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1. Manufacturing vs. Reselling: You have the choice between producing your own sheds, offering complete control over design and quality but requiring significant resources, or reselling, which needs less upfront investment but gives you less control over the product.

2. Direct-to-Consumer vs. Wholesale: Selling directly to consumers can yield higher profits and direct feedback, while wholesale selling to other businesses offers volume sales but at lower margins.

3. Physical vs. Online Sales: Operating a physical store allows for personal interaction with customers, but comes with higher overhead costs. Online sales extend your reach beyond geographical limitations, although it requires effective online marketing and logistics.

4. Standard vs. Custom Sheds: Offering standard sheds can streamline production and costs, while custom sheds cater to unique customer needs but require more time and skilled labor.

SHED SCHOOL

Business Models in the Shed Industry: Finding Your Fit

This guide summarizes shed industry business models to help you choose the right fit for your goals and resources.

January 15, 2024

Shed Suite

The key to a successful venture in the shed industry starts with the right business model. It's the backbone of your operation, defining your business's core structure and strategies.

In this guide, "Business Models in the Shed Industry: Finding Your Fit," you'll:

• Examine the benefits and challenges of Manufacturing vs. Reselling, with real-world examples of shed businesses using each model.

• Understand the nuances of Direct-to-Consumer vs. Wholesale selling, again with successful industry examples.

• Evaluate the trade-offs between Physical vs. Online Sales, with case studies of businesses successfully leveraging each model.

• Delve into Standard vs. Custom Sheds and understand the varying demands, costs, and customer needs associated with each.

• Learn about the concept of Franchising and how it can provide a route to expansion for successful shed businesses.

• Explore Partnership Models and their potential benefits, backed by examples of successful strategic partnerships in the industry.

By understanding the distinctive characteristics and implications of each business model, you can make an informed choice that aligns with your goals, skills, and resources. This guide aims to provide the necessary insights and guidance to support that crucial decision.

Manufacturing vs. Reselling

When you're setting up your shed business, one of the first decisions you'll need to make is whether you'll manufacture your own sheds or resell sheds from other manufacturers. Both have their advantages and challenges, and the best fit for you will depend on your available resources, your desired level of control over the product, and your business goals.

• Manufacturing: This model involves producing your own sheds. With this approach, you have complete control over the design, quality, and production timeline of your sheds. However, manufacturing can be resource-intensive, requiring space for production, raw materials, and labor. If you choose to be a manufacturer, you can then decide whether to sell directly to consumers or adopt a wholesale approach to supply other businesses.

• Reselling: In this model, you purchase sheds from other manufacturers to sell to your customers. This requires less upfront investment in space and labor since you won't be producing the sheds yourself. However, you have less control over the product, and your profits are dependent on the manufacturer's pricing. Typically, resellers operate on a direct-to-consumer model, as it would be uncommon for a reseller to also act as a wholesaler.

Direct-to-Consumer vs. Wholesale

Once you've determined your product's source (manufacturing or reselling), you'll need to decide on your target market. Your choices largely boil down to two main models: direct-to-consumer and wholesale.

• Direct-to-Consumer: In this model, you sell your sheds directly to the end user. This could be homeowners, businesses, or other organizations. Selling directly to consumers can often yield higher per-item profits and allows for direct feedback from your customers, which can be invaluable for improving your products and services. Both manufacturers and resellers can adopt a direct-to-consumer model.

• Wholesale: If you're a manufacturer, you might consider selling your sheds wholesale to other businesses. These could be home improvement stores, other shed resellers, or even construction companies. Wholesaling typically involves selling in larger quantities but at lower per-item profit margins. This model can provide a steady stream of orders, but it also requires the ability to produce or acquire sheds in significant volumes.

It's important to note that these models aren't mutually exclusive. Many businesses find success with a mixed model, selling both directly to consumers and wholesale to other businesses. However, each model has unique requirements and challenges, so a thorough evaluation of your resources and goals is crucial. Remember, every business is unique, and the best choice is the one that aligns with your business' specific circumstances and objectives.

Physical vs. Online Sales

Choosing between operating a physical store and selling sheds online is a major decision that can greatly impact your business's trajectory. Each approach has its advantages and potential challenges.

Physical Sales

Engaging customers in a physical sales environment presents unique opportunities. Here, customers can personally interact with products, giving them a tangible feel for what they're investing in.

Benefits:

• Allows customers to physically interact with products, enhancing their buying experience.

• Enables face-to-face customer service and relationship building.

• Creates opportunities for immediate feedback and closing sales.

Challenges:

• Incurs overhead costs such as rent, utilities, and staffing.

• Limited reach to geographical location.

Online Sales

On the other hand, the digital marketplace has revolutionized how products are sold, including sheds. An online platform can vastly broaden your business's reach and provide convenience to customers.

Benefits:

• Offers a wider customer reach beyond geographical limits.

• Allows for the integration of digital tools for customization and visualization.

Challenges:

• Requires detailed product presentation, including high-quality images and descriptions.

• Logistics for delivery and potential assembly must be considered.

Hybrid Model: Combining Physical and Online Sales

Embracing a hybrid model that incorporates both physical and online sales can potentially harness the benefits of each, allowing your shed business to reach a wider audience while still offering the tangible customer experience associated with physical stores.

Benefits:

• Combines the advantages of physical interaction with the reach and convenience of online sales.

• Offers flexibility to customers who prefer to shop both in-person and online.

• Allows businesses to pivot and adjust based on market trends and consumer behaviors.

Challenges:

• May require more resources to manage and maintain both physical and online operations.

• Balancing in-person and online customer service can be challenging.

In the end, a hybrid model can offer an excellent balance for a shed business, allowing you to reach a wider audience while maintaining the ability to provide personal customer experiences. However, it's vital to remember that a hybrid model requires a strategic approach to manage both physical and online operations without overstretching yourself, your team, or your resources.

Ultimately, the choice between physical and online sales, or a hybrid model, is not a one-size-fits-all decision. Consider your business's unique circumstances, including your target customer, the types of sheds you sell, your resources, and the customer experience you want to provide. 

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Standard vs. Custom Sheds

Choosing whether to offer standard shed models or to provide custom-designed sheds is another significant decision when carving out your niche in the shed business. This choice often relies heavily on the resources, skills, and demand within your target market.

Standard Sheds

Standard sheds refer to pre-designed, ready-to-install models. They are popular among customers seeking quick solutions and are generally less expensive to produce due to the predictability and economies of scale.

Benefits:

• Economies of scale make standard sheds less expensive to produce.

• Predictability of the manufacturing process can increase efficiency.

• Straightforward product offering can simplify the sales process.

Challenges:

• Limited scope for differentiation may lead to increased competition.

• Some customers may desire more unique or customized solutions.

For example if you want to track material costs and develop BOMs (Bill of Materials) for each model you must limit the number of options the customer has when placing an order. If you are not tracking materials and costs that closely, you can offer the customer unlimited options when it comes to how the shed is constructed.

Custom Sheds

On the other end of the spectrum, custom sheds are designed and built to meet unique customer specifications. While this model can require more skilled labor and has higher costs, it allows for a more personalized customer experience and a product that stands out from the competition.

Benefits:

• Greater customer satisfaction due to tailored solutions.

• Can command higher prices due to the unique, customized product.

• Opportunity to differentiate your business from competitors offering standard models.

Challenges:

• Requires skilled labor capable of producing a wide range of designs.

• The production process can be more time-consuming and costly.

• It becomes impossible to automatically track material costs as the BOM for each order has to be built by hand.

Whether you choose to offer standard or custom sheds, or a mix of both, largely depends on your target market's demand, your team's skills, and your capacity to handle the associated costs and customer service requirements.

Other Shed Business Models

Contract Shops

A Contract Shop in the shed industry acts as a dedicated construction partner, usually exclusively building sheds for a specific shed brand. It focuses on manufacturing, closely following the brand's designs and quality standards. This type of shop operates purely in a production capacity, without engaging in retail sales, ensuring that all sheds produced are consistent with the brand's identity and specifications. As a behind-the-scenes producer, the Contract Shop plays a key role in materializing the brand's designs into tangible products for the market.

Benefits:

• Standardized models streamline production.

• Consistent contracts ensure steady work.

• Economies of scale due to repetitive builds.

Challenges:

• Heavy reliance on the brand's business stability.

• Limited opportunity for diverse skill development.

• Need to adapt to changes in brand specifications or policies.

Consignment Dealers

A Consignment Dealer in the shed industry operates by showcasing and selling sheds on behalf of manufacturers or brands, without owning the inventory themselves. This business model involves the dealer displaying various sheds at their location, where potential customers can view and choose them. The manufacturer retains ownership of the sheds until they are sold. The dealer earns a commission or a portion of the sales revenue for each shed sold. 

This arrangement allows dealers to offer a wide range of sheds without the upfront costs of purchasing inventory, while manufacturers benefit from expanded market reach and visibility without the need for their own retail space. Consignment Dealers play a crucial role in bridging the gap between shed manufacturers and customers, providing a physical space for customers to explore options and make informed purchasing decisions.

Benefits:

• Wide Product Range: Ability to offer diverse sheds without the cost of owning them.

• Flexibility in Stocking: Adapts easily to market trends and customer preferences.

• Reduced Financial Risk: Lower overheads by not purchasing inventory.

• Increased Exposure for Manufacturers: Helps manufacturers expand their retail presence.

• No Inventory Depreciation: Avoids loss in value of unsold stock over time.

Challenges:

• Dependence on Suppliers: Reliant on manufacturers for product quality and availability.

• Lower Margins: Earnings based on commission, which might be lower than direct sales.

• Inventory Control: Limited control over the types and quantities of sheds received.

Wholesale Dealer

A Wholesale Dealer in the shed industry operates by purchasing sheds in bulk from builders, then branding these sheds under their own label before selling them to customers. This business model allows the dealer to leverage economies of scale, acquiring sheds at a lower cost due to bulk purchasing. Once acquired, the sheds are rebranded, giving the dealer the opportunity to establish their own brand identity in the marketplace. 

This approach not only enables the dealer to control pricing and marketing strategies but also allows for customization or additional features to be added under their brand, enhancing the product's appeal. The wholesale dealer serves as a critical intermediary, adding value to the basic shed structures and catering to the specific needs and preferences of their customer base, often providing additional services like delivery, installation, or after-sales support.

Benefits:

• Cost Savings: Reduced cost per unit through bulk purchasing.

• Brand Control: Establishes and promotes own brand identity.

• Pricing Autonomy: Sets own prices for higher profit potential.

Challenges:

• Brand Development: Requires investment in marketing to build brand recognition.

• Supplier Reliance: Dependence on builders for quality and supply consistency.

• Market Saturation: Difficulty standing out if the builder sells similar sheds to other dealers.

Strategic partnerships can be a powerful way for shed businesses to extend their reach, improve their offerings, and increase profitability. By partnering with complementary businesses, a shed company can leverage shared resources and capabilities.

Understanding Partnership Models

A strategic partnership involves two or more businesses collaborating for mutual benefit. This could mean sharing resources, technology, or customer bases. In the shed industry, partnerships could be formed with hardware stores, home improvement businesses, landscaping companies, and even real estate developers.

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Benefits:

• Access to new customers or markets.

• Shared costs and resources.

• Ability to offer complementary services and products.

Challenges:

• Potential for conflicts of interest.

• Need for clear communication and aligned objectives.

• Successful partnerships require trust and commitment.

Partnerships in Shed Businesses

Strategic partnerships can take many forms in the shed business industry, and here are a couple of examples:

• Shed Company and Hardware Store: A shed company could partner with a local hardware store, offering customers a discount on shed building materials in exchange for the hardware store promoting the shed company's products and services.

• Shed Company and Landscaping Business: A shed company could form a partnership with a landscaping business, offering combined shed and landscape design packages. This provides a comprehensive solution for customers looking to renovate their outdoor space.

By forming strategic partnerships, shed businesses can leverage shared resources and expertise, potentially leading to increased growth and profitability. However, the success of a partnership depends heavily on finding the right partners and managing the relationship effectively.

Concluding Thoughts: Picking Your Path in the Shed Business

In conclusion, your choice of business model will significantly influence the trajectory of your shed business. This choice should align with your personal goals, skills, and resources to set the stage for success. As we've explored, each model—whether it's manufacturing vs. reselling, direct-to-consumer vs. wholesale, physical vs. online sales, standard vs. custom sheds, franchising, or creating strategic partnerships—presents unique opportunities and challenges.

Let's review some key points:

• Manufacturing offers control over the product but requires a higher investment, while reselling provides flexibility and lower startup costs.

• Direct-to-consumer models foster personal relationships and allow for higher profit margins, whereas wholesale models offer volume sales but at lower margins.

• Physical sales can provide a hands-on experience and build trust, while online sales extend your market reach and offer convenient shopping for customers.

• Standard sheds are simpler to produce and sell, while custom sheds can meet unique customer needs but require more time, skills, and customer service.

• Franchising can fast-track growth but requires a successful business model and brand to start with.

• Strategic partnerships can open new opportunities and shared resources but require careful management to ensure alignment of interests.

Keep in mind that no single model guarantees success, and many businesses blend elements from different models. The right choice will depend on various factors, including your market, competition, and, importantly, your personal vision for your business.

Starting a shed business is an exciting venture. It's essential to thoroughly research and understand each business model, considering their implications for your specific situation and goals. This understanding will help you lay the foundation for a shed business that not only survives but thrives in the competitive market.

Good luck as you find your fit in the shed business industry!.

Grants

Grants are an alluring funding option for any business, mainly because they do not need to be repaid. They can provide a boost to your shed business without the financial burden that loans or other forms of borrowed capital entail. However, obtaining grants in the shed business industry can be challenging, albeit not impossible.

The typical perception is that grants are not commonly associated with industries like shed businesses. While this is true to an extent, there are avenues and conditions under which your shed business could potentially qualify for grant funding.

Sustainability Grants

With the world leaning towards sustainable and environmentally-friendly practices, there are grants available for businesses that align with these principles. If your shed business is incorporating sustainable building practices – such as using recycled materials, promoting energy efficiency, or implementing green designs – you might be eligible for these grants. Government bodies, environmental organizations, and even some private corporations offer such grants to encourage eco-friendly business practices.

Innovation Grants

Innovation is another aspect that can open doors to grant funding. If your shed business offers a unique, innovative design or a transformative business model that could revolutionize the industry, you may qualify for innovation grants. These are often provided by government departments, industry bodies, and private entities that aim to foster innovation and development.

Local and Community Grants

Local government bodies and community organizations sometimes offer grants to support local businesses. If your shed business plans to operate in a specific community, contributes to local employment, or supports community development, you might be eligible for these grants.

While it's clear that obtaining grants requires meeting specific criteria and navigating through complex application processes, the effort can be worthwhile considering the financial relief they provide.

Crowdfunding

Crowdfunding, at its core, is a method of pre-selling your product or service to a broad audience. It may initially seem like an unlikely strategy for a shed business, but when you dig a little deeper, you'll find it could present some unique opportunities. The question to ponder on is - why would people pre-purchase a shed or invest in a shed business?

Understanding the Value Proposition of a Crowdfunding Shed Business

For a crowdfunding campaign to succeed, your shed business must offer a unique selling proposition (USP) that's compelling enough to engage potential backers. This USP could take various forms:

• Innovation: A shed business that introduces innovative designs or employs state-of-the-art building techniques can provide significant value. For example, a shed that serves as a solar power hub, or an architecturally unique, multi-functional shed, can intrigue potential investors.

• Sustainability: Today's consumers are increasingly interested in environmentally friendly businesses. If your shed business incorporates recycled materials or sustainable practices, it could draw support from environmentally-conscious backers.

• Community Impact: If your shed business plans to provide vocational training to underserved communities, or sources materials locally thus bolstering local economies, such initiatives can appeal to backers who value community development.

Advantages and Potential Challenges of Crowdfunding

Crowdfunding has many advantages, one of which is the opportunity to pre-sell your products, allowing you to validate your business idea and build an initial customer base. By offering your sheds or other perks as rewards for different pledge levels, you can not only raise funds but also test market interest and generate early sales.

However, crowdfunding comes with its unique set of challenges. A successful campaign requires a compelling pitch, targeted marketing, and a degree of luck. Not all campaigns reach their target funding, so having a well-planned strategy and realistic expectations is essential.

Positioning Crowdfunding in the Shed Business Landscape

While crowdfunding might be traditionally associated with tech startups or creative projects, the principle behind it is universal — if you have a unique idea that resonates with people, crowdfunding can work. Given the rising interest in home improvement trends and sustainability, a well-positioned shed business could leverage crowdfunding to its advantage.

Venture Capital

Venture capital (VC) funding is often associated with high-growth, high-tech startups. It may not be the first funding source that comes to mind when you think about a shed business, but under specific circumstances, it could become a feasible option. The critical factor is demonstrating high growth potential to prospective investors.

Understanding Venture Capital's Fit for Shed Businesses

Traditional shed businesses—those that manufacture or sell sheds—might not fit the conventional profile that attracts venture capitalists. So why even consider venture capital for your shed business?

The answer lies in the business model and the value proposition. Here are a couple of scenarios that could pique the interest of venture capitalists:

• Revolutionary Technologies: If your shed business is developing or utilizing cutting-edge technology that disrupts the industry, it could be attractive to venture capitalists. For instance, if you're pioneering a new construction method that significantly reduces the cost or time it takes to build a shed, this kind of innovative approach might be of interest to VC firms.

• Scalable Business Models: VC firms are often interested in businesses that can scale rapidly. A shed business that employs a scalable business model—such as a franchise or a platform connecting shed manufacturers to customers across a wide geographic area—may attract VC interest.

Navigating the Venture Capital Process

Obtaining VC funding involves presenting your business plan to VC firms, who then decide if your business aligns with their investment strategy. If they're interested, they'll offer capital in exchange for equity in your company. This process can be complex and time-consuming, and it requires a detailed and convincing business plan.

Be aware, though, venture capital isn't for every business. Giving up equity means losing some control over your company, and VC firms often expect a significant return on their investment, which means a high-growth trajectory is a must.

Positioning Venture Capital in the Shed Business Landscape

While venture capital may not be a common funding source for most shed businesses, it doesn't mean it's an impossibility. If your business is at the intersection of innovation and scalability, it could prove to be an attractive investment for the right venture capital firm.

Angel Investors

Angel investors are high-net-worth individuals who provide capital for a business startup, often in exchange for convertible debt or ownership equity. Similar to venture capitalists, they often invest in businesses with high growth potential. However, there are some key differences between angel investors and venture capitalists that could make this a more appealing option for your shed business.

Key Differences Between Angel Investors and Venture Capital

While both venture capital and angel investment involve offering equity in return for funding, there are a few fundamental differences:

• Personal vs. Institutional Funds: Angel investors typically invest their own money, while venture capitalists manage pooled funds from different sources.

• Investment Size: Angel investors generally invest smaller amounts than VC firms, typically in the range of $25,000 to $100,000.

• Involvement: Angel investors may offer mentorship and guidance based on their personal experience and might be less involved in day-to-day operations compared to VC firms.

Strategic Partnerships

Sometimes, it might not just be about getting funding from external sources; there are also creative ways to leverage partnerships to get your business off the ground. Forming strategic partnerships can be a savvy move, especially for shed businesses.

Strategic partnerships can take on many forms and serve multiple functions:

• Shared Expenses: Partnering with complementary businesses such as hardware stores, home improvement businesses, or landscaping companies could involve splitting initial startup costs. Shared expenses could range from the cost of renting a physical location to marketing campaigns, reducing the financial burden on your business.

• Shared Resources: A strategic partnership can mean sharing resources, like tools, equipment, or even employees. This can significantly lower your overhead costs and increase your operational efficiency.

• Investment for Equity: In some cases, a strategic partner might provide an initial investment in exchange for a stake in your business or a share of profits.

It's essential to remember that the nature of these partnerships can vary greatly, and they should always be formalized with clear and legal agreements. A good partnership is built on clear communication, shared goals, and mutual benefits.

Conclusion: Navigating Your Shed Business Funding Journey

Securing capital for your shed business is a critical step that requires careful consideration. Each funding source, from personal savings to strategic partnerships, offers distinct advantages and challenges, and their suitability depends on your specific business context.

Choosing the right funding source isn't solely about getting the most capital but finding what best aligns with your business's needs, industry dynamics, and long-term goals. Effective financial planning and management are essential not only in the initial stages but as your business evolves.

Remember, the path to funding is one part of a much larger journey. It's about making strategic decisions, planning, and continuous learning. So, as you embark on your venture to build a thriving shed business, choose your funding route wisely and make each decision count.

FEATURE UPDATES

Webhooks for Shed Suite Dealers: Easier Third-Party Integrations for Sales and Conversion Tracking

We're excited to roll out Webhooks on the Shed Suite dealer platform, aiming to automate data transmission and make third-party integrations easier for you.

November 29, 2023

Ryan Chatterton

We're thrilled to announce a new feature on the Shed Suite platform - Webhooks now enabled on the dealer side. Thanks to our awesome dev team, this addition is geared towards making your operations smoother and more interconnected. Let's delve into what this feature entails and how it's set to enhance your interaction with third-party services.

What Are Webhooks?

Webhooks are a handy tool that allow automatic data transmission from our platform to other platforms you use. Shed Suite has enabled Webhooks on the dealer side, empowering you to create Webhooks in your settings on the admin dashboard.

How to Use Webhooks

The beauty of Webhooks lies in their ease of use and seamless interaction with external platforms. By setting up Webhooks, you can:

• Send information automatically when a contact is created.

• Use data for other actions as needed.

• Integrate with platforms like Zapier to send these Webhook payloads to the desired destinations.

Webhooks for Marketing Automation

Webhooks have proven to be instrumental for marketing automation within Shed Suite. This feature facilitates automatic data transmission when key events happen in Shed Suite, allowing effortless integration with the Shed Suite Marketing Platform CRM, or other third-party systems. It's a step forward in making your marketing campaigns more effective and well-coordinated.

Activating Webhooks for Dealers

The Webhooks feature has now been extended to dealers as well. You can turn on the Webhooks feature for each dealer individually.

Access this setting under the "other dealer settings" section in the manage dealers menu, allowing for tailored configurations catering to the diverse needs of different dealers.

Subscribing to Webhook Events

Once you enable Webhooks for a dealer, they can subscribe to various events such as:

• contact creation and updates

• quote creation and updates

• order processing

• customer order delivery

These subscriptions help in updating their CRM or any other third-party system, ensuring a seamless flow of data for smoother operations.

We're quite excited about the prospects this feature brings, especially with the upcoming Shed Suite Marketing platform for dealers. We're continuously working to improve Shed Suite, so stay tuned for more enhancements. In the meantime, we hope you enjoy exploring the advantages of the newly enabled Webhooks feature on the dealer platform.

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