Friday, August 28, 2009
Avoiding Drop-shipping Scams
There are lots of companies out there waiting for you to fall into their too-good-to-be-true traps. I have personal experience with the owners of two of these kinds of companies based right here in Utah - USight and Simplx. These companies tout their desire to make you a millionaire overnight by giving you access to thousands of high-margin products which you can sell online. To make themselves seem viable, they'll also include "coaching" from a person who really has never tried their methods in the first place. Otherwise, he'd be building his own business using those strategies instead of trying to sell them to you. A quick logic check would clue most people in to the fact that these companies aren't even worth the time you'd waste trying to determine whether they're legitimate, let alone the thousands of dollars you'd be out if you get involved with them. Think about it, if they're selling the same lists to thousands of people, who are in turn trying to sell the same products on eBay, the prices are driven down and the competition so fierce that there is no way for anyone to make money. Don't let it happen to you. I can't emphasize enough that you shouldn't go down the road of buckling to the high-pressure sales schemes of those snakes. If you do, I guarantee you'll be setback a few thousand dollars, and you'll likely be cured of any desire to try building an online store again.
Sporting Goods
After a couple months of toying with the idea of selling trains sets online, we decided it wasn't the best option for us. As we brainstormed about what else we could try, we quickly settled on team sports apparel and equipment. My wife and I both love sports. I wrestled and played varsity football and baseball in high school. I also love to play basketball, volleyball, and other competitive sports. My wife is the same way. We figured that we couldn't go wrong selling the kinds of products we used.
The next step in the process was to determine exactly what products we would sell. That decision would be contingent on a few things. First, because we didn't want to carry an inventory, we needed to find companies who would drop-ship their products for us. We wanted to sell to customers directly, many of whom would likely only buy one or two of any particular item. This meant that our suppliers needed to have low minimum order requirements.
The next priority was to find products that had a decent markup. Especially when you consider all the fees associated with completing the sell of an item - credit card processing fees (about 3% of the total), drop-shipping fees (as high as $8.00 per shipment for some of our suppliers), etc. - you want to make it worthwhile for you to sell what you're selling. Most items on which there isn't at least a legitimate 30% margin are just not worth selling.
Here are some suggestions. Most kinds of clothing have 100% markups from wholesale price to MSRP (Manufacturers Suggested Retail Price). Lots of niche products or somewhat custom items have high margins. Consider what you'll sell carefully before you put all the time into building a website, marketing it, and ultimately finding that the profit you're making (or not making) just isn't worth the time and effort you're investing.
The next step in the process was to determine exactly what products we would sell. That decision would be contingent on a few things. First, because we didn't want to carry an inventory, we needed to find companies who would drop-ship their products for us. We wanted to sell to customers directly, many of whom would likely only buy one or two of any particular item. This meant that our suppliers needed to have low minimum order requirements.
The next priority was to find products that had a decent markup. Especially when you consider all the fees associated with completing the sell of an item - credit card processing fees (about 3% of the total), drop-shipping fees (as high as $8.00 per shipment for some of our suppliers), etc. - you want to make it worthwhile for you to sell what you're selling. Most items on which there isn't at least a legitimate 30% margin are just not worth selling.
Here are some suggestions. Most kinds of clothing have 100% markups from wholesale price to MSRP (Manufacturers Suggested Retail Price). Lots of niche products or somewhat custom items have high margins. Consider what you'll sell carefully before you put all the time into building a website, marketing it, and ultimately finding that the profit you're making (or not making) just isn't worth the time and effort you're investing.
Wednesday, August 26, 2009
Selling Model Trains Online
Being ditched by my brother after spending almost two years working on what was supposed to be a joint deal took me back to ground zero. Besides being cut out of a business that had significant potential, I was left with no website, no established link network or traffic avenues. I didn't want to start a business that would directly compete with my brother's, so I didn't even have a product to sell at that point.
The next step was for me to figure out what I wanted to sell. Making a decision regarding what you're going to sell online is a major step when creating a successful ecommerce business. It's like walking down a road and coming to a place with a thousand different forks. Your decision regarding what product you are going to sell will have obvious impact on your business for years to come. You can read my article about what factors to consider when you're ready to seriously make that decision. Simply put, it's best to anticipate as best you can your sales process and focus on something that will be as simple and profitable as possible. It also helps if you sell something you enjoy.
Soon after my split from OuterSports.com, my wife got a job at a business that sold electronics and other toys online. She was impressed with the growth the company had experienced over the previous few years with their business. Partly because of her experience at work, our discussion about what we should sell online tended to focus on finding a niche that we could potentially dominate. My wife's grandfather was a model train enthusiast. On our most recent visit to his home in Texas, he showed us his elaborate train setup. With the influence from my wife's grandpa and her job, we made a decision to begin selling model train sets and later add other related products.
We got some literature on model trains so we could learn what we needed to sell model trains confidently and provide quality customer support. We learned about O-Scale, S-Scale, and HO-Scale trains. We studied some of the various aspects of what's involved in setting up train tracks, train stations, and accessories. We bought a domain, BigKidsPlayground.com, and we started to build our site.
As we began building a network of suppliers for model train sets, it soon became apparent to us that an online store selling model trains and accessories could quickly become more than we wanted to handle. The wholesale accounts we set up provided us with price lists that didn't show a very impressive margin on most of their products. We thought about the difficulties that could arise with customers buying trains and having difficulty with them not working for one reason or another. Electronics are often volatile products, and the nature of the detail with model trains, tracks, and scenery gives them a higher level of potential problems.
Despite the significant amount of time it took us to "settle" on the idea of selling model trains online, and the efforts we put into starting down that road, we backed out.
I tell this story because it illustrates what I mentioned about finding a product to sell that is relatively simple, and which a person can make a decent profit from. I'm definitely not saying that there's no way to make a profit selling model trains online. Had we continued down that road, we could likely have made it work. It's just that, using our best judgment and intuition, we figured our time would be better spent building a store that we estimated to have more potential.
The next step was for me to figure out what I wanted to sell. Making a decision regarding what you're going to sell online is a major step when creating a successful ecommerce business. It's like walking down a road and coming to a place with a thousand different forks. Your decision regarding what product you are going to sell will have obvious impact on your business for years to come. You can read my article about what factors to consider when you're ready to seriously make that decision. Simply put, it's best to anticipate as best you can your sales process and focus on something that will be as simple and profitable as possible. It also helps if you sell something you enjoy.
Soon after my split from OuterSports.com, my wife got a job at a business that sold electronics and other toys online. She was impressed with the growth the company had experienced over the previous few years with their business. Partly because of her experience at work, our discussion about what we should sell online tended to focus on finding a niche that we could potentially dominate. My wife's grandfather was a model train enthusiast. On our most recent visit to his home in Texas, he showed us his elaborate train setup. With the influence from my wife's grandpa and her job, we made a decision to begin selling model train sets and later add other related products.
We got some literature on model trains so we could learn what we needed to sell model trains confidently and provide quality customer support. We learned about O-Scale, S-Scale, and HO-Scale trains. We studied some of the various aspects of what's involved in setting up train tracks, train stations, and accessories. We bought a domain, BigKidsPlayground.com, and we started to build our site.
As we began building a network of suppliers for model train sets, it soon became apparent to us that an online store selling model trains and accessories could quickly become more than we wanted to handle. The wholesale accounts we set up provided us with price lists that didn't show a very impressive margin on most of their products. We thought about the difficulties that could arise with customers buying trains and having difficulty with them not working for one reason or another. Electronics are often volatile products, and the nature of the detail with model trains, tracks, and scenery gives them a higher level of potential problems.
Despite the significant amount of time it took us to "settle" on the idea of selling model trains online, and the efforts we put into starting down that road, we backed out.
I tell this story because it illustrates what I mentioned about finding a product to sell that is relatively simple, and which a person can make a decent profit from. I'm definitely not saying that there's no way to make a profit selling model trains online. Had we continued down that road, we could likely have made it work. It's just that, using our best judgment and intuition, we figured our time would be better spent building a store that we estimated to have more potential.
Wednesday, August 12, 2009
Things to consider when starting an online store...
Things to consider when starting an online store...
I put together a list of things that you’ll need to consider when starting an online store. The items included in this list comprise a checklist of core essentials for building and marketing a successful online business. I am writing articles that will describe in more detail each of these issues. Also, my ebook will have specifics about what I did to handle these various aspects of my business. If you’d like to be notified when my ebook is published, please sign up for our mailing list.
• Finding a product to sell
• Finding distributors for the product you want to sell
• Purchasing a domain name
• Finding a solid web host
• Setting up an SSL certificate for secure online ordering
• Establishing a merchant account to accept credit cards
• Finding a shopping cart system and setting it up on your web host
• Customizing your shopping cart system
• Establishing policies for pricing, discounts, shipping, returns, etc.
• Marketing your website - getting targeted traffic
I put together a list of things that you’ll need to consider when starting an online store. The items included in this list comprise a checklist of core essentials for building and marketing a successful online business. I am writing articles that will describe in more detail each of these issues. Also, my ebook will have specifics about what I did to handle these various aspects of my business. If you’d like to be notified when my ebook is published, please sign up for our mailing list.
• Finding a product to sell
• Finding distributors for the product you want to sell
• Purchasing a domain name
• Finding a solid web host
• Setting up an SSL certificate for secure online ordering
• Establishing a merchant account to accept credit cards
• Finding a shopping cart system and setting it up on your web host
• Customizing your shopping cart system
• Establishing policies for pricing, discounts, shipping, returns, etc.
• Marketing your website - getting targeted traffic
Evolution of OuterSports.com
Our decision to focus on selling outdoor products was based mostly on the fact that the supplier we had for those products was the largest and easiest to work with. If you go the route that we did and try to avoid having a significant inventory (which obviously increases your risk), your product selection will depend heavily on what suppliers you can find. I’ve found that there is a wide spectrum when it comes to the flexibility and cooperation of distributors, especially when it comes to small startup online stores. I’ll discuss in another section some things you can do to find the right suppliers for your online store. What you are looking for are suppliers who are willing to ship products directly to your customers each time you receive an order, and who don’t charge prohibitive fees to do so.
After we decided to focus our store on selling products for hiking, climbing, and camping, we knew we needed to find a new domain name, something that sounded like an outdoor store. We checked on the availability of a bunch of names using a domain registrar, but most of the names we wanted were taken. My brother came up with the name OuterSports.com. It was available and sounded good, so we took it.
We applied the experience we’d gained from RandomDeals.cc to building up OuterSports.com. Although we were more knowledgeable about how the process worked, we still didn’t have a lot of money to inject into the business, so we had to build it more slowly than we wanted to. However, as I discussed previously, we did see incremental improvements. At first we added about five hundred products to the store. Then we started getting links to our site by finding sites to exchange links with us, submitting our site details to online directories, commenting and contributing to forums and other community websites. Orders began to trickle in, and it wasn’t long before OuterSports.com had surpassed RandomDeals.cc.
About that time, I met a girl who I’d later marry. We dated for a few months until she went to France to study for a semester. While she was gone, I continued to build up OuterSports.com by adding products, getting links, and handling customer service issues (taking orders, charging customers, submitting orders to be processed, etc.).
In the spring of 2003, I received an entrepreneurial scholarship from Brigham Young University, where I was attending school. The scholarship was given to me for my work with OuterSports.com, and it required that I spend the summer working full-time on the business. I also had to submit formal reports to the scholarship office about what I was working on and detailing the success I was having. A couple months later, I got married and moved from Utah to Texas with my new wife so we could spend some time with her family before going back to school.
The scholarship I’d received validated my belief that the business my brother and I started had some serious potential. If experienced business people thought our small online store was worth giving a couple thousand dollars to a student, our business had to be worth something. The requirements for the scholarship motivated me to focus my efforts and move forward. Over the course of the summer, I took over handling the entire operation, and I was able to greatly improve our profits by continuing to market the site. In March of 2003 we were making about $2,000 per month, obviously not enough consider the store a career. During the month I returned back to Utah just before school, the site had made almost $4,000 in profit, and the signs showed that we had some serious momentum.
The plan that I’d discussed with my brother dictated that once the business was large enough to support him and his family, he would quit his job and work full-time on OuterSports.com. Then, as the business grew even more, I would finish school and devote my full attention to the business, and we’d build it together. Those plans abruptly changed when I returned to Utah after my scholarship summer in Texas. Just before school started, I received a phone call from my brother, who told me he and his wife had decided that they didn’t want to share a bank account or the business with me and my new wife. He simply asked me to move on and do something else.
As shocking as that turn of events was, I knew that I could start again with a new line of products, a new domain, and a new online store. Based upon my experience with the transition from RandomDeals.cc to OuterSports.com, I knew that building an online store wasn’t a one chance only situation. In fact, even after I split from OuterSports.com, I’ve seen three of my brothers build and successfully operate online stores selling products ranging from outdoor equipment to nursing scrubs to jewelry. Each of these stores has taken advantage of the formula my brother and I figured out when we began building RandomDeals.cc. If you have the patience and the willingness to invest time into following the same formula, I’m confident your successful online business is on the horizon.
After we decided to focus our store on selling products for hiking, climbing, and camping, we knew we needed to find a new domain name, something that sounded like an outdoor store. We checked on the availability of a bunch of names using a domain registrar, but most of the names we wanted were taken. My brother came up with the name OuterSports.com. It was available and sounded good, so we took it.
We applied the experience we’d gained from RandomDeals.cc to building up OuterSports.com. Although we were more knowledgeable about how the process worked, we still didn’t have a lot of money to inject into the business, so we had to build it more slowly than we wanted to. However, as I discussed previously, we did see incremental improvements. At first we added about five hundred products to the store. Then we started getting links to our site by finding sites to exchange links with us, submitting our site details to online directories, commenting and contributing to forums and other community websites. Orders began to trickle in, and it wasn’t long before OuterSports.com had surpassed RandomDeals.cc.
About that time, I met a girl who I’d later marry. We dated for a few months until she went to France to study for a semester. While she was gone, I continued to build up OuterSports.com by adding products, getting links, and handling customer service issues (taking orders, charging customers, submitting orders to be processed, etc.).
In the spring of 2003, I received an entrepreneurial scholarship from Brigham Young University, where I was attending school. The scholarship was given to me for my work with OuterSports.com, and it required that I spend the summer working full-time on the business. I also had to submit formal reports to the scholarship office about what I was working on and detailing the success I was having. A couple months later, I got married and moved from Utah to Texas with my new wife so we could spend some time with her family before going back to school.
The scholarship I’d received validated my belief that the business my brother and I started had some serious potential. If experienced business people thought our small online store was worth giving a couple thousand dollars to a student, our business had to be worth something. The requirements for the scholarship motivated me to focus my efforts and move forward. Over the course of the summer, I took over handling the entire operation, and I was able to greatly improve our profits by continuing to market the site. In March of 2003 we were making about $2,000 per month, obviously not enough consider the store a career. During the month I returned back to Utah just before school, the site had made almost $4,000 in profit, and the signs showed that we had some serious momentum.
The plan that I’d discussed with my brother dictated that once the business was large enough to support him and his family, he would quit his job and work full-time on OuterSports.com. Then, as the business grew even more, I would finish school and devote my full attention to the business, and we’d build it together. Those plans abruptly changed when I returned to Utah after my scholarship summer in Texas. Just before school started, I received a phone call from my brother, who told me he and his wife had decided that they didn’t want to share a bank account or the business with me and my new wife. He simply asked me to move on and do something else.
As shocking as that turn of events was, I knew that I could start again with a new line of products, a new domain, and a new online store. Based upon my experience with the transition from RandomDeals.cc to OuterSports.com, I knew that building an online store wasn’t a one chance only situation. In fact, even after I split from OuterSports.com, I’ve seen three of my brothers build and successfully operate online stores selling products ranging from outdoor equipment to nursing scrubs to jewelry. Each of these stores has taken advantage of the formula my brother and I figured out when we began building RandomDeals.cc. If you have the patience and the willingness to invest time into following the same formula, I’m confident your successful online business is on the horizon.
Transitioning from Randomness
Our experiments with RandomDeals.cc showed that we were making a lot of mistakes in our approach to building a successful online store. On the other hand, the site served as a sort of prototype that showed us we at least had the potential to effectively sell things online.
We consulted with a lot of people about our business, getting feedback from friends, relatives, and others on the usefulness of the site. We asked for and received frank feedback about whether our site was one that looked trustable, whether the way we presented our products was appealing, and other aspects of the site. Much of the feedback centered on two things. We needed to have a more focused product offering, and our site needed to look more professional. RandomDeals.cc seemed to be more like a garage sale than a professional outlet for products being offered by experts in a particular industry. Besides the random mix of products on the site, the design of the website itself was pretty old school looking, appearing as if it were made by amateurs who were learning how to build an online store. In spite of those issues, we were still making a few hundred dollars each month. To take things to the next level, we needed to do some refining.
We consulted with a lot of people about our business, getting feedback from friends, relatives, and others on the usefulness of the site. We asked for and received frank feedback about whether our site was one that looked trustable, whether the way we presented our products was appealing, and other aspects of the site. Much of the feedback centered on two things. We needed to have a more focused product offering, and our site needed to look more professional. RandomDeals.cc seemed to be more like a garage sale than a professional outlet for products being offered by experts in a particular industry. Besides the random mix of products on the site, the design of the website itself was pretty old school looking, appearing as if it were made by amateurs who were learning how to build an online store. In spite of those issues, we were still making a few hundred dollars each month. To take things to the next level, we needed to do some refining.
Sunday, August 9, 2009
Learning the Important Lessons
My brother and I set up RandomDeals.cc in the early part of 2002. Both of us had some technical background, but our main asset was our willingness to learn the ropes of building and marketing an online store. Our limited understanding of search engine optimization was manifest in our approach to getting traffic to our site. Right away my brother paid a company over $100 to submit RandomDeals.cc to a bunch of links farms and other similar worthless (worse, they could have had a negative impact on our site) link farm sites. We quickly figured out that route was not the way to go. Although we both had full-time occupations, we planned to dedicate whatever time we could to learning what we needed to learn and quickly building up a new career for both of us.
Around that time, I saw a commercial that showed employees of an online store around an order counter that recorded orders being placed soon after the company unveiled their newly created web site. The group cheered as a few orders trickled in. Then, their jubilation suddenly turned into panic as they watched the order meter spinning out of control. They were receiving so many orders they didn't know how they would keep up with them. That was my plan. I figured we could throw together our own online store, put in a few hours of marketing, and the orders would come rolling in.
The expectation that I had regarding how easy it would be to get our website rolling in the dough was pie in the sky. Like many American entrepreneurs, I didn't understand how much work would be involved in building an online business from scratch. Every time we got a link from a website to ours or our website was added to an online directory, etc., we thought we'd see our orders skyrocket. That never happened. Unless you're funded with tons of cash and resources galore [in which case my scenario doesn't apply to you] to market your site, you're very unlikely to see your business achieve the instant success that so many new online store owners expect. Instead, it will happen slowly, after lots of steady, determined effort.
A Note About Patience and Persistence
Over the years since I helped launch my first online store, I have had opportunities to mentor many people who wanted to find the freedom they saw in my ability to run a significant business from a home office. Some of them have been successful. Sadly, many of those I've mentored have failed in their goal to change from their existing jobs to become Internet entrepreneurs. I've seen a common trend among those whose online businesses have fizzled. Typically we'll have an initial meeting where I explain the fundamentals of finding a product to sell, determining who will be suppliers, registering a domain, setting up a store, and ultimately marketing the new site. After the initial meeting, the aspiring entrepreneur is normally thrilled thinking about how he will be his own boss within the following few months. Like the twelve-year-old boy who buys himself a nice new basketball and some sneakers intent on becoming the next NBA star, many of those I've worked with buy a domain or two, set up their business entities, establish accounts with suppliers, and in the short term seem bound for success. When I follow up with them later, it's obvious that most of these folks simply didn't understand that achieving success with an online business just doesn't happen overnight, and it doesn't happen with a few hours of work. When you begin building your online store, you're much more likely to see incremental gains and marginal improvement than you are to see instant windfall profits. However, over time, if you are patient and persistent in your efforts, you will find that your consistency has paid off.
My brother and I could very well have become two more among the numbers of people who tried to start an online business, gave up, and continue to work a job that doesn't fulfill their interests. I remember him telling me several times, "This isn't working. Let's just see if we can sell this thing for a few thousand dollars and try something else." I'd remind him that whereas during the previous month we were getting 30 visitors to our site each day, during the current month we averaged more than fifty visitors on a daily basis. We'd also notice that instead of getting five or six orders in a week as we had just three months ago, we were getting ten or twelve orders per week.
Obviously, the speed at which your eCommerce store takes off will depend upon how much time you put into it and how intelligently you approach it. Some strategies for setting up and marketing websites will be better than others. I've seen Internet marketers use creative, non-spamming, effective techniques to drive traffic to their site, and I've seen others whose efforts were not so effective. Hopefully the information you find on this blog and in my ebook will help you develop a strategy for your site that will be as optimized as possible. Spending some time planning, organizing, and refining your strategy (in addition to doing the actual grunt work) should accelerate your results.
Around that time, I saw a commercial that showed employees of an online store around an order counter that recorded orders being placed soon after the company unveiled their newly created web site. The group cheered as a few orders trickled in. Then, their jubilation suddenly turned into panic as they watched the order meter spinning out of control. They were receiving so many orders they didn't know how they would keep up with them. That was my plan. I figured we could throw together our own online store, put in a few hours of marketing, and the orders would come rolling in.
The expectation that I had regarding how easy it would be to get our website rolling in the dough was pie in the sky. Like many American entrepreneurs, I didn't understand how much work would be involved in building an online business from scratch. Every time we got a link from a website to ours or our website was added to an online directory, etc., we thought we'd see our orders skyrocket. That never happened. Unless you're funded with tons of cash and resources galore [in which case my scenario doesn't apply to you] to market your site, you're very unlikely to see your business achieve the instant success that so many new online store owners expect. Instead, it will happen slowly, after lots of steady, determined effort.
A Note About Patience and Persistence
Over the years since I helped launch my first online store, I have had opportunities to mentor many people who wanted to find the freedom they saw in my ability to run a significant business from a home office. Some of them have been successful. Sadly, many of those I've mentored have failed in their goal to change from their existing jobs to become Internet entrepreneurs. I've seen a common trend among those whose online businesses have fizzled. Typically we'll have an initial meeting where I explain the fundamentals of finding a product to sell, determining who will be suppliers, registering a domain, setting up a store, and ultimately marketing the new site. After the initial meeting, the aspiring entrepreneur is normally thrilled thinking about how he will be his own boss within the following few months. Like the twelve-year-old boy who buys himself a nice new basketball and some sneakers intent on becoming the next NBA star, many of those I've worked with buy a domain or two, set up their business entities, establish accounts with suppliers, and in the short term seem bound for success. When I follow up with them later, it's obvious that most of these folks simply didn't understand that achieving success with an online business just doesn't happen overnight, and it doesn't happen with a few hours of work. When you begin building your online store, you're much more likely to see incremental gains and marginal improvement than you are to see instant windfall profits. However, over time, if you are patient and persistent in your efforts, you will find that your consistency has paid off.
My brother and I could very well have become two more among the numbers of people who tried to start an online business, gave up, and continue to work a job that doesn't fulfill their interests. I remember him telling me several times, "This isn't working. Let's just see if we can sell this thing for a few thousand dollars and try something else." I'd remind him that whereas during the previous month we were getting 30 visitors to our site each day, during the current month we averaged more than fifty visitors on a daily basis. We'd also notice that instead of getting five or six orders in a week as we had just three months ago, we were getting ten or twelve orders per week.
Obviously, the speed at which your eCommerce store takes off will depend upon how much time you put into it and how intelligently you approach it. Some strategies for setting up and marketing websites will be better than others. I've seen Internet marketers use creative, non-spamming, effective techniques to drive traffic to their site, and I've seen others whose efforts were not so effective. Hopefully the information you find on this blog and in my ebook will help you develop a strategy for your site that will be as optimized as possible. Spending some time planning, organizing, and refining your strategy (in addition to doing the actual grunt work) should accelerate your results.
Monday, August 3, 2009
A Failed Automotive Shop
In 1999, I was working as an entry level software developer while going through college when I first decided it would be a good idea to go into business. My older brother and father were mechanics. At most of our family functions, it was common to hear them complain about their jobs. It wasn't that they didn't like the work they did. They just were fed up with their work environments and having to function under what they portrayed as incompetent management. Each complaint was followed with an insistence that if they had their own shop, things would be much different - much better.
After a few months of hearing their complaints, some of the others in the family (with my voice probably the loudest) suggested that they start their own business to remedy the situation. Although they were great mechanics, their business skills were lacking. My younger brother and I stepped in to provide what they lacked on the business side. We were determined to make it a successful family business, selling automotive repair and tires.
While I was working on our business plan and trying to secure financing for the business, I bought a house so I could put some sweat equity into it. My intent was to pull out the equity to help leverage our startup costs. I finished my basement and installed a sprinkler system in the yard. I pretty well exhaused the $10,000 or so in savings I had accumulated.
During this time, a period of about five months, I spent well over 100 hours doing market research, interviewing potential customers door-to-door, negotiating with the owner of the property we wanted to use, and wearing the numerous hats that come with starting a small business. The culmination of it all was at best disappointing. At worst, it set me back all the time I had put into building a business that never even got to the runway, and thousands of dollars in attorney's fees and other costs. My brother and father decided the business was "too risky" when the bank asked for collateral (i.e. - possibly our homes in the event the business failed) to secure a loan.
The whole experience wasn't a total loss. I had learned some things about business and negotiating. I understood how quickly money could evaporate. I still wanted to build a business, but I also knew that my risk level comfort zone then changed to being willing to put my time and effort on the line, but hopefully not so much my savings.
My younger brother still wanted to work together on a business with me. We thought about a few options. A friend of his had tipped him off about a distributor of outdoor supplies. They weren't interested in having us sell their stuff on eBay, but they would give us an account if we demonstrated that we had an online store. For a small fee ($2.00 per order), they would drop-ship their products to customers. We also found other suppliers whose products we could purchase and have shipped to our customers just in time, as we received orders, without having to stock a bunch of stuff that we weren't sure we could sell.
We set up a website: randomdeals.cc (randomdeals.com was taken). The name was accurate for our business. On the home page of the site there were four pictures in the main section: one for computer components, one for auto accessories, one for outdoor equipment, and one for sporting goods. Indeed, it was random. Here's the header for our RandomDeals.cc website. I found it using archive.org's WayBack tool.
The funny thing about our RandomDeals.cc site is that we actually sold some things on it. Apparently not everyone was turned off by our obvious lack of online sales experience. Although it wasn't much, it led to greater things for us in the eCommerce world.
After a few months of hearing their complaints, some of the others in the family (with my voice probably the loudest) suggested that they start their own business to remedy the situation. Although they were great mechanics, their business skills were lacking. My younger brother and I stepped in to provide what they lacked on the business side. We were determined to make it a successful family business, selling automotive repair and tires.
While I was working on our business plan and trying to secure financing for the business, I bought a house so I could put some sweat equity into it. My intent was to pull out the equity to help leverage our startup costs. I finished my basement and installed a sprinkler system in the yard. I pretty well exhaused the $10,000 or so in savings I had accumulated.
During this time, a period of about five months, I spent well over 100 hours doing market research, interviewing potential customers door-to-door, negotiating with the owner of the property we wanted to use, and wearing the numerous hats that come with starting a small business. The culmination of it all was at best disappointing. At worst, it set me back all the time I had put into building a business that never even got to the runway, and thousands of dollars in attorney's fees and other costs. My brother and father decided the business was "too risky" when the bank asked for collateral (i.e. - possibly our homes in the event the business failed) to secure a loan.
The whole experience wasn't a total loss. I had learned some things about business and negotiating. I understood how quickly money could evaporate. I still wanted to build a business, but I also knew that my risk level comfort zone then changed to being willing to put my time and effort on the line, but hopefully not so much my savings.
My younger brother still wanted to work together on a business with me. We thought about a few options. A friend of his had tipped him off about a distributor of outdoor supplies. They weren't interested in having us sell their stuff on eBay, but they would give us an account if we demonstrated that we had an online store. For a small fee ($2.00 per order), they would drop-ship their products to customers. We also found other suppliers whose products we could purchase and have shipped to our customers just in time, as we received orders, without having to stock a bunch of stuff that we weren't sure we could sell.
We set up a website: randomdeals.cc (randomdeals.com was taken). The name was accurate for our business. On the home page of the site there were four pictures in the main section: one for computer components, one for auto accessories, one for outdoor equipment, and one for sporting goods. Indeed, it was random. Here's the header for our RandomDeals.cc website. I found it using archive.org's WayBack tool.
The funny thing about our RandomDeals.cc site is that we actually sold some things on it. Apparently not everyone was turned off by our obvious lack of online sales experience. Although it wasn't much, it led to greater things for us in the eCommerce world.
Subscribe to:
Posts (Atom)