I believe that any business with clear goals which everyone in the organisation is working to will always succeed. We sat down as a team to discuss the goals for Eliot Turner for the coming year.

We decided to set 5 realistic goals which are:

1.      Achieve a turnover of £100,000 in the first year of trading
2.      Develop 1000 unique daily  visitors to the website by the end of the first year
3.      Primarily use social networking to build the business
4.      Build a brand which can be trusted on both a national and international market place
5.      Diversify into two other market areas by the end of year one. Initial ideas have been handbags, hats, beauty products and designer clothes

Looking beyond this it is worth to mention that one of our long term goals is to create a £1 million turnover by the end of year three.

Today we received a new comment on the blog with regards to our “Setting a Budget” post. I felt it was so well written that it was worth responding to in full. The comment was from Oliver Ker, a freelance designer from Huddersfield, UK.

Thanks to Oliver for taking the time to write such an interesting response. This has actually made us realise that we hadn’t addressed this issue in full and has prompted another post.

You can find a full response to your comment here.

I don’t have a great deal of experience of budgets when setting up, is this budget what you would expect your customers to pay to you as a start up looking for your services?

As a designer I am worried about the design/development being “swept under the carpet”. Are you noting down the hours spent developing this project to calculate the cost later?

Also I would be worried about £100 as a marketing budget? What does this cover? Marketing can make or break your company. What do you class as marketing? Writing these blog posts and your twittering about the project is classed as marketing and Im sure you have spent more than £100 of your time.

Personally to start a business on a shoe string, I would have used a platform that already exists and anyone could set up (I have done this, and (http://mlbadges.com/schools) is now quite successful, and would not like to add up the hours spent developing, designing and marketing it). BUT does this not contradict with why you started this experiment, as your client left to seek a bigger platform to handle a bigger turnover.

As you can tell I am following this project and interested to see where it goes. Good Luck

I think it is worth clarifying that the budget we’ve set out in our original post for Eliot Turner only includes our start-up costs. It does not include our staff time for the design, development or creation of the marketing strategy.

You can see from the post “How Strong is Your Team” every member of carrotmedia Ltd is becoming a director in the business and taking share options. With this structure in place we have all committed to carry out the necessary work setting the site up outside office hours. We are in a unique position to have all the skills and software at our finger tips to launch such a site with little cost to ourselves. Before you ask, yes there was a cost originally for developing our eCommerce system. However, these developments are required for our existing eCommerce clients and if we add any new features these will be released back to our clients as upgrades to the existing software. We therefore felt it would be inappropriate to build this cost into the startup budget. If a client required our services to setup an online shop we would be charging for a full design and build so the costs we’ve set out in our initial budget will seem very low.

An eCommerce website is not a part time business which can be managed outside office hours once launched. We fully understand once launched it will require work during office hours. At this stage we will keep a track of our time and raise a management charge from carrotmedia Ltd to Eliot Turner Ltd for time spent on the site. The management charge will be based on a cost price for our members of staff and not the retail rate being billed to our clients.

So how are we calculating the management charge?

• Salary + Tax + Employers National Insurance
• Divide this by 235 days to allow for holidays & weekends
• We work to 5.5 billable hours in a day so we divide the amount by this number.
• We then add 10% to the figure to account for overheads to give us our hourly rate.
• For example, on a salary of £20,000 we would be looking at around £20 per hour.

I agree with your assessment of the marketing budget of only £100 being small. This £100 will cover the first month of trading and we will be modifying the budget throughout the year which will be based on the margin achieved on turnover.

There is an important business issue which is partly why the marketing budget is so low. We are looking to test the market in the first month of trading and don’t want to commit to a large amount of stock which may or may not sell. If we commit a large marketing budget we may sell more stock than we have in hand. We never want to be in a position where customer service is anything less that 100% and overselling could kill us before we’ve even begun. I’ve made no secret that buying jewellery is not my primary occupation so being cautious and accepting slow organic growth in the first few months is advisable. Once we’ve gained the confidence and developed a strong marketing strategy we can build up our stock levels. It takes some time to take photographs and add items into the eCommerce system so until we have someone dedicated to the task we have to limit marketing spend to control sales.

The comment about our client leaving to be supported by a larger platform isn’t correct. The client left due to them feeling we lacked the marketing experience to take their turnover into the millions and they were approached by a dedicated eCommerce design agency. Unfortunately we didn’t get the opportunity to demonstrate that we did have this experience. In reality this is why eCommerce experiment exists as we’re looking to show we can not only demonstrate skills in web design but also business acumen.

We’re carrotmedia, based in Newcastle upon Tyne with a reputation for rolling out fantastic web and design solutions for our clients.

As the Managing Director of Carrotmedia I would be slightly biased about my own company but I’m going to tell you about a real problem that happened last month.

We recently had one of our e-commerce clients depart as they wanted a turnover beyond £2million. We have a fantastic relationship with all our clients so to be told they are going elsewhere is a painful experience. Once the initial shock was over and I sat back to analyse what had happened, I came to the realisation that I actually agreed with our clients. This left the question: “What were we going to do to make sure this won’t happen again?”

In just over a year we had taken this ecommerce site from nothing to a £250,000 turnover. When I was talking to another client about the situation their first reaction was; “can you do that for my business?” We have a track record of building websites to this level but then get stuck.

We called an emergency meeting in the office where we all sat down to discuss how we can build ecommerce business for our clients faster with less cost. A throw away remark was made; “well short of starting our own ecommerce business how will we find out?”. This was a great idea and putting your own money on the line will definitely help the team concentrate on finding the right formula for our own solution.

I’m currently in the process of choosing a product to sell online. Once the product is secured we will be planning, building and launching our own website. We want this to be an interactive experiment and we’ll be talking you through the process from start to finish.

Our client moved to an agency that has a track record and portfolio of big brands in a similar market place so were attracted by this potential opportunity to draw on their experience. Don’t forget that we neither had the opportunity to prove our capability or had such an impressive portfolio. Could it just be a case of the grass looks greener from the other side of the fence? At the end of the day we had lost a client and something had gone wrong; let the experiment begin!