Tips to Help You Find Success in the Direct Response Marketplace
You did it! You have a life-changing, earth-shattering idea and you’re convinced the world is going to LOVE it. Now what? Finding yourself in unfamiliar territory and needing an ally you can trust is the story of all our direct-to-consumer (DTC) business customers.
Who are we? We are Charis Media Capital, and we provide unique financing for DTC business start-ups. We know that launching a new business in the direct response marketplace takes a lot more than a great idea and a steadfast desire to make it work. Before anyone can add your product to their shopping cart, there are several steps your new business must take.
Build Your Direct-to-Consumer Business
- Market research
- Develop a business plan
- Finance your startup
- Structure your business
- Register your business
- Trademark your brand name and logo
- Establish DTC marketing strategy
Step 1 – You’ve identified a need. Market research is your first step to clarifying that your product is a viable solution to fill that need. There are two main components to your market research:
- Check for existing products in the category
- Identify the potential audience
Before you get too far down the innovation road, confirm that your product doesn’t already exist. If you find competitors in the direct response category, identify their weaknesses and improve your product to overcome them.
Targeting a potential audience is critical for positioning your product for success. You will need to know who they are, how to reach them, and what they might pay for your product. This research will involve demographic and psychographic examinations from both quantitative and qualitative sources.
Step 2 – Developing your business plan is essential to organizing the way you will execute your business. It will also provide necessary information for potential investors and financial institutions. Carefully choose how much work you’ll do yourself vs. what would be more economical to outsource to an expert. Often relying on an expert for order processing, distribution, and funding are the most cost-effective solutions. Charis Media Capital is one of those trusted experts that will deliver funding, help you make the right direct response industry connections, and advise you in ways that protect your business.
A typical business plan follows this format:
- Executive summary
- Business overview & structuring
- Market research results
- Company management and personnel structure
- Business financials
Finance Your Direct-to-Consumer Business
Step 3 – Finance options for your business come in several forms, each with pros and cons. Consider all options very carefully and watch out for the long-term consequences of your decision. Options include:
- Self-finance – i.e., use personal savings, mortgage house. Pros – you own your business, keep complete control, and receive 100% of profits (when you earn some). Cons – Typically, it takes years to grow a company enough to turn a measurable profit that will pay back your investment. If it fails, you could lose your home, retirement account, or be saddled with long-term debt. This happens much more than you may realize, so choose wisely.
- Raise capital – investors provide money in exchange for equity. Pros – you can often quickly receive the capital you need to roll out and maintain your operations. Cons – you give up day-to-day control of your company. This tradeoff may benefit you if you have knowledgeable advisors; however, remember that once someone owns a portion of your business, they can bring in more investors, managers, etc.
- Partnership – bringing in a partner or two… or three. Pros – Partners are great when you share a vision and have complementary skill sets. Cons – Each partner invests personal wealth, so you are on the hook for the same risks when self-financing, but now you have less control.
- Financing – work with a lender to finance your operation. Pros – Lenders can quickly get you capital, and you keep control of your business. Cons – it can be difficult for a new company to meet the risk level of a leading operation… Unless you’re working with Charis Media Capital. We understand what it’s like to start a direct response business, and we know the players and the pitfalls. No one will care as much about your success as Charis.
Step 4 – Structure your business to be most advantageous to you and your business partners. Most structure options vary when it comes to liability, insurance, taxes, and compensation.
- Sole proprietorships – unlimited personal liability, pay only personal tax
- General partnerships – unlimited personal liability, self-employment tax, personal tax
- Limited liability companies -owners not personally liable, self-employment tax, personal tax, or corporate tax
- Limited partnerships – liable to the size of their investment, personal tax
- C corporations – owners not personally liable, corporate tax
- S corporations – owners not personally liable, personal tax
Establish Your Direct-to-Consumer Business
Step 5 – Register your company where you expect your operations to be based. Laws vary, so be sure to understand the rules for both state and local governments. You’ll receive an Employer Identification Number (EIN) and state tax ID necessary for filing taxes when you register the business. Depending on your business, you may be required to apply for licenses or permits first to complete the registration.
Step 6 – Take the steps necessary to trademark your brand name and logo with the U.S. Patent and Trademark Office. Be aware this process can take 12-18 months to complete and can sometimes be denied. Due diligence ahead of filing will help your request be successful.
Step 7 – Build your DTC marketing campaign strategy – clear messaging and captivating images may get a potential customer to pause on your ad. Still it will take a strategy of coordinated media and consistent messaging to get them to buy. Be honest in your messaging, don’t overpromise, and offer referral incentives to continue to grow your business.
Charis Media Capital is a direct response industry veteran with campaign testing and roll-out experience, valuable media buyer, call center, and fulfillment center connections. We provide a reliable stream of media funding that allows you to roll sales receipts back into more advertising to expand your reach, grow your sales, and enjoy the success you’ve worked so hard to achieve. Our funding is non-dilutive, meaning you keep your equity.
Call our funding experts to learn more about our unique media funding opportunities for direct-to-consumer and direct response business start-ups.
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