Diary of Opening A New Business

[JEdwards]

Jack, Where are you hiring from? A job posting site or craigslist or just folks that you know through a network? What do you look at when hiring people?

Thanks everyone for your responses.

Right now I am just hiring a few people that have worked for me in the past, I have been taking out ads every few days on craigslist, If I don't get the 2-3 good salespeople I need in the next 2-3 days, I will probably take out an ad in the free bee employment papers. But those ads are $250-350 a week, and don't even get me started on Monster.com and the others, $$$.

I am offering some great money to start, just getting a ton of people who are not closers, or wait have never sold anything in their lives, I am looking for people with the same type sales experience. I could train, but why.

Yes I am being picky. I have two that are pretty close. Just need a leader/closer type.

Funny story, I actually had a girl tell me "I can close" when I worked at Mcdonalds, I closed every night... Love that one.

Today was a good day, I do believe the first sale will fall in the am. And hopefully we will have our core 4 salespeople by Thursday. 7 people total, So that will be a burn rate of $600 bucks day. (3 of us are working free)

Bad side today, had a hell of a time today with the voip set up. nightmare really, I miss regular old phone systems.

Jack

 

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[JEdwards]

Things are going great. Having fun. Making money. Just building more equity at this point, just the time it takes to grow. Sold a small portion of the business to a national company not to long ago. Trying to position the business to sell out in the next year or so.

Only time will tell.

 

[JEdwards]

Lots.. Have not worked for the man for 23 years. In that time I have learned over and over what not to do. I did a lot of them.

Also don't get overwhelmed, take everything bit by bit.

 

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[Lakeview]

I was able to meet Jack last week for breakfast. Thought I would share with this group some take aways from our meeting. First of all, Jack is the real deal and reminds me very much of some other great entrepreneurs I have crossed paths with. His mind quickly shifts from understanding the idea to how can it be monetized for the quickest return. If that idea isn't best he quickly determines an alternative route but focuses in on the primary opportunity.

For me, I was all about planning and making sure the i's were dotted and t's crossed. I was spending too much time planning and not acting. Reality is I had convinced myself it was necessary but it was prolonging the ability to get things going. (Guess that comes from my corporate upbringing.) I have so many ideas as to how I could build my business I was not focused on a solid starting point. He helped me understand how I could charge for my services that could generate cash flow quicker so I could hire additional personnel. Hiring additional personnel obviously would help jump start my business quicker.

To recap:

• identify the value proposition
• put numbers to it - number of potential clients in what market areas
• focus on one target area or market area at a time and use that as a test bed
  
• adjust and pivot as you receive feedback and expand into other market areas, THEN add additional products or services
  
• once you have a solid model, expand quickly by reinvesting in the business (in my case, adding inside sales)
• don't dabble in the details without drawing income or you're liable to get discouraged and give up

Thank you Jack for this thread and the opportunity to visit.

Well back to work!

 

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[JEdwards]

I don't think most salespeople would be able to pull off the entire process. The biz has many facets.

As with every business, I bet I could give them an exact step by step book on the way out and still 99% of people wouldn't go out and create their own.. Just facts..

Franky.. Most people want to work and get a check and one day hope to win the lottery.

 

[JEdwards]

Very informative....thanks for the details, maybe you can help me as well. It seems from your post that you started business from scratch. I am in no shape or even form to begin from that lane. My mission is franchise....but of a Urgent Care or Hospital. How does this sound, if only ONE manager is needed to handle the urgent care? For right now I can invest $10,000 to $20,000, so I might go into (for right now) into the real estate business. Though mission is to open up a Urgent care which would cost one million dollars. That will be no problem in future for me. But overall what is your intake in this?

Ask me when you have the million...

24 months later. Wonder if he got to the $10 mill mark.

You never know.... I might but you might never, well until I post after the sale

Hey Jack, I noticed through the threads that you have your sales team making the calls and so fourth. Is there a reason why you didn't go through a call center and have everything setup through them?

I would not want to pay double for something I cannot control and make changes to when needed.. And it is way to late to outsource it.

 

[JEdwards]

JackEdwards. What's new with the business? Are you on track of hitting goal of $10MM in 24 months?

Everything is going fine, as I said before now it just takes time. 1st year, who is this, 2nd year, yea I have heard of you but I have been doing the same thing for 20 years, Year 3, OK I will give you a try.

This year I am adding some new product lines so that will be fun. As for hitting my goal of $10 million in sales, I will say this, at this point if you had $10 million in cash and sat it in front of me as an offer to buy me out, I would not only say no, I would say HELL NO! So with that you would have to assume I probably did.

 

[MJ DeMarco]

I will take that as your polite way of telling me to stop

I think you've made your point clear, and our points equally that due diligence is not something to ignore, nor is your gut. I just don't want this to turn into a witch-hunt. If there are shenanigans going on, it usually gets exposed and recirculated through the vine. Again, truth survives investigation.

 

[JEdwards]

Welcome to the forum Jack and thanks for sharing your story. I'm sure many will be interested to see how it develops.

Thanks, I am interested in seeing how it develops also. Time will tell.

now THIS is what im talking about. Where did you get all the used equip from? Is the space you rented NNN and already built with offices or what?

I bought the computers from a used computer store, Dells, paid $119 then $89 for a 17in flat screen monitor. Then nego down to $900 all in for 5 of them.

The rent on the space is all in. It is in an office building not a normal retail space. Space was already built out. Hopefully we will be out of this space in under 6 weeks, (to a 2,000 sq footer in the same building) it is really to small to do anything in, but one piece of advice, never sign long term leases and do not take space that you do not need.

Finally got the internet going, all the computers are set up, Voip phones and Headsets should be in tomorrow.

Manager girl did flake after all.

But, I Hired a new sales manager, (someone who worked for me in the past) nice girl, not my first choice for the position but she will do for what I need. Or at least I hope she will. Paying her $750 a week.

Also have another old employee (sales person) starting Friday.

Next weeks payroll will be a min of $2g's plus, then you add rent and phone, and misc, we need to start making some sales, here real quick.

Hoping to still sale our first deal by the end of the week.

Thanks for reading.

 

[darkjediii]

I agree with you Jack. I don't think you have to make the sale yourself. You hired an experienced sales manager and sales people, so you should not have to teach them how to sell because if you hired the right people, they should be able to outsell you at least 5-1 anyway.

All you need to really focus on is to get with the sales manager and come up with an excellent sales process/program and aggressive quotas. Then you need to hold these people accountable for their own leads and sales.

From the info you shared with us, it seems like right now your main problem is getting the sales. So obviously you need to devote most of your time concentrating on developing your sales program. this should involve: listening in on the sales calls, working with your sales manager to tweak and improve, set quotas, identify your sales people's strengths and weaknesses, analyze each call, recruit the top sales people and get rid of the non-producers etc..

Remember: Sales people are like teenagers, they can be very lazy/unproductive or if given the right push, they can be amazingly productive.. A wise man once gave me advice on how to handle sales people: don't tell them how much they could make. ASK them how much they would like to make in 1 year wether it be 65k 100k or 200+k, then break that down to measurable goals and hold them strictly to it.

I think you are headed in the right direction. Good luck on the new venture and I look forward to your every update!!

 

[JEdwards]

I'm sure you're not looking for advice, but have you ever read "The Ultimate Sales Machine" by Chet Holmes?

If not, I would highly recommend it...

Between 16 and 25 that is all I did, read books on business, I cannot stand them now.

I didn't mean my post to be negative, Everything is a building block, Rome was not built in a day.

Overall I am happy with the progress we are making.

 

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[JEdwards]

I am doing fine, thanks, growing, As I said before in this thread, business gets to a point where you have to wait it out, Let it grow, etc.

A lot of repetitive stuff that there is no reason to post over.

That is where we are, every month the numbers are getting bigger. I am taking home some good change. I think we have a real business , that has gone over the hump.

Now just growing it to the best it can be, so I can sell it.


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...

 

[JAJT]

I just subscribed.

First time doing ANYTHING like this but my thinking has been changed. If I want to be successful I need to start investing in myself. I've purchased a LOT of nice things in the past and none of those nice things have done anything to help me be successful.

It's amazing how I used to drop my trousers for a fancy poster, a video game, a luxurious meal, great food/beer/wine, and other impulse items without batting an eye but the second I'm faced with the choice to learn something for a price I put up my mental walls, grip my wallet tightly and figure out every reason in the world not to go for it. Such stupid thinking.

Even if I only had a 20% chance of learning something from every course, book and subscription I paid for (which is an insanely low %, it's probably more like 80% even with the trash courses) I would still be putting myself in positions to get lucky and find real gems of wisdom. I may learn nothing by taking these chances, but I'll certainly learn nothing by not trying.

My friends laugh at me quite regularly for the professional books I own. One even held up MJ's book and gave me the stinkeye, like I was reading 50 Shades of Grey or something. They think I'm wasting time and money when all they can talk about is the next Gears of War achievement and how great the new Batman film is.

I can't wait until they start asking me "how did you do it?" and when I start explaining they will get that glossed-over look like when I tell them how I lost weight. "Oh, work was involved? Never-mind."

 

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[JEdwards]

Thanks everyone for your replies. Things are going very well. Our main office is now over 6k sq feet, and I control about 75k feet in warehouse space. Soon to be 200k. Still hope to be bought out in a year or so, have added a zero to what I expect.

Lot of work still to do, I have taken the biz into new directions I didn't even consider when we opened.

I was wondering how much your budget was when you first started your first company which generated the first million...
And did you start with the same strategy as with this new company? To expand fast with hiring employees.

We started the first business in 1991 with $3,500 bucks. Not my money either. Not the same method, I was just lucky to be at the right place at the right time on that one.

 

[JEdwards]

Is this what you were talking to me about when we had lunch? or something new since then?

Nope that's it. It is going to be huge.

Well One of the things I told you. Not the one where we make a linkedin/facebook for little people. The other one.

 

[JEdwards]

How/why did you decide "Ok let's get into this" - checked the numbers and saw good opp/$$/other?

How many sales do you need to break even every month?

Well, I saw someone elses attempt to do something along the same lines and thought, I can do that a little better. Don't know if that will turn out to be true or not, we will just have to see.

I go by my own simple logic of common sense, if it does not make sense to me, I don't do it. If I can be stumped on a sales question, I don't do it.

Also, the most important thing is sales, can it be sold? Anyone can make a great website, anyone can spend money putting up ads on google, but the reality is, you must know how to sell it. I am pretty good at giving that a try.

Jack

 

[Rickson9]

You actually believe that he will steal your idea, and start up a business in your niche. LOL.

Nice thread anyhow.

Only an idiot wouldn't. Capitalism is survival of the fittest. I steal ideas all the time.

Best regards.

 

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[JEdwards]

I have considered myself to be an entrepreneur but now as I have been employing people here and there I realized I am not good at it. I am good at motivating others just not good at picking out the right people. Here is my question, if you are not physically doing any of the work... Once the office is set up, employees are trained, and sales men are on the phone what is considered "hard work" for you? Are you struggling through trial and error to make your system to work? Is motivated your employees the difference between failure and profit? I have never owned a business with full time employees so I'm sure it's a different game.

You are going to have to get over that.. You must be able to hire smarter, better than you. If not you will always be "working hard"

The goal is to show up, and go to lunch...

 

[JEdwards]

You mentioned something to the effect of you are done reading books, and I was wondering how you would handle this if you were to start over. Would you read as many books as you did? Or would you read less and substitute action in its place?

.

Thanks,

This business is me starting over. I read books when I was young, early 20's.. Just decided to take more action then reading books that rehash everything. (well except for MJ's, that is a pretty good book)

Figure out your idea, figure out the angles.. Make your first sale. the rest is easy.

 

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[JEdwards]

Hi Jack,

What would you say your company's competitive advantage is? If your business is profitable (which it appears it is, or why else would you start and continue it), it would attract competitors eventually. What is something that you have that is not easily steal-able, replicatable, etc. Thanks Jack

Myron

1. Competitive advantage, the fact that there are too many lazy - rich people in my industry.

2. Attracting competitors: See that is the thing they were already there, As I said before in this thread I am not reinventing the wheel here.

3. What is something that you have that is not easily steal-able, replicatable, etc? Easy, My Thought process.

 

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[JEdwards]

In your experience, how many phone calls do you have to have with somebody before you land a sale? Do you break down the calls into stages? If so, care to explain the stages?

For example,

Phone call 1: Build rapport and educate customer about product

Phone call 2: Follow up with customer so that you're always in the back of their mind.

Phone call 3: After customer has thought about what you have to offer, you follow up to answer any last questions. Close the sale.

Dang Ryan, Tough questions.


Here is the reality of it, these guys are getting screwed over by their massive consolidating competitor. Imagine 500 million dollar biz against your 1 million dollar biz... they know it, I know it. So really all I need to do is explain how we are going to screw the big guys back.

It is not a money issue, it is a trust issue. They dont know me from Adam. They see the value, but it might take me a few calls to get them to yes.

The ones I have pitched have owned Multiple locations, So it is just a matter of them thinking about it, going through it and saying ok, Instead of most of them cutting me a 3k check they are having to cut a 15-20k check. which they think, they have to think about.

Had it just been a 3k or 6k check, I feel I would of done a few one call closes.

BTW: This is not arrogance or ego. They actually need what I am selling, They just might not of accepted it yet.

 

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[JEdwards]

These guys have brought up an interesting question. "Why not do it yourself!?"

I personally know how important it is to delegate tasks and realize that you cannot be the person who does that work to make the business grow, but let me ask you this:

Do you still feel the urge to "take control" and "do it my damn self" ?? If so, how do you handle that urge?

I don't really have that urge. I am on the organizational, idea side. I know it can and will be sold because it makes sense, it adds value. There are people that are great at some things and not so good at others, I know what I am good at.

Not to say that I could not sell it, I could, but what does that prove? Right now we are creating a system, once we have that system then it is just scale. Hopefully in a few weeks we will be moving up into a much bigger space.

 

[JEdwards]

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... $$$

 

[JEdwards]

Unlike some people on this site that have this dream to become rich and sit on the beach, or travel, or whatever. (not there is anything wrong with that). That isn't me. I've done it, I have sat and done nothing for months at a time, only to be bored and wanting to do something.

I love this little business I started, I am really having fun. I want to see how far I can take it until it blows up or gets bought out for an obscene amount of money. ( 9 figures)

I could sell today if I wanted. I have offers on the table. But No Not yet.

 

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[Lathan]

I will say this, at this point if you had $10 million in cash and sat it in front of me as an offer to buy me out, I would not only say no, I would say HELL NO! So with that you would have to assume I probably did.

 

[JEdwards]

Things went well, have not made as many calls as I thought, spent a lot more time on the pitch, avg call when I get to the owner is over 25 minutes. (going through the presentation) and it looks like the industry is a little more consolidated than I thought, Which means either a few are going to write me a 25k check or they will face the repercussions of the man with the phone.

Which I told them, don't make me do it. One of my lines is, don't make me go mid-evil on your a$$... I''ll do it.

Still at zero sales out of the 60 I need. Think I have 4-5 for that will close next week, then hopefully 10 a week, until I am sold out.

As of Monday I am going to call in 2 1 and 1/2 hour blocks 10-11:30 and 2-3:30.

On a personal note, I am really enjoying it.. I think I have been way to bored. I have made it into a game in my head. I win when the 60 sell out.

Bright side, which I was worried about, I thought I would of had to fire myself... But not yet.

 

[JEdwards]

Phone sales has always worked..

Back in pest control I call residential.. I do not call homes anymore, Never again, only businesses and then I only call for something they need or already buy. Makes the call much easier..

Hope that answered your question.

 

[JEdwards]

No way to know the numbers of other compaines.

You just need to know what you can do, realistically, or it will be a very short partnership.

But most Chinese companies are not looking for a little one-z two-z deal.. Tell them you can gross them 5 million a year, you just need 5 years to build their brand in the states. They love big numbers. Figure out your plan and make sure it is big.

 

[TheSilverSpoon]

I get what you are saying. In my mind I face the same and other barriers, although I suspect these are very real and strong barriers. Not insurmountable, but large enough without a large initial investment.

Trying to hit such a broad market at the very beginning of your business will be tough. But, if you can drill down on a mini-niche and serve that group better than your competition you now have an advantage. The number of widgets that need to be stocked, supplied, and managed dramatically decreases. Warehouse needs decrease, capital in inventory dramatically decreases, and your inventory turnover rate will be higher. You can give your customers better customer service, faster delivery, etc to compensate for your company's newness in the marketplace.

After you have that running smoothly THEN you can start to branch out into other widgets. Base the widget additions entirely upon what your existing customers are asking for. Now instead of trying to just guess what everyone would want, you have a few bread and butter products supplemented with products that your customers are hungry for. As customer base grows, so will their needs. Your company will grow and add more widgets as this happens.

Chopsticks...yes you could sell thousands (I'm in Australia, 1/12th the population of the US!), the issue is, they are already being supplied, so why change? To save a couple of hundred a year? Unlikely. I think these sorts of items are highly commodotized so that in itself is a massive barrier (glass half empty?)

With almost all highly commoditized products comes a slew of highly profitable accessories and services.

Vig was saying in his thread how Walmart had a TV special they ran for Black Friday. The TV itself looked like it was a loss leader, with little, if any, profit being made on the sale of the TV itself. But with the sale of the TV they could push a wall mount. Wall mounts cost <$9 per unit with a sales price ranging all the way up to $100. You can bet the salesman were pushing extended warranties too. 90%+ margins in those. And then the buyer needs all the necessary cables to go with their new TV. And cables are a very high margin item.

Cars are another example of this. In my area we have a few local dealers selling for $1000 under invoice. You pay $1000 less for it than what they paid for it. So hows that work? If the dealer sells the car within a specific time period (usually 90 days) they get a 3% kickback from the dealer, usually ~$650. The documentation fee is ~$390. This brings them to breakeven on the car itself. Now they'll push the financing, extended warranties, add ons, and service plans on you. All are relatively high margin items or services.

These places don't make their profit on the sale of the product itself. In fact they barely break even on it. Let me repeat. They barely break even on some products. They make the profit on the accessories and services that surround that product. In a commoditized market you have to think what service or accessories you can provide to both differentiate yourself AND provide enough value for someone to switch to you.

 

[JEdwards]

Hey Everyone, On the 28th of February I will be hosting a conference call on the INSIDERS forum on how to figure out angles of opening a specific business, so If you like my thread and this forum, please sign up to be an INSIDERS and be part of the call.

You might learn something or who knows you might learn nothing. Vegas odds right now are at 50/50.