Why Moving Away From Self-Fulfillment Was My Smartest Business Decision to Date
July 10, 2017
Imagine being able to grow a business selling physical products to a six-figure revenue in less than a year, with no need for an expensive office or anything other than a laptop, internet connection and a cellphone.
It might sound too good to be true, but it’s exactly what I was able to do by using a 3PL to accelerate the growth of my vegan beauty business. That business is currently on track for a quarter of a million dollars in annual revenue after opening our doors just 18 months ago.
But, not all that long ago, my business looked very different …
The not-so-glamorous life of self-fulfillment
If you’re a small business owner you’re, more than likely, still self-fulfilling orders from the comfort of your home, garage or small office. I’ve been there too, with packages covering my dining room table and USPS bins stuffed into my car.
Even in the early days of my business, retail fulfillment started to eat up massive amounts of my time. Any of the following sound familiar?
- Making emergency Costco trips for printer ink and packing tape
- Assembling mailer boxes and printing labels…plus dealing with the odd printer jam
- Counting (and recounting…) inventory to make sure everything looks right
- Worrying about how much crinkle paper to add to prevent breakages in transit
- Playing Tetris to get countless packages into a car – then driving waaay too slowly to avoid damaging anything – because you do NOT want to have to make multiple trips
- Watching post office workers look like they’re about to go “postal” as you unload hundreds of packages from your car onto their loading dock
- And, if you’re a little clumsy, you can add almost slicing your finger off with a pair of scissors and trying not to get blood all over everything. Or maybe that was just me.
As you know, the nuances of managing your own fulfillment can get out of hand really quickly, especially as your sales increase even by a small uptick.
There’s absolutely nothing wrong with asking friends and family to stay up with you until 1am to package up orders or count inventory, but there is a better way that will save you time, money and frustration. Might save a few friendships too!
Why it’s time to think bigger
The basic advantages of using a 3PL (third-party logistics) are very simple: outsourcing your warehousing/fulfillment/supply chain will help save your time, and ultimately your sanity, as the business grows and you’re needed in other areas of your company. But this simple truth often isn’t enough to get business owners of any stage to see the power of utilizing 3PLs to their true potential.
The problem lies in scale: if you want to grow your business to 6, 7, 8 or 9-figure revenue, logistics needs to be outsourced (out of your own physical hands or that of your in-house team).
Using a 3PL isn’t as expensive as hiring in-house warehouse staff, paying rent for warehouse space, worrying about worker’s comp, liability insurance and so on.
You can simply offset 3PL cost by building it into customer orders and, thus, your business model. Pro tip: ShipBob’s ridiculously low rates have not only made this possible but, honestly, made it go unnoticed.
Almost 30 days after starting my vegan beauty business, I knew I had to outsource fulfillment and warehousing, since most of my time was spent on “low dollar” activities. More on what that means in the next section! In fact, ShipBob was my very first “hire,” even before I made my first “actual hire” for customer service. That’s how important I knew a good 3PL partner would be to scaling my business as fast as possible…Because I’ve never intended to play small.
How much money should you be making with your time?
We’re not talking about product sales here, but how much money you (and your business) should be making by taking into consideration how you spend your time and the daily tasks you complete.
There are tasks that every business owner does on a daily basis to drive their business forward. But, as I learned from a business coach named Todd Herman, these tasks are not created equal. By looking at how much you would pay to outsource these tasks you can determine which are “low dollar” activities and which are “high dollar.”
Let’s say that you have a bunch of $10/hour, $100/hour, $1,000/hour and $10,000/hour tasks. As a business owner, your goal is for almost all of your daily tasks to fall within the $10,000/hour bucket. Here’s an example of some tasks for each category:
|Warehousing and inventory management||Talking to qualified leads||Negotiating with qualified leads/prospects (especially for B2B ecommerce)||Creating new products/services|
|Order fulfillment and packaging||Helping an existing client||Creating marketing campaigns||Expanding to new markets/locations|
|Post office and running errands||Drafting emails to leads and customers||Writing sales copy||Negotiating major deals|
|Customer service||Graphics and video editing||Creating split tests||Drafting brand messaging or positioning|
|Organizing, cleaning||Fixing website||Planning a new sales funnel||Final decision in hiring team members|
|Basic market research||Cost analysis||Scouting for new team member talent||Forward vision thinking and long-term goal setting|
|Ordering supplies||Content creation (writing blog posts or on social media)|
“Low dollar” activities refer to the tasks in the $10/hour and even $100/hour categories. A business owner should be focusing on “high dollar’ activities that sit in the minimum $1,000/hour category, and ideally in the $10,000/hour category.
Notice how many of those low dollar activities using a 3PL addresses? Almost all of them fall into the $10/hour category. Every hour I was spending personally on $10/hour tasks instead of $10,000/hour jobs, I was effectively losing $9,990/hour in revenue generating activities. It’s that small shift in thinking that helped to shoot my business off like a rocket, even in its very early stages.
The more time you spend doing tasks in a given bucket ultimately determines how quickly your company will be able to scale in the long term, especially if you are bootstrapping (like my business) and have zero investment dollars coming in.
If you are currently a solopreneur then your priority should be to start with the $10/hour bucket and delegate all tasks in that category first, then move onto the $100/hour bucket and so on. You’ll slowly make your way up to $1,000 – although by that point you’ll likely have a team of a few people – until, finally, you are concentrating the majority of your day on $10,000/hour tasks.
Of course, the tasks (and the associated dollar value) in each category will differ from the example above depending on your needs. Still, this is a valuable exercise that will show you the real value of your time.
As a business owner, you should always be in the highest dollar activities bucket to best utilize your time and, ultimately, make the most money for your business.
Baggage and expectations
All of us have “baggage” in one form or another. Sometimes it’s an ex-husband that says your business will never be successful – that’s mine, by the way, but I proved him wrong! – and other times, it’s a former business partner running away with company funds.
In any case, past negative experiences unfortunately stick with us (and speak louder than) all the past and present positive experiences we have. Blame it on a 10,000 year old negativity bias in our “primitive” brain, but we’re still just cave people trapped in these “modern” bodies.
It’s past negative experiences that see us self-sabotaging our current situation and relationships, whether in business or personal life. Control and trust issues will pop up when you’re delegating tasks within your business or collaborating with b2b partners, and it doesn’t help matters that some traditional 3PL providers have a reputation for being opaque and failing to communicate problems until it’s too late to do anything about them.
Managing expectations, on both sides, is key.
The big “E” word is both terrifying and confusing to most people. Expectations give off a negative vibe because we fear that failing to meet them will disappoint the other person, or ourselves. In other words, this is really a fear of failure. So how can we get rid of that?
Transparent conversations between both parties are needed to lay out expectations and determine the forward course of action to success. The other party better know that you’re expecting a fancy steak dinner because, if they think your expectation is a bucket of fried chicken, then that’s where the relationship will ultimately fail.
How I hooked up with ShipBob
30 days after starting my beauty business, already with an itch to outsource my warehousing operations and fulfillment, I received a random email from ShipBob asking if I had a logistics solution in place. Coincidentally, I received that email less than a week after writing “Find 3PL!” on my to-do list.
I decided to put my baggage to one side, taking this as fate and the universe telling me that ShipBob was my solution. Beyond checking out a few links in the press, I didn’t even really research ShipBob as a company and essentially pushed all of my company’s logistics and supply chain needs to them with full force and blind trust. Fortunately, that decision turned out to be a smart one!
Utilizing a 3PL (ShipBob) to get my time back meant that I could focus on all the other aspects of my business that actually drive sales, like marketing and product development. That’s a huge part of how I was able to build a six-figure revenue business within 11 months.
What makes me stay with ShipBob for our 3PL solution, is that we can have open, honest and transparent conversations about what my expectations are as a client, and how they will provide solutions and options to move forward. We both voice questions and concerns in a timely manner, so I feel 100% secure that they have my back.
In other words, they know I’m aiming for much more than a bucket of chicken!
If you find yourself swamped by low dollar activities, then I’d encourage you to think about why you have trouble delegating or outsourcing tasks even though you probably know that you need to be focusing on the high dollar stuff in order to scale rapidly. Is it because you feel that no-one else can do the task to your satisfaction? Or is it because you don’t trust anyone will get the job done at the end of the day?
If you’re an entrepreneur looking to scale your business, one who values their time and sanity, then you already know that the only way to grow is by building a great team around you. And yes, that can (and should, IMO) include a 3PL!
The range of low dollar tasks that an effective 3PL can take off your hands is staggering, and will leave you with more time than you can currently dream of to focus on those high dollar activities.
Just make sure that you treat your team members, and your 3PL, like you would a significant other: none of us are psychic, which is why frank and transparent communication – particularly when it comes to setting out your short and long term goals – is so important for growth.
Learn more about how partnering with a modern ecommerce fulfillment company can help your business scale, and get tips for choosing a fulfillment partner.
Download “How to Choose a 3PL for Your E-Commerce Business.”