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When I wrote the first article in this series on business, I did not realize how much you readers care about the topic. I have been pleasantly surprised by your feedback so I guess I will keep writing.
Before I talk about today’s topic, let me give you a quick update. At the time I wrote that first article at the end of August, the kids’ business was at about $750,000/year in revenue. Today, it is about $1,200,000/year. That is $100,000/month and $3,300/day. That may sound like a bit of work but it is not so bad. For us, that translates into about 50 orders/day. When the kids are on their game, they can process 60 orders/hour. I would say on average, they work about two hours/day, not just on packing orders but also receiving shipments into inventory, cleaning the warehouse (our basement) and various other things. All in all, things are hitting on all cylinders.
I mentioned a while ago that we were planning on moving to a bigger house but that is sort of on hold at the moment. We got better internet (finally) and we have emptied the basement so we have more room for the business. Now when I sit back and calculate space, I think we can probably triple the business and make it work with the basement. So for the moment at least, we are sitting tight and actually took the house off the market at the end of December.
So how do you decide what to sell? Many of you would like to start a business at some point, and the decision about what to sell (either product or service) is THE critical question. Before I give you some tips, let me tell you a story.
Many years ago when I was just getting my feet wet, we started selling a particular product on the internet. We knew it was popular but we were selling the same product that maybe 1000 other online stores sold and we were all obligated to sell at the same price. Sales just trickled in and they were small orders.
One day, someone called me and asked me if I could sell them 100 cases of that product. They wanted to pay a max of $90/case. I was paying full wholesale ($100/case) at the time so it looked impossible but for some reason, I agreed to look into it. That night I had an idea. My brother worked with me at the time and together we wrote a quick piece of software that basically scoured the internet and harvested the email addresses of those other 1000 online stores. Our thinking was that some of them were overstocked on the product and might be willing to sell it to us at less than the $100/wholesale.
We sent out an email to those stores and sat back and waited. By lunch, we were getting offers to sell us cases and we started buying at around $75/case. By dinner, we had bought several hundred cases and we were only paying $25/case.
We sold the 100 cases for $9000 and pocketed maybe $4,000 dollars. A few thousand dollars is no big deal but it opened our eyes. Before long, we were buying and selling thousands of cases. The price we paid kept going down. In fact, while the product is almost dead, we still sell it today. My cost per case is roughly $1 and I sell a case for $12.
Here is what I learned from that experience: if you are looking for something to sell, you need to get off the beaten path. You need to get creative and you need to zig while everyone else is zagging. I have done similar things numerous times over the years since then. I could tell you stories for a long time about successes and failures. Yes I have had my share of failures but for sure, I have not been bored.
If I were to distill all of that experience down to a few tips to help you find something to sell, here they are:
Sell something that only you can sell
Here in the deep south, we have a plethora of “country-cooking” restaurants. They all sell the same fried chicken, fried okra, french fries, fried fish (get the picture?) in the same kind of overused grease. I often wonder why someone decides to open a restaurant that is basically like a dozen others in the same town. Yet they do, and they usually fail. If they were smart, they would open a restaurant with a different concept.
Be careful of trying to sell commodities or perhaps a brand of product that anyone else can sell. Doing so is not the kiss of death but you will be starting with a hand tied behind your back. Rather, look for a way to have a truly unique product. The products I sell here on this site fall into that category. I am the only person that can sell my particular products unless I allow some kind of distributorship. If you don’t have your own products, perhaps try to get an exclusive deal to represent a product line.
Sell something that you can acquire cheaper than the competition
If you can’t be the sole distributor of a product, at least try to find a way to buy it cheap. If you buy the product cheaper than the competition, you will have a huge leg up on them. Sometimes that might mean carrying more inventory than your competitors do. Sometimes, it might mean getting creative like I did in the story I just told. Sometimes, it might mean just negotiating with your wholesaler.
Most businesses try to figure out how to get more money for their products and services. While that is a good thing, spend just as much time trying to figure out how to get your products and services cheaper.
Sell something where there are barriers of entry that cut down competition
The good thing about internet business is that you can get started for almost nothing. The bad thing about internet business is that your competitors can get started for almost nothing.
If it sounds easy and it costs no money, guess what? Your competition is going to be overwhelming. Be careful about those kinds of businesses. I would include affiliate programs and drop ship businesses in that category and any other business that provides you with a free website that sells something.
Sell something that there there is a legitimate market for
There are many ways to determine if there is demand for a product. An anecdotal story from a friend does not really qualify. Do your market research and do it objectively. If you are going to open a plumbing business, figure out how many plumbers service the area and what their strengths and weaknesses are. If you are going to sell online, go to tools that help you predict how many people a month are looking for your service (Google Adwords has one).
Bonus: sell something that works with viral/social media
If I was going to give one tip for starting a business in 2017, I would tell you to intentionally look for an idea that people will advertise for you. I love the story of Grace and Lace, a company that is now at $20,000,000/year and still does not spend money on advertising. Their advertising comes from posting pretty pictures on social media that get shared.
Last weekend, I toured a similar business that sold gun holsters that worked with the same principle. They simply post videos to Instagram with shooting tips and that generates customers. Not all products are candidates for this kind of strategy but if you can find one that is, you will have a huge advantage.