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Diary of Opening A New Business

dbjennings

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I don't want to send this thread too far off the rails since it is one that I have enjoyed following for quite some time. However, as someone who hires a lot of salespeople, I thought I'd give theBiz my two cents:
* With the possible exception of some web-based businesses, it is very tough to grow significantly without a sales force (Jack seems to have a substantial inside sales team working the phones based on prior posts about his business).
* You don't have to hire people who "are selling other products." In fact, I have found these "independent reps" to be of little value. I have heard of successful partnerships with sales reps that carry multiple lines "in the bag," but have not personally had that experience. I want to hire people to sell for me and only me.
* Hiring sales reps is difficult. In fact, I think it is more difficult to hire salespeople than any other type of employee. The problem is that sales requires so much personal motivation. I've seen people that look like aggressive winners in an interview that can't produce. On the flip side, I've come across some very good salespeople that don't show a lot of "personality" during the interview process.
* In my experience, you are going to have a higher turnover rate among the sales staff than your support, professional, or production people. Part of that is out of necessity. If a salesperson can't produce, you've got to "coach him up" or part ways quickly. You are going to waste some time on some bad hires. The key is to identify those quickly and move on. Good training coupled with good reps should yield good results. You'll have some people that don't "get it." You've got to let them go and spend your energy on the ones that can help you grow.
* One of the most important things, in my opinion, is hanging on to the good ones. Sales forces are usually driven primarily by money. You want that since your company makes money when the salespeople do (assuming you've structured your commission package properly). However, that same trait means that the best salespeople usually have their eyes open for better opportunities for themselves. I bend over backward to keep the top producers. Like the old saying goes, "you've got to kiss a lot of frogs to find your prince." After all of the effort it takes to find and hire good salespeople, I don't want to lose them. I'm willing to pay a premium to keep them happy - and keep them producing for me. I've found it is cheaper to reward the best people handsomely than to get greedy about commissions and end up having to "kiss more frogs."
 
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jtmoniii

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Quick question

I see a lot of these threads started by young entre's and thought I would start my own on a new business I am starting this week. I think it might be a good insight to what it takes to make it. Or what it takes to fail at it.

My goal. Turn a (hopefully only) $15k investment into a $10 million dollar a year business within 24 months. (last business I started with under $10k, we did $4.5 million in sales in 36 months and sold out to a major player in that industry). To do that I am going to have to go from zero employees (as of last week) to say 100 in under 24 months.

If you guys like I can keep an account of what is actually happening week to week. the trials and tribulations, the hiring's, the firing's, the bills, the sales, etc.

I am not going to tell you what business I am starting, (name or industry) but I will say, I am not reinventing the wheel here. This is a business a ton of people are doing and make a lot of money from, A lot on this site, I just THINK I have come up with a niche, and a different way to market it. So I am going to give it a try. (no need to reinvent the wheel)

Where am I at?

Expenses

- Just rented a small office last week, 800 sq ft. $1,500 down $750 a month (signed a month to month lease, with the ability to move up to 2,000 sq feet quickly, then to 4,000 sq feet, which is about the size I need.)
- Bought 5 used computers - $900
- Bought 6 Voip phones - $1,000
- Bought 6 headsets - $750
- Cable is going to be installed tomorrow. $220 a month
- Phone lines through a voip service $250 a month
- Incorp with proper books, $1,000 (lawyer on retainer)
- Talked to the CPA about becoming my part time book keeper ($200 a month)
- General liability policy $440 for the year. (once I have a few more employees, need to add some sort of workers comp)
- Set up payroll company
- Set up bank account

Office already had some junky old furniture that will do, but I am buying new chairs, some plants and pics. $1,000 bucks

Have main website almost done, as we will be charging on monthly automatic renewals, and sometimes taking payment info by phone, still trying to get the merchant account set up.

Employees,
- Tons of infrastructure work to do, hired a college degreed in marketing guy to be my right hand man. $3,000 a month to start, Add $1,000 a month every month to 9k a month as long as sales justify. (tons of work to do)
- Hired my sales manager, starts Wed, and we will start selling Thursday. She will help write the scripts, make changes and manage the sales force. ($17 an hour plus override comm bonus from sales team)

Goals for this week,

Make 1 sale, set up a sales system, finish website writing,(or just keep updating).

Goals for next week, (once we have the script down) hire 4 more salespeople, pay $13 an hour plus commission.

I am back in the game.... Now it is time to have some fun.

Note about me: I have been a serial entrepreneur for over 20 years, started a small business when I was 20, with no money (no parents money either, they asked me for money), it worked, thank god, (I have not had a boss for 20 years) I have owned a lot of businesses, from a bunch of retail stores, to a huge wholesale operation with 60 employees, then another wholesale operation in a total different industry just to see if I could. ( Also the bad, I have spent at least 1 million over the years trying businesses I should have never gone into, I did it because I thought I was smart, I lost a lot of money, but learned a lot)

Thanks for reading..

Quick Question: I don't need specifics, but can you tell me the average sales price and average profit per sale? I was just trying to get an idea of acceptable risk - when calculating burn rate vs. growing the business.


Thanks!!!!
 

Rawr

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I will also add, that it is hard for me not to go crazy with other ideas, in my 20's I got to where I was making great money and decided I should go out and open new ideas, new businesses all the time. Instead of just keeping with my main one and running it up to it's highest point..

I am certain that alone cost me 100 million, easy..

Right now i have no less than 4 ideas bouncing around my head that I would like to give a try to.. But keep saying, No jack.. No...



Jack, congratulations on your success. Q- how would you know when that highest point is? First sign of declining $?
 

wade1mil

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How are things going with your business Jack? Same old same old? Anything new? I think I'm going to reread this thread to get another shot of adrenaline :)
 
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JEdwards

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How are things going with your business Jack? Same old same old? Anything new? I think I'm going to reread this thread to get another shot of adrenaline :)

Thanks for asking, everything is growing quite nicely. I have time now to work on some other angles away from the main one. Have not tapped out the market completely, but I like where we stand. We are now known. Now it is just the time it takes for all the rest of the people that buy what I am selling to slowly switch over to me.

Or I become that big of a bother to the competitors, which means... $$$
 

Yussef

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Jack I am loving this. My biweekly payroll is roughly between $5500 and $7400 but payroll taxes are a pain in my a$$, I have a setup a little similar to yours, not as many phones but certainly enough computers and another office an hour away. After reading TMFL I realize that with a setup of this magnitude I should be getting much better ROI. Are you willing to give more details or are you holding this one close to your chest? I understand if you are. You are still awesome.

P.S. It is a dream of mine to manage more product and less people. As MJ said in his book "people can be unpredictable" and boy how right he was. I know very little about wholesale purchasing, selling, and distribution but if you recommend a site or reading material I will get it, read it and attempt to gather enough info to implement a workable plan. Hard work is never an issue for me, I work my a$$ off now but I am looking for a better return for my time and a lot less people management oriented stress.
 

Rerun

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Hey Jack,

Thanks for sharing your experience, and congrats on your success. This is an awesome thread!

I got lucky over the past 10 years or so in web-based businesses, and ready for new challenges. Your approach makes a lot of sense to me and is something I'm going to pursue. When I was a kid, I was the guy on the phones and then the guy managing the sales teams. About time I'm the boss :)

You shared a lot about you're hiring/firing of sales people and managing costs on a budget. How did you get started with such a low budget and still manage to fulfill your product/service? You must have had other employees providing the service, or purchased stock for merchandise for the physical product (plus people to pack and ship). Or did you start out as a reseller of sorts or it's a digital product (which I think you said it wasn't)?

In other words... in simplest terms, it sounds like you set up shop, set up some phones, and hired sales people to dial for dollars. Once you get the sale, how is that handled? If you can share in generalities, without disclosing your product/service, that would be awesome.
 
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andviv

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I have a setup a little similar to yours, not as many phones but certainly enough computers and another office an hour away.
Yussef, I can't seem to find what your business is about... I think I saw it here somewhere, can't find it though.... that may help JackEdwards to give you better input.
 

wade1mil

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Jack did you end up hiring outside sales reps? I'm curious how that has worked out.
 

NaPal

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Great Thread Jack!
Was surprised that there was such a size of time between the last few pages here. Two pages ago I was expecting another 10 pages or so based on the posts from the beginnings of the thread.

This thread and your journey to succeed with you business is truly inspiring. The way you word it, it makes it seem like its just a game. Throw your chips in on more employees and increase your profits. Do whatever it takes to get to that $25 million.

It'd be great to know your products, however not making it public is a smart move on your part; at least that's what i think.

Will you take me for a drive in the Ferrari and Bentley? :) It will only add more fuel to my the process!
 
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JEdwards

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Jack I am loving this. My biweekly payroll is roughly between $5500 and $7400 but payroll taxes are a pain in my a$$, I have a setup a little similar to yours, not as many phones but certainly enough computers and another office an hour away. After reading TMFL I realize that with a setup of this magnitude I should be getting much better ROI. Are you willing to give more details or are you holding this one close to your chest? I understand if you are. You are still awesome.

.

I would have to see what you are doing exaclty so I could tell you what ROI you should be getting or shooting for. PM some info and I would be happy to look over it for you.
 

JEdwards

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Jack did you end up hiring outside sales reps? I'm curious how that has worked out.

Yes more regional reps though than local. I wanted more local, but that is tough. I am working on it, and I would say I am at break even with the outside reps. Money wise. But I have high hopes.
 

JEdwards

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This thread and your journey to succeed with you business is truly inspiring. The way you word it, it makes it seem like its just a game. Throw your chips in on more employees and increase your profits. Do whatever it takes to get to that $25 million.

It'd be great to know your products, however not making it public is a smart move on your part; at least that's what i think.

Will you take me for a drive in the Ferrari and Bentley? :) It will only add more fuel to my the process!


1. It is just a game.

2. Sure if you are ever in my neck of the woods, sure I will take you for a ride in Both.. Just not at the same time.
 
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AllenCrawley

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Yes more regional reps though than local. I wanted more local, but that is tough. I am working on it, and I would say I am at break even with the outside reps. Money wise. But I have high hopes.

Do you still pay the outside reps a base? I assume you do but curious if it's set up differently than with inside sales.
 

JEdwards

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Do you still pay the outside reps a base? I assume you do but curious if it's set up differently than with inside sales.

I pay the outside sales reps a base, plus travel, food, hotel expenses.

When they are out of town traveling it is about $700 a week in expenses alone.
 

wade1mil

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Yes more regional reps though than local. I wanted more local, but that is tough. I am working on it, and I would say I am at break even with the outside reps. Money wise. But I have high hopes.

Is this in the auto industry? I might be able to get some names for you...
 
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SeanKelly

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Jack,

I've never even been a truly active member of any forum community. However, I couldn't stop myself from reading every post throughout this thread. Truly inspirational and interesting. I have a lot of respect for you. Best of luck!

-Sean
 

Rerun

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I would say I am at break even with the outside reps. Money wise. But I have high hopes.

If you're breaking even with your outside reps, I'd say that's a hell of a start. Especially considering the reorders is probably all upside!
 

St.Alpine

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Jack,

this is one of the first topics I've read on the fastlane forum and the "realness" of this progress keeps me comming back. It tops off my motivational gastank, which seems to never run empty, since I set out on the journey. It is exiting to see the process of building a business with the steppingstones on its way.

It is the real deal and that is why I love this forum and MJs book. I admire what you are doing and I hope you reach your goals with the business!

-Kevin
 
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JAJT

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Damn. Read the whole thread start to finish and was hoping with such a time span the business would have been revealed by now. Any chance of a made-up example from a different industry that somewhat mirrors what you do? The advice is gold regardless but I find context really helps cement the ideas.

I used to cold call regarding business cell phones and plans so that is the closest I can come to a personal example that sorta fits your descriptions (required inventory, after-sale support, cold calling, making a name for yourself, etc...).

Having been in sales for 10+ years now (inside sales) I wonder why it never occurred to me to hire sales people instead of being one. You make it sound so fun and easy with a bit of money and elbow grease. Probably because all the things I've sold in the past were cock-hard to get up and running (super technical, tons of backend programming or engineering, etc...).

Great thread. Look forward to the ultimate reveal which will hopefully one day come.
 

andviv

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Look forward to the ultimate reveal which will hopefully one day come.
Why do you really need this information?


Having been in sales for 10+ years now (inside sales) I wonder why it never occurred to me to hire sales people instead of being one.
With all this knowledge, what prevents you from doing it yourself starting today?


Probably because all the things I've sold in the past were cock-hard to get up and running (super technical, tons of backend programming or engineering, etc...).
Great excuse. How would you implement this with another product? Actually, what product could you sell that did not involve all the things you mentioned?
 

JEdwards

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Damn. Read the whole thread start to finish and was hoping with such a time span the business would have been revealed by now. Any chance of a made-up example from a different industry that somewhat mirrors what you do? The advice is gold regardless but I find context really helps cement the ideas.

I used to cold call regarding business cell phones and plans so that is the closest I can come to a personal example that sorta fits your descriptions (required inventory, after-sale support, cold calling, making a name for yourself, etc...).

Having been in sales for 10+ years now (inside sales) I wonder why it never occurred to me to hire sales people instead of being one. You make it sound so fun and easy with a bit of money and elbow grease. Probably because all the things I've sold in the past were cock-hard to get up and running (super technical, tons of backend programming or engineering, etc...).

Great thread. Look forward to the ultimate reveal which will hopefully one day come.

I am having an INSIDERS call on Friday, which basically lays out the entire deal. To bad you are not an INSIDERS.
 
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JAJT

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I am having an INSIDERS call on Friday, which basically lays out the entire deal. To bad you are not an INSIDERS.

I still have yet to digest even a fraction of what is available here - I will likely subscribe shortly as I see actual value in this forum (which is a happy first... and I've seen a lot of forums...).


Why do you really need this information?

Curiosity, mostly. I'm absolutely in awe of all the gracious information provided already - I don't expect my success or failure at any venture would be dependent on this kind of specific information. I'm just intrigued.


With all this knowledge, what prevents you from doing it yourself starting today?

I had a long run of sidewalk/slowlane and have JUST this month gotten myself out of a good deal of consumer debt through some painful "F*ck this kind of life" effort. Getting a business going is step 2 and my next immediate goal. My issue is that I just had my second child mere days ago and the last thing I can do after finally climbing up to "$0.00" is jumping back into a hole. I'm not risk adverse, I just can't "put it all on black" this second. I can do smaller risks but I am in no position to finance more than the primary job allows right this second without risking my marriage.

Now that debt isn't my main financial responsibility/burden, I have some breathing and risk-taking room, but I have to challenge myself to do it above the $0 line, not below.


Great excuse. How would you implement this with another product? Actually, what product could you sell that did not involve all the things you mentioned?

I just meant that I never considered selling the products I was exposed to due to the high level of in-house expertise and funding that was used to get the various company's off the ground. I've sold reverse engineering, custom made industrial cameras, SaaS stuff (internet faxing, email marketing, virtual receptionist services), etc... All required tremendous up-front development and investment, of which I never had, so I never considered it. I didn't mean to imply these were insurmountable hurdles, only that I had a mental roadblock preventing me from even considering them.

Believe me, I'm not one to accept excuses and do actually love getting spanked when I find it entering my own vocabulary. I'm fairly new here and haven't paid my dues yet but I'm looking forward to sharing my own stories in the coming weeks when I have pudding to provide as proof. The pudding may be sour and off-colored but it will be a hell of a lot more delicious than the idea of some "future pudding".

(I like pudding... )
 

andviv

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gotten myself out of a good deal of consumer debt
Congrats


I just had my second child mere days ago
CONGRATS!!!!


I just meant that I never considered selling the products I was exposed to due to the high level of in-house expertise and funding that was used to get the various company's off the ground. I've sold reverse engineering, custom made industrial cameras, SaaS stuff (internet faxing, email marketing, virtual receptionist services), etc... All required tremendous up-front development and investment, of which I never had, so I never considered it. I didn't mean to imply these were insurmountable hurdles, only that I had a mental roadblock preventing me from even considering them.
What about generic cameras, instead of custom made?
 
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theBiz

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I am having an INSIDERS call on Friday, which basically lays out the entire deal. To bad you are not an INSIDERS.

What does this mean, that you are going to do an interview with MJ for INSIDERS to hear...?
 

JEdwards

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What does this mean, that you are going to do an interview with MJ for INSIDERS to hear...?

You don't know? On this site, there are INSIDERS and there are outsiders.. You right now are an outsider.. where as I am an INSIDERS..

You can become an INSIDERS, there is a button somewhere.
 

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