Author Topic: 28 years old and hungry  (Read 1328 times)

k-vette

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28 years old and hungry
« on: March 03, 2017, 11:10:57 AM »
Hungry to succeed!  (Not to eat)  I figured I would just share what I've learned and where I'm going:

1.  Vending Machines.  This was my first official business I ever started.  Initially I placed a machine at my full time job. It made sense, I was already there every day so servicing it was easy.  Then we decided to scale up and find more locations.  This was a few years ago, the business officially folded early this year.  Here's what I learned and why it wasn't best for us.
Machines are HEAVY!  You need good equipment to move them.
Living in a populated area with a local source for products is key.  We lived about 45 minutes from a good supplier, so the drive had to mean large volumes of product to make it worthwhile.  We tried to stock machines every 2 weeks or so.
What people buy changes!  You're most popular snack one week will be a dud the next.  Keep things rotating occasionally through different products.
More machines!  A few machines works if they're local and you have easy access, but it won't make much money.  More machines = more money.  If you want to make a killing, you need to have over 100 machines out there.  That's a full time job.  I met a guy buying product once that was working part-time managing 40 machines and doing well.  That's a heavy investment on equipment, so the cost of entry isn't cheap. We spent $1,000 on our first snack machine.  The other business owner I talked with had over 300 machines and 2 full time employees.  It's work.

Why did we stop?  We moved further away from the dense population, making product stocking even more difficult.  It just didn't make sense anymore to make the drive for a small number of machines.  The profit was minimal.

2.  Ebikes!  Started late in 2015.  Still going and looking to expand further.  I'm working on a crowdfunding campaign to bump up sales for this summer.  The market trend is looking very good, so I want to keep pushing on this one.

3.  Clothing - My wife just started a clothing business a couple weeks ago.  Initial results look good, and she has relatives doing the same with good sales numbers.  They're numbers would easily replace many middle-class incomes.  I hope my wife gets there as well.

4.  Youtube - Not a business yet, because I haven't made any money!  But I'm trying to leverage the successful businesses (and failures) as leverage for good content to build up a personal Youtube channel.  I'm hoping it will bring exposure to both businesses, as well as eventually bring it's own cash flow down the road.

4.  ?  Not sure!  I have however purchased a Domain name for a plan I've been considering for a long time... I'm just trying to figure out where to fit it in.  I'm still working full-time in addition to the ebikes, clothing, and youtube channel.  This last one could be relatively hands off though.


IMPORTANT LESSONS!
1.  Don't spend money.  Really.  The vending machine business wasn't fruitful and had a high cost of entry, plus I need to sell of the machines I have to get something back out of it.  The ebike business was started with less than $200 and has brought the most so far, over $100k gross in it's first year from inception.  With a slow first few months, that was amazing!  A good business sells itself.

2.  Customer Service - That's what has set me apart and brought sales.  I'm servicing what other people won't.  Shipping overseas?  I do that.  Alternate payment gateways?  Done.  Do what the other guys aren't and you'll find a sales niche within your niche.

3. Not every business succeeds.  90% of startups fail.  That means it might take 10 businesses before you make one successful!  In reality I think your odds are better, because I'm sure most stop after the first.  Don't give up!  It's those that continue on that become the 10% of successful startups.

I'm always learning something new, but am open to suggestions.  I'll try to post here when I have a need for feedback!
Owner of Sierra Ebike
www.sierraebike.com

Axecleaver

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Re: 28 years old and hungry
« Reply #1 on: March 03, 2017, 03:59:38 PM »
Good story! What was your margin on the eBikes, and have you found ways to improve margin as you learned more about the business? A lot of businesses can be started on very little money; that does mean the barrier to entry is low, though.

k-vette

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Re: 28 years old and hungry
« Reply #2 on: March 03, 2017, 04:12:57 PM »
The margins on ebike products vary.  I started by dropshipping components.  Very low margin, but no inventory and overhead, which is a key to building slowly with only money the business brings in.  I slowly expanding to stocking things in the US (increasing margins by buying in bulk) and onto complete bikes.  A typical bike shop has gross margins of 36%.  My ebikes are typically better than that, while the components are all over the board.  Some are low, some are ridiculously high.

Basically an ebike business is "not" a low entry point - BUT the components were.  That helped me build up a customer base which I can then turn to as referrals and eventually more bike sales.
Owner of Sierra Ebike
www.sierraebike.com

CargoBiker

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Re: 28 years old and hungry
« Reply #3 on: March 03, 2017, 09:09:22 PM »
You do sound hungry man, you are kicking ass.


Your vending machine business sounds a lot like my old appliance fix/flip/service business.  Moving heavy machines all ding dong day, and servicing stuff all over the place.   It wears you down to the bone.


Glad you found something a little more "hands-off"
« Last Edit: March 03, 2017, 09:31:36 PM by CargoBiker »
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k-vette

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Re: 28 years old and hungry
« Reply #4 on: March 03, 2017, 09:26:24 PM »
You do sound hungry man, you are kicking ass.


Your vending machine business sounds a lot like my appliance fix/flip/service business.  Moving heavy machines all ding dong day, and servicing stuff all over the place.   It wears you down to the bone.


Glad you found something a little more "hands-off"

Definitely working smarter.  But not "smarter, not harder".  Smarter AND harder.  It gets tough some days, but I see the light at the end of the tunnel.   I saved everything I could, then realized the next step to RE is more income.  Some unmastachian like day trading has been making good money as well.  I'm conservative, but risk tolerant.  :)
Owner of Sierra Ebike
www.sierraebike.com

JG in Hangzhou

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Re: 28 years old and hungry
« Reply #5 on: March 06, 2017, 07:52:47 PM »
I started my own business in China.  It began with consulting then morphed into education and training then morphed into a school. 
If you want to increase your risk of success and lower the risk of failure, I would definitely focus on the low investment strategy. 
In the middle of my success, I decided to "go big".  Rented a larger building, hired a larger staff, bought into a franchise for marketing the school, and after two difficult years, losing money, sold it.
Luckily, my wife and I had seriously considered how much we could afford to lose and our investment was capped at that.  Once we hit that we actively sought to sell out and minimize the loss. 

Having an 'exit strategy'  for a business is a must.  Otherwise it can drag you down a rabbit hole consuming your time, money, sanity, or worst of all, health.

My low investment high return school is now blossoming while I spend less time and less money keeping it rolling.   At first I spent long hours personally handling everything, but slowly have replaced myself and my wife's involvement more and more, so we have more freedom, but continue to collect profit from the school. 

Also, another side business is bringing kids to the USA during the summer.  We collect all the money up front so there is little risk.

Scale is another important issue.   For my business, it is limited by scale, but now I am spending time on writing text books and looking into publishing them as a second revenue source, using the school as the testing ground for the materials. 

My advice, start small, limit the risk by limiting investment and commitments. 
Have an exit strategy if things take a bad turn.
Look to leverage connections or build offshoots.
Make sure you are having fun doing it.  When the fun stops, pull the plug.
« Last Edit: March 06, 2017, 07:55:05 PM by JG in Hangzhou »

Axecleaver

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Re: 28 years old and hungry
« Reply #6 on: March 07, 2017, 04:31:48 AM »
Great post, JG!

Having an "investment cap" before you get started is a great idea. When I launched my consulting practice, I based our cap on the expenses we had saved. We started with 6-8 months of expenses and if we got down to two months, I'd close up shop. This helped in two ways: we worked hard to minimize our expenses while I waited for receivables to come in, and I worked extra-hard to sell, because I knew if I closed, I'd never have another chance to do it.

Exit strategy is also a really good suggestion. A good business plan template helps you to define what the exit plan looks like.