-launch interest is very high, do not wait to get one of these. Grab the Dymo 4XL early. It will save you so much time. Investing in your business is good (and tax friendly, but I’m not a lawyer or accountant). Get labels designed for it. There are plenty of people on Amazon who sell off brand labels that work great. The issue you’ll run into with these is that running out of labels while printing can cause a headache, but that’s a learning experience you’ll need to figure out on your own.
Packing materials – Have extra tape, dunnage, and boxes on hand all the time. Working out of your house? Make room. You live in a warehouse now.
Tape guns – Go through Uline. Get a couple good tape guns if you are sealing boxes. They really do save time.
Extra work space – I keep buying extra work tables as we grow. They are very handy.
Space in a vehicle to transport boxes – Don’t buy a new car, but boxes take up a lot of room. Plan ahead.
An agreeable post office who helps you – Get to know the people at your post office if you are shipping USPS. If they know you and see you a lot, they will likely help you out by rolling big carts out to you, or helping you get all of your boxes into the post office. It’s the little things like that that will end up making a big difference in your effort.
Friends & Family – They aren’t going to understand at first, but ask for their help. Get your kids and nieces and nephews to help pack and label. Buy pizza and beer and work together. Get help where you can until you are too big and need to pay people.
Do everything for your customers. They are going to start writing you as soon as you have subscribers. You’ll get requests. Items are going to get broken. Shipments are going to get lost. Customers are going to pre-pay for 12 months of boxes, get 1, and then cancel and want their money back. You’ll need to be ready. It’s going to be frustrating and scary, and you’re going to think your customers are awful and you’re awful. It’s all part of the game. Create a system, be consistent, and do everything you can for your customers.
Give them refunds. Ship them replacements. But be strong and stay true to your policies. Your customers will understand. You’ll also need to make sure your policies are stated on your site clearly.
Someone will always be surprised that they were renewed. It’s going to happen. Be nice and consistent. Explain your policy.
People are going to want things for free. Don’t always give it to them. You have a business to run after all. That said, occasionally, give it to them. Do something special. Make a customer feel great. That’ll go a long way.
You will immediately start getting requests for you to send some Instagrammer or Blogger your box to review. Be strategic, but know that this is likely going to be your best growth strategy early on, and potentially always. Decide where the line is for what you’ll send. Get to know what size audience will create enough of a return to make it worth it for you. Make sure you talk to the person who’ll be reviewing your box. Get a feel for what they do. Ask for results of previous reviews.
Also, don’t be afraid of the lost money from sending the free boxes. It’s honestly part of the game. Play it well and you can greatly influence the growth of your business.
Running a business isn’t cheap. It’s going to cost more than you are planned for. Carve out as much margin in your prices as you can, and get ready to spend some extra money in the beginning. There will be months when a product ends up costing more than you plan, or your shipping fees edge a little higher than you were ready for. That isn’t what defeat looks like, it’s just part of the game. Know that it’s going to happen going into this and you’ll be ready.
If you are in it for the long-haul, you’ll start to make some quick realizations. It’s ok to lose a little money up front. Spending money to make things look nicer only goes so far. Some months you’ll want extra value in your box. We’ll cover much more on cost and spending later, but it’s always going to be something you are thinking about, worrying about, happy with, mad at, etc. Don’t be afraid, just know where your money is, know how much you have, and be frugal.
I’ll devote an entire post to this as well, but the pre-launch cycle is very important. Getting email addresses, judging interest, essentially validating your business idea, you’ll do all of that here. There is a lot of strategy and technique you can deploy, but your goal is to build up your brand, get people to see what you’re doing, and get them excited about your product.
Launching Your Site
The final step is opening up. It’s not scary. Don’t be romantic about your business. Be calculated and strategic. Opening will feel like a relief, not a challenge.
It may seem like a lot, but that’s ok. Being ready for the challenges that are coming your way gives you an edge. It helps you make decisions faster, it helps you move quicker. When you are small, the ability to move faster is what helps you win. Make sure you are organized and prepared as you launch your business.