I worked hard at my day job and affiliate marketing to save USD $30k to use for a business venture. This was not fun or easy. I'm nearing 30 years of age and I've rejected the path that most of my peers have taken because it looks like an incredibly boring life, and I am easily bored. My goal is an international, mobile lifestyle. I am putting my net worth on the line for the chance to obtain this freedom.
My main requirements for a business model were continuity (recurring monthly fees), a medium-large market with moderate competition, high profit margins, and simple exit strategy. I also needed every aspect of the business to be integrated and automated so I can run it from my smartphone anywhere in the world.
My plan is to sell a nutritional supplement that people use daily via a free trial continuity program. This is when you get to try the product for the cost of shipping and then two weeks later you are shipped another item at full retail if you don’t cancel. I’ll be very upfront about this to customers and make canceling easy. To be successful, the product has to be effective enough that most people want to take it every day.
My mid-term goal is 7,000 monthly subscribers at a very conservatively estimated $30 profit per person. I don't have any partners, so that's $210,000/month for me. As MJ says, "life changing". The US market for this product is estimated to be 20 million people according to industry journals. My short term goal is to sell the first bottle!
I'm going to document what I've done for my own benefit and possibly others. I've been working on this for about six months and there is a lot to it, so please bear with me.
1. Created a LLC. Used it to create a business bank account at local bank with individual loan officer capacity of $800k.
2. Identified target market. Researched numbers and competitors.
3. Thunk up a legit formula.
4. Got quotes from several manufacturers. Target markup for the retail bottle was 6x-8x. Squeezed mine in at 6x, which will improve thanks to economies of scale.
5. Went with the company that gave me the most personal attention and had the best reputation. The minimum order for a custom formulation was 1,000 bottles (+/- 10% [industry standard]). $8k+$1k label design ($4k due up front)
6. Hired a US web designer to create my version of the biggest competitor's website and landing page. Studied copy writing, marketing, and landing page optimization (ongoing studies, always). Traffic conversion was the goal of every reasonable aspect of design and copy. $5k
7. Got recommendations from this forum for shipping and storage(~$8/piece but really TBD) and call center ($500 no refund deposit, $0.79/minute), 800 number ($70) and Grasshopper to direct calls ($30/month ).
8. Got recommendations for a cart system from the call center. This was especially important because of the continuity aspect of my business which is not easily achievable with the mainstream cart systems and CRMs. Ultracart was the final choice. ($50/month)
I am currently waiting for the first order to finish, which is about 10 weeks past schedule due to a variety of delays, including but not limited to hurricane sandy. Typically custom nutraceutical production takes 10 weeks for the first order and 6 weeks for re-orders. From what I understand, this is normal.
I plan to spend the largest % of my startup money on marketing- about $10k. I will expand into all avenues of media, free and paid, as aggressively as the budget allows. I believe that complicated systems of finding and managing customers are necessary for maximum profit and minimum competition. This is what I’m going to start with:
1. Found a provider of targeted website traffic to send to the landing page.
2. Found a list broker with a good reputation to get a highly targeted mailing list. I will mail sales letters optimized for conversions to 1000 people to start, and another letter to the same list about two weeks later. I will buy more names from the list if the response rate is good, or find another list.
3. With the website traffic generated from these efforts, I will get a control (baseline conversion rate) for the landing page and start A/B testing to increase conversions as much as possible.
4. Reinvest all profits into marketing. Scale up and diversify efforts as quickly as possible.
My profit plan:
1. Several years of positive cash flow. Outside funding as needed to scale up.
2. Possibly a couple more products.
3. Profitable sale of the company, once the valuation is large enough.
There has been a huge learning curve to all of this. There are SO MANY new things to learn and put together, but a strong barrier to entry is a good sign!
Most people I know don’t know what I’m doing. This is because I don’t know anyone who has done this kind of thing before so their input would be speculation and likely counterproductive. As most entrepreneurs quickly learn, the rest of the world might think we are crazy or foolish. A mentor would be really awesome but I've done my best to base all my decisions so far on careful research and the bottom line ($$$).
I'm a very optimistic person, but the worst case scenario is if the product is not effective. I've used high quality components that are supported by lots of empirical and anecdotal evidence to try to minimize the odds of failure. I've also run the formula by a physician friend of mine, who endorses it. At this point I am basically putting all my trust in the manufacturer to deliver a product that is what I ordered (I will have it tested by a 3[SUP]rd[/SUP] party lab). The only way to really see if a new formula works is to run a clinical trial, or bring it to market, and only one of those has the potential to create profit. I've only got the cash for one choice so I am rolling the dice. In any case, I’m not too worried, because even clearanced out prices will likely recover some or all of my principle. BUT I am betting that it will work, obviously!
Thank you for reading what I've done so far. I will update this thread with my progress. I would be grateful for any advice, comments, or questions from any of my fellow fastlaners.
My main requirements for a business model were continuity (recurring monthly fees), a medium-large market with moderate competition, high profit margins, and simple exit strategy. I also needed every aspect of the business to be integrated and automated so I can run it from my smartphone anywhere in the world.
My plan is to sell a nutritional supplement that people use daily via a free trial continuity program. This is when you get to try the product for the cost of shipping and then two weeks later you are shipped another item at full retail if you don’t cancel. I’ll be very upfront about this to customers and make canceling easy. To be successful, the product has to be effective enough that most people want to take it every day.
My mid-term goal is 7,000 monthly subscribers at a very conservatively estimated $30 profit per person. I don't have any partners, so that's $210,000/month for me. As MJ says, "life changing". The US market for this product is estimated to be 20 million people according to industry journals. My short term goal is to sell the first bottle!
I'm going to document what I've done for my own benefit and possibly others. I've been working on this for about six months and there is a lot to it, so please bear with me.
1. Created a LLC. Used it to create a business bank account at local bank with individual loan officer capacity of $800k.
2. Identified target market. Researched numbers and competitors.
3. Thunk up a legit formula.
4. Got quotes from several manufacturers. Target markup for the retail bottle was 6x-8x. Squeezed mine in at 6x, which will improve thanks to economies of scale.
5. Went with the company that gave me the most personal attention and had the best reputation. The minimum order for a custom formulation was 1,000 bottles (+/- 10% [industry standard]). $8k+$1k label design ($4k due up front)
6. Hired a US web designer to create my version of the biggest competitor's website and landing page. Studied copy writing, marketing, and landing page optimization (ongoing studies, always). Traffic conversion was the goal of every reasonable aspect of design and copy. $5k
7. Got recommendations from this forum for shipping and storage(~$8/piece but really TBD) and call center ($500 no refund deposit, $0.79/minute), 800 number ($70) and Grasshopper to direct calls ($30/month ).
8. Got recommendations for a cart system from the call center. This was especially important because of the continuity aspect of my business which is not easily achievable with the mainstream cart systems and CRMs. Ultracart was the final choice. ($50/month)
I am currently waiting for the first order to finish, which is about 10 weeks past schedule due to a variety of delays, including but not limited to hurricane sandy. Typically custom nutraceutical production takes 10 weeks for the first order and 6 weeks for re-orders. From what I understand, this is normal.
I plan to spend the largest % of my startup money on marketing- about $10k. I will expand into all avenues of media, free and paid, as aggressively as the budget allows. I believe that complicated systems of finding and managing customers are necessary for maximum profit and minimum competition. This is what I’m going to start with:
1. Found a provider of targeted website traffic to send to the landing page.
2. Found a list broker with a good reputation to get a highly targeted mailing list. I will mail sales letters optimized for conversions to 1000 people to start, and another letter to the same list about two weeks later. I will buy more names from the list if the response rate is good, or find another list.
3. With the website traffic generated from these efforts, I will get a control (baseline conversion rate) for the landing page and start A/B testing to increase conversions as much as possible.
4. Reinvest all profits into marketing. Scale up and diversify efforts as quickly as possible.
My profit plan:
1. Several years of positive cash flow. Outside funding as needed to scale up.
2. Possibly a couple more products.
3. Profitable sale of the company, once the valuation is large enough.
There has been a huge learning curve to all of this. There are SO MANY new things to learn and put together, but a strong barrier to entry is a good sign!
Most people I know don’t know what I’m doing. This is because I don’t know anyone who has done this kind of thing before so their input would be speculation and likely counterproductive. As most entrepreneurs quickly learn, the rest of the world might think we are crazy or foolish. A mentor would be really awesome but I've done my best to base all my decisions so far on careful research and the bottom line ($$$).
I'm a very optimistic person, but the worst case scenario is if the product is not effective. I've used high quality components that are supported by lots of empirical and anecdotal evidence to try to minimize the odds of failure. I've also run the formula by a physician friend of mine, who endorses it. At this point I am basically putting all my trust in the manufacturer to deliver a product that is what I ordered (I will have it tested by a 3[SUP]rd[/SUP] party lab). The only way to really see if a new formula works is to run a clinical trial, or bring it to market, and only one of those has the potential to create profit. I've only got the cash for one choice so I am rolling the dice. In any case, I’m not too worried, because even clearanced out prices will likely recover some or all of my principle. BUT I am betting that it will work, obviously!
Thank you for reading what I've done so far. I will update this thread with my progress. I would be grateful for any advice, comments, or questions from any of my fellow fastlaners.
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