The lifeblood of the Canadian and U.S. economy, arguably now more than ever, is the ability for small and mid-sized businesses to ramp up growth quickly without huge capital investment. How do businesses requiring a loan for such things as warehouse space and warehousing staff get funded? Have you visited your bank lately to finance a "big idea"? I thought so. It really does seem like the chicken and egg game and often one business owners cannot win.
Warehousing Requirements No Longer Means Huge Fixed Costs
Good news. The question may not be "Where do I get funding?" but "Do I need funding?" or "Can I get from A to B without capital investment or taking on the risks of higher fixed costs on a multi-year basis?" It is these questions that have led to the emergence of outsourced warehousing distribution, inventory management, and customer fulfillment solutions - customized for your business.
Let's face it, micro businesses often started in someone's garage or basement. Whether it's selling knit baby hats on eBay or a hot item you've imported, there comes a time when small businesses grow and need more space. Successful owner-operators often have great product knowledge and a marketing sense, but get bogged down with organizing, storing, and distributing products. As the business grows, those necessary steps become more than cumbersome chores, warehousing and fulfillment sucks the time (and fun) out of doing what business leaders do best.
Contracting Out: Outsourced Warehouse and Distribution Services
An outsourced warehousing, distribution and fulfillment solution may be just the ticket. By the time a commercial real estate agent can show you 10 warehouse locations for lease, you can likely be well on your way to an outsourced solution.
Fortunately, it's incredibly simple - and can be cost effective. First, find a warehousing and fulfillment company you can trust as they'll be an integral business partner. Get to know management plus the people you'll be dealing with daily. Ask all the questions you can possibly think of to ensure it is a fit for your growing company. Listen for answers that fit your needs exactly and get them in writing (go beyond the sales pitch). Surprises later will strain the partnership if not kill it entirely.
Secondly, cost it out. Consider hard costs (dollars and cents) and soft costs/benefits. Consider scalability and how an outsourced warehousing and fulfillment partner can help you grow. Compare potential warehousing and fulfillment partners "apples to apples". Do they have better courier rates you can leverage? Do they have a better inventory management system than your notepad? How can you automate or integrate order fulfillment processing? Get the fine print and know your costs.
Pay as You Grow: Leverage Variable Warehousing and Fulfillment Costs
Outsourcing warehousing and fulfillment is particularly great for companies that experience seasonality and/or are on a great growth trajectory. Typically, in these arrangements you pay for space used. As your inventory levels fluctuate, so too do your costs. The more you're fulfilling orders and earning revenue, the more you typically pay for fulfillment and order processing services (per-order fulfillment pricing). When sales slow, you're not stuck with high fixed costs. In fact, you've turned traditional fixed costs into variable costs that align with sales, which stabilizes cash flow, too.
Is it Time to Grow Your Warehousing and Fulfillment Capabilities?
If you feel you can scale supply and generate demand while running out of space and strapped for time to fulfill orders, the timing may be right for you. Look into outsourced warehousing and fulfillment as a viable strategic option, and get serious about smart business growth. Oh, and say goodbye to your banker and the need to pay interest to service debt!