When establishing a new business or even expanding an existing business there are many setup costs that are likely to be incurred by the company. In today’s economic climate such costs can deter a company from expanding or from ever being established. However, there are ways in which initial setup costs can be minimised.

One such method of keeping initial setup costs to a minimum is the outsourcing of critical business operations. By outsourcing these services the company can dispense with the significant expense of establishing the support infrastructure required from the very outset.

Outsourcing storage and dispatch

Many companies that enter the direct sales market require an extensive storage and dispatch capability from the very beginning of business operations. To internally create the capability to store and dispatch all of the products sold by the company would be extremely costly and would carry with it a high risk.

By outsourcing mailing fulfilment to a third party service the company can eliminate this initial setup cost altogether. Instead the company would simply pay the third party service a regular rate for the use of its facilities. This could mean that establishing a new company or expanding an existing company is more financially viable and would certainly reduce the associated risks.

Room for expansion

When choosing a fulfilment service it is important to look to the future and anticipate what the company’s requirements may be. It would be short-sighted to choose a small-scale fulfilment service if the business anticipated rapid growth within the first year of business.

The company should therefore choose a service that is both appropriate to the scope of sales initially anticipated and that will allow for future growth. By doing so, the company can keep costs to a minimum and achieve the highest efficiencies.

Relevant market experience

It is likely that the fulfilment service will provide a variety of services from storage of products to order picking to order dispatch. The company will therefore become highly reliant upon the fulfilment service for daily business operations. It is therefore important to select a fulfilment service that has a proven track record of operations within this field.

Moreover, the experience must be relevant to the specific requirements of the company for it to be any kind of safeguard. A company with a wealth of experience in packaging and dispatching small items in jiffy bags would not necessarily possess the expertise required in shipping large electrical goods.

Shared values

For a partnership to work successfully between a business and a fulfilment company it is important that they share business values. This can be achieved by choosing a fulfilment company that matches up to the values of the company.

Values may simply be maximising efficiency and productivity or may include ethical considerations such as reducing environmental impact and using recycled materials. A company with ethical values would therefore seek a fulfilment service with similar ethical values that perhaps makes use of recycled packaging including jiffy bags and cardboard boxes.

This post was written by James Harper on behalf of UK Packaging who supply e-commerce and fulfilment businesses with jiffy bags and packaging products.