This is more of a general update kind of post where I want to touch on a bunch of different things that are going on and also take a snapshot of what I’m thinking right now and planning for in the coming months.
Hyacinth Marketing
First things first, we have Hyacinth Marketing. The company is doing pretty well right now and I have been using almost all of the profits to support the growth of Cave Tools. If I didn’t have my clients at Hyacinth, I wouldn’t have nearly enough capital to be as aggressive as I am with Cave Tools. Right now the only sales I’m doing for the company is attending my breakfast meetings with the Million Dollar Marketing (MDM) group. In the past 2 months I’ve given 3 prepared speeches to this group of Doylestown business owners and these guys literally think I’m the smartest marketing person they’ve ever met. I share a ton of strategies and advice with them and they have been referring a good amount of clients over to me. It’s literally like having my own sales team working for me. They actually invited me to a golf outing next Friday with a ton of business owners in the area, so I’m really excited about that. Apparently the keg is tapped 2 hours prior to tee off so it should be a fun day.
Unlimit3d
The Unlimit3d project also started almost a month ago. I built a project management platform for this entire project and between my team and theirs, we have about 9 people communicating and sharing files every day. However, even with the ease of collaboration we are already falling behind schedule. As far as my estimates go now, I think we are between 10-20 working days behind where we need to be to keep pace. The problem is that we are still stuck in the graphic design phase and because Unlimit3d has so many people involved on their end, nobody is taking the lead on feedback because they are afraid everyone wont agree. This is causing us to have feedback response times of close to 48 hours sometimes and it is really slowing things down. I’ve had a bunch of talks with Unlimit3d and my development team on ways to improve efficiency with the feedback process. They’re getting better, but at this point we are already behind and there’s not much we can do about it because we don’t want to start coding and then have to do a ton of rework. The entire website is broken into 6 milestones, so the longer milestone 1 takes, the longer I need to wait for my milestone 2 payment and the less aggressive I can be with using that money on Cave Tools.
Cave Tools
Speaking of Cave Tools, we’ve gone profitable! Well…only for a short period of time. I described Cave Tools to my friend the other day like this, “I started out by digging a 2 inch deep whole with my initial investment. As soon as I filled it up to the surface, I decided to dig a 4 inch hole in the same spot. I’ve filled that up a couple inches so far, but then the other day I just dug another 6 inches deep.” Basically, due to such a lengthy supply chain (approx 2 months), even though I am making profit, I am not making enough to support growth on the timeframe that I need it. Therefore, I’m drawing money from Hyacinth to drive growth and hoping to make it back on the backend.
Right now I have another shipment of 2,000 grill brushes on its way to me now. Due to the money restrictions, I was late on placing my replenishment order in time to make sure I don’t stock out. It took 20 days to manufacture the next batch of brushes, but because of my tardiness I had to split the shipment into 400 brushes via air and 1,600 via boat. To put the cost in perspective, it costs me about $900 to ship 400 brushes via air and about $1,200 to ship 1,600 brushes via boat. That’s a ton of money I’m now losing because I don’t want to be faced with a stock out. This also counts as 2 separate imports, so instead of paying the fees twice, I decided to get a continuous import bond. Now, I’m a registered importer and can do as many imports as I want for a year without paying a fee each time. It’ll pay off by the end of the year, but for now it’s more money. The 2,000 grill brushes was my 4 inch hole. My new product line is the 6 inch hole…
Product Development
My next product line is a 3 piece grill set: Spatula, Fork, Tongs. From a money standpoint, this is pretty much triple my initial investment for just the brush because we have 3 new items. Depending on my cash flow, I may have to actually take investment to afford it, but I really don’t want to do that.
I haven’t paid to start manufacturing yet though because I’m waiting on my samples to arrive, hopefully this upcoming week. I’m super excited about this because I literally spent hours researching different sets and designing these samples. For the grill brush I just picked out a certain model, but the 3 piece set I actually designed. I also had a mold developed so I can brand them with the Cave Tools logo. Here’s a few pictures of what they look like:
I can’t wait to get my hands on them and just hold them! My goal with this set was to make them incredibly strong and durable. I took the average steel thickness in the grilling utensils market and increased my thickness by 20%. For approximately $0.40 per unit extra in steel, I will probably be able to increase my sell price by about $4-5. I have 2 sample sets coming in right now. One has a strengthen slot, which curves the metal a little bit to make it stronger and the other is just flat steel. I’m going to be comparing the two and also soliciting feedback from people to see which they prefer more.
These sets will most likely retail in the $30 dollar range. The best Weber set sells for $31 so I’m thinking of charging $32-35. I have a bunch of marketing ideas planned for when I finally launch the set and I’m also going to be building an early bird waiting list primarily via facebook where people can get a 20% coupon. I’m also thinking of doing a direct mail campaign to all of my grill brush customers. Something like a teaser post card with a coupon code.
Sales Trends
From a trend standpoint, I have noticed that my week to week growth has started to level out. We’re still making solid sales numbers, but the growth has slowed down, which is not good at all. I think it is do to a combination of our promotion efforts slacking a bit (Because I am very busy with Hyacinth) and possibly the seasonal effect. We are getting closer to the end of the summer so people are probably just not buying as many brushes. I have a couple of solutions on my success list to keep my growth trending up and protect against a winter slump in sales. My success list is different from my daily to-do list in the sense that these are strategic business advancements that will take my business to the next level. Building my wholesale program for instance was something on my success list.
Success List
At the top of my list right now is utilizing Multichannel Fulfillment to increase my ecommerce footprint. So what does this mean? I’ve outsourced all of my warehousing and customer service to Amazon and yes, they charge me an arm and a leg for it. Since I’m already paying them for this stuff, I might as well use them for sales I make outside of Amazon. Basically, my goal is to get listed on as many ecommerce stores as I can and when orders come in from those channels, I pass them through to Amazon and have Amazon ship for me. This means I can now get listed on websites like Buy.com and newegg.com and the other big ecommerce stores on the internet. There are many benefits to this from a marketing standpoint, sales, brand awareness, etc. I’m in the process of compiling a list of sites right now that I want to target. Then I need to build the processes to automate order handling from the various websites. This creates more of a management aspect for me unlike Amazon where when I make a sale they instantly do all of the order management. If I’m late on passing my orders through, then I get bad feedback and pissed off customers. That can’t happen. I also need to build processes to track my profit and loss on each website so I can be sure to focus my marketing efforts at the high converting channels. Finally, I need to figure out how to simplify all of this so my assistant can handle everything for me and just give me a weekly progress report. Sounds difficult, but I get a chubby for business development work, so I’m excited to take on the challenge.
Next up on the success list is becoming an expert at media buying. Media buying scares the shit out of me because it costs a lot of money and I have heard tons of stories of people losing their shirt with poor purchases. In short, media buying entails building out a profile for my ideal customer (ex: Male, 21-35 yrs old, interested in grilling, etc.) and then running targeted banner advertisements on the websites that the person hangs out on. I could run the adds by going through an advertising network or by doing direct purchases from individual websites. In order to do direct purchases, I need to build my own ad server to rotate and serve my ads. This is cheaper in the long run, but to get enough test data I’m going to need to go through an ad network.
The ad networks used to be reserved for just the big brands like Coke because they have outrageous minimum budgets like $10,000. Just to get enough sample data to optimize a campaign, you need to blow through at least $5,000 and have enough money left over to make it all back. However, Real Time Bid (RTB) networks have become readily available in the past few years which makes it easier for someone like me to break in. Basically, I’ll be able to bid in real time on remnant advertizing inventory that wasn’t sold via the big networks. I’ll still have to blow through about $500 in a test budget, but then I can optimize my campaign for the highest converting websites and approach them for direct buys.
My strategy for Media Buying is to target websites with a large visitor base that matches up to my demographic and also target sites with a visitor base primarily in the southern U.S. states. This way I can keep my sales consistent during the winter time in the north. In order to do this the right way and not lose a bunch of money, I need to do significant competitive intelligence research to figure out what the highest converting offers are for the grilling industry (ex: Free Recipe books, discount coupons, etc.). Once I figure out what my offer will be, I need to create it and then drive traffic to an email opt in form where I will give it away. Then I need to convert email leads into product sales on the back end. It sounds funny, but I don’t want to do what Weber is doing because they are very corporate. A lot of their marketing is designed for branding, not direct response marketing. I’ll probably end up breaking down all of Grill Daddy’s advertising because they are more of an internet based company.
Retargeting is also going to be a big factor in boosting my conversions. Retargeting is placing a cookie on someone’s browser when they visit your site, which then shows your ads all over the internet and literally follows them around to make it look like you’re everywhere. The majority of people will leave my offer page right away without giving me their email, but if I retarget them I will reclaim a lot of those visitors at a later date.
To be clear, my experience with paid advertising is limited to just Google pay per click. I’m pretty good, but I’ve never run any type of campaign this complex before or built a significant email list. I have a shit ton to learn and I want to get this all set up by October so I can be ready for the winter. I purchased a media buying course the other day from some pretty respectable internet marketers and I also got my hands on some training documents from Gauher Chaudhry, who is one of the biggest paid traffic guys in the world. I’m trying to do about an hour a day of studying and then I need to start testing on a small scale so I can scale up. As scary as this is to me, I know that if I master Media Buying, I can scale the shit out of my company and start to become a big player.
Traditional Marketing
I decided I need to be doing some more traditional marketing for myself as well. Instead of just doing online press releases, I need to start getting featured in newspapers and branding myself as a young up and coming entrepreneur. This will bring publicity to both of my companies and will also help drive traffic online and give me back links from authority news services. Regardless of how much money I’ve made so far in my career (very little compared to if I had a job), my on paper resume sounds ridiculous right now: “23 year old entrepreneur who has started 2 companies in the past 2 years, conducts business all over the world, and has 8 employees in 4 different countries. Has never accepted any investment and has built everything from scratch with hard work, determination, and virtually no budget.”
I dropped a quick email to a reporter that covers the bucks county area and I have an interview coming up next week. My plan is to get featured in the business section for print and online and then use that credibility to approach larger newspapers.
Couch Surfing
I originally planned to leave for my couch surfing across America trip in September after our fantasy football draft in Atlantic City. There is no way in hell that’s a realistic option for me anymore. I have way too much shit going on to just pick up and leave. I’m also strapped for cash right now because of everything I’m working on. I’m thinking a realistic departure date is going to be sometime in March/April of 2014 because it will be getting warmer for my trip and that also gives me time to do test runs where I couch surf for say a week at a time and learn how the logistics are going to work.
Working From Starbucks
I had quite the week this week working out of different Starbucks. The only people that are in a Starbucks during the day for the most part are entrepreneurs and people doing business meetings. I always have my headphones on, but when I hear an interesting conversation going on, I turn the music off and eavesdrop with absolutely no shame. They think I’m working and listening to music, but really what I’m doing is qualifying them. For the most part, I listen for a couple minutes and then go back to work, but sometimes I find some gems. This week was a good week for me.
Early in the week, I overheard people discussing a business plan for some SAT tutoring service. They talked about SEO and the need for a website multiple times in the convo, so as soon as their meeting was done I introduced myself and gave them each my card. Later in the day, they both checked out my LinkedIn profile and then within a half hour I had a voicemail on my business line asking for a meeting with me. Easy Peasy.
On Thursday, I overheard a conversation between a real young kid and a business attorney. He’s only 21 years old and his business which I will not include here, has already done over $1 million in revenue for the year. He recently fired his cofounder because she blew 250K on bull shit and now she is causing legal problems for him. After the meeting was over, I grabbed the kid and went with the I love meeting other young entrepreneurs approach. We talked for 15 minutes about different stuff and exchanged cards. I’m planning on following up with him sometime this upcoming week and seeing if he wants to grab a few drinks. Surround yourself by smart people and build relationships with movers and shakers and somewhere down the line it will pay off.
On Friday, I was working out of a starbucks in Philadelphia. This old dude was working behind me and looked at my screen and asked if I was building a website. I wasn’t, but a conversation ensued and this guy who I thought was a kook, actually turned out to be incredibly interesting. He went from being a taxi driver, to landing a job from a passenger in his taxi, to becoming a self taught programmer, to designing one of the world’s first heart monitoring machine software’s, to becoming #1 ranked in the world at competitive air hockey, to having an asthma attack in which the doctors fucked up and paralysed him. Ever since the accident, he has problems focusing and he talks weird, which is why I thought he was kooky, but he is intelligent as fuck. We literally talked and exchange stories for 3 hours on Friday (which I made up by working until 8:30pm fml) and he has invited me to stay at his house in South Texas when I do my couch surfing trip. He also took my card and wants to introduce me to a bunch of business people he knows in Texas. During our talk, we got onto the subject of encryption and I got an entire rundown of how to encrypt devices and back them up. He was at Starbucks on Friday rebuilding a computer’s operating system and he had a bag of flash drives. Each flash drive contained its own linux operating system on it. He basically had 7 different portable operating systems stored on these encrypted flash drives that he could plug into any computer and boom he was up and running.
Based on what I learned from Joe, I set up a bunch of encrypted files on my computer today. With my level of encryption, not even the NSA could break into my computer to look at my documents if they wanted to. Seriously, and the NSA knows it, which really pisses them off. Not that the NSA would ever solicit my documents or anything like that, but if my computer were ever stolen like it was in Montreal, all of my information is safe. Furthermore, I now plan to back up my files everyday on my encrypted flash drive so I can be completely portable instead of having to drag my laptop around. Bad Ass!
