Humble Beginnings

I started my first business around the year 2000 and it's pretty crazy to think about all that has changed since then. I made plenty of mistakes along the way but did enough right to build a solid business.

Fair warning, this is more of a trip down memory lane than an up-to-date guide on how to run a mail-order business in today's environment.

Technology and the tools available to start, run, and grow a business has streamlined and sped up every aspect, especially for online businesses.

Having said that, the fundamentals of business remain the same and I hope my story proves useful and interesting to anyone just getting started.

After I finished university and instead of getting a white-collar job like my friends I went to work in a local supermarket distribution center. The commute to work took less than five minutes by car, the pay was decent, and I got an 8 hour workout 5 days a week.

One of the cool things about this job is that it required minimal mental bandwidth, so while I was slinging crates of beer and bulk pack cans of beans onto roll cages I could plan what to work on in my free time to get my business going.        

I promised myself I'd stick with the warehouse job for up to a year and save as much money as possible as seed capital to hit the ground running after I left the company.

A Gap in The Market

I went to a one-day festival back in high school and I remember being fascinated with the glowsticks lots of people were waving around. I wondered where they came from and why they were so expensive to buy retail.

A bit of plastic with a small amount of some mysterious liquid inside. Surely they didn't cost much to make?

As soon as I got home I searched online and discovered a handful of manufacturers' websites in China selling them in bulk. Seeing the full product price range for the first time blew my mind. Some of them were just a few cents each. About as close to free as you could imagine any product being without being free.

I could hardly believe it. I felt like I'd struck oil.

I pulled out my trusty scientific calculator and started playing with the numbers. My mind raced with possibilities. I did some more research online to find all the companies currently selling glowsticks.

There were about 10 other vendors and one company that seemed to have a monopoly on glow in the dark products. All the other sellers offered all sorts of other party products. Looking at their prices it appeared that all of them were charging similar and premium prices, making massive margins.          

At this stage, my story takes a 3 year detour when I went to university. I'd always wanted to get a degree but also enjoy the experience of being there and meeting new people and making new friends.

The seed had been planted though, and I slowly did more research and developed a plan for what my first business might look like when I finally started it. I kept an eye on the market and, fortunately for me, nothing much changed during my years at uni.

Quitting The 9 to 5 (10pm to 6am!)

Fast forward through finishing university and on to working full-time. About the same time I started working at the warehouse, I also began working on my website for the business and learning HTML. I had no budget for web design so Microsoft FrontPage became my best friend.

My website was about as ghetto as they come even after countless hours tinkering and still makes me laugh thinking about it. Black background, six or seven colors for the text (to match the product colors), all contained within a giant 3-column table.

The website looked awful but fortunately back then everyone else's did too so mine fit right in! With a cheap logo designed I was ready to roll.

When I wasn't working on the website I was learning about SEO and it wasn't long before my website started ranking for a few search terms. I didn't have any product at this point so instead, I fielded inquiries and talked to potential customers about their requirements.

I cold-called and sent cold emails to schools and other companies I knew bought glow products, developing solid knowledge about the market.

Almost every month new sample packages arrived from the manufacturers I was talking to. By comparing the quality, price, and a few other factors I narrowed down to one company and slapped $5k on my credit card with my first order. With my credit card maxed out I waited impatiently the six weeks it took for my first shipment to arrive from China.

Taking delivery of the first shipment and seeing all of the products was an amazing feeling. The business felt real for the first time, and I felt relieved that everything had arrived safely and undamaged.

I started taking the first few orders over the phone and via email.

Another benefit of my work hours, 10pm - 6am, was that I could always get to the post office any day I had a parcel or two to send out. It wasn't long before I was shipping orders out almost every day.

After a few months of this, working my physically demanding warehouse job then working every spare minute on my business, it became pretty tiring. I started thinking about how much more I could get done if I could devote all my time to the business.

With a small amount of money saved to cover rent for a few months and erratic but solid sales revenue coming in, I decided to quit my job.

I reasoned that it was the kind of job I could pick up again easily if everything went wrong with the business. Leaving was a no brainer and I felt the confidence of youth and a promising business growing in front of me.

I still remember my last day working in the warehouse. As I'd been doing for every day that week, I was trying to decide exactly what day to leave. It was always somewhere out in the future. Maybe next month. Maybe in a few weeks.

At some point during this internal dialogue, I posed the question, "how about today? You could just leave today and never come back." Then I thought no, I should hand in my notice, work another two weeks, and then finish.

Well, that didn't happen.

For the rest of the shift I pictured clocking out, stuffing my overalls in the locker, and walking outside into the glorious summer sunshine, getting in my car, and watching the warehouse recede in the rearview mirror for the last time. By the time my shift finished, I was bursting to leave. And that's exactly what I did.

I remember walking across the car park to my car, feeling this overwhelming sense of freedom, knowing I'd never go back there. Not that it had been a bad experience. I'd enjoyed my time working there. Probably because I knew it was only for a fairly short amount of time. I'd never felt so excited about the future.

My First Year in Business

Within a month of my first shipment arriving, I'd already sold a third of the stock and needed to start thinking about placing a second order or risk running out of product. As far as problems go, selling "too fast" was a good one to have but also a tricky one.

With no outside investment, I had to wait until I'd banked enough revenue before I could pay for the next order from China. That begged the question, "what will I do if I run out of stock?"

Over the next month, I reached out to various companies, trying to find a "friendly" competitor who I could order from locally if I ran out of stock.

I needn't have worried.

All the companies I contacted were happy to supply me. My irregular orders were so small - between a few and several hundred dollars - that they didn't see me as competition at all. Just another customer. Problem solved.

While I researched the market for my products I discovered that the business was quite seasonal. Demand generally stacked up towards the end of the year, ramping up from mid-September and going crazy from October right up to New Years.

I figured I could increase my second big shipment size from China by 50% but, if my demand forecast was even half accurate, I'd still run out of stock by the end of October. This would be a disaster.

Sure, I could order products locally but I'd have to pay between 2 and 4 times as much for the products. This would eat up a huge and unacceptable chunk of profits. Profits I would need in the New Year to both grow the business and weather the relatively lean first few months of the year.  

While I was trying to figure this problem out, I went for a beer one day with an old friend from high school. At some point, we got around to talking about my business. I told him how things were going well and mentioned my challenge. We pushed a few ideas around and then I headed home and didn't think much more of it.

The next day I decided to draft a business plan and see if I could get an overdraft or small loan from my bank. In the evening I received a call from my friend. He said he'd spoken to his father and his father said he'd be willing to lend me some money. I had a contract written up and sent within an hour and a few thousand wired to my bank the next day.

It was a big surprise and relief to receive this unexpected investment. With the extra money, I was able to place an order to China 3 times the original size of my first order.

In late summer I managed to arrange a daily pickup from a courier company, which saved me a huge amount of time and inconvenience lugging packages to the local post office. I also started renting a small unit from a self-storage company a short drive from home.    

My first experience of the busy season began right on schedule in late September and didn't stop until after New Year. When the dust had settled I'd made around mid five figures in revenue which I was ecstatic about.

I worked happily almost every waking hour, wearing all the hats a business requires. Taking and making calls, packaging and sending orders, updating the website, sales, marketing, networking, admin, traveling, stock-taking, banking. Everything.

Moving on Up

During this time I was living in a small, cozy, one-bedroom apartment. It was my first step onto the property ladder. The location was perfect for me. A picturesque small town, close to friends, family, and a stone's throw from the railway station.

Sometime in spring the following year I had a chat with my brother who lived on the South coast in a two-bedroom apartment. I mentioned how crazy things had gotten with the growth of the business and that my apartment, although lovely, was pretty cramped to run a mail-order business from.

Even though I had a storage unit I needed to keep enough stock on hand to fill orders, which meant the apartment was crammed with boxes all the time.

We joked about getting a place together and the more we talked about it the more it seemed to make sense. By combining our finances we could buy a nice house that would have tons of space, spare rooms, an office for me, a garage for stock, and so on.

Over the next 4 or 5 months, I sold my house, moved down to the coast, and into my brother's spare room. Then finally we both moved into our house as soon as the sale had gone through.

Rapid Expansion

Over the next few years, business went from strength to strength. Shipments from China got bigger. Orders big and small came in from corporate clients, some with customization requests for branded product promotions.

Bumper sales months in my first few years became average months. Six-figure years turned into multiple six-figure years. The list of regular customers kept growing and also became more diverse.

Even the website started looking professional as my web design skills improved. Business was booming and all the analytics pointed in the right direction.

I could write a lot about these years, but this article is already getting long so I will save the main takeaways for later. Suffice to say the first 3 years of business were something of a fairytale.

One of the few times in life where everything is working perfectly. Sales were high. Margins and profits were high. I was high on life, both personally and professionally.  

Competition Proliferates

The first rumblings of competition came in the form of an early customer about six months into my first year. He openly told me that he had a shipment of products coming over from China. He would become one of the many what I referred to as eBay sellers. My assessment at the time was that they were individuals who sold various products on eBay as a sort of side-gig as opposed to established businesses.

This was in the early 2000's and eBay wasn't anywhere near as big and widely used or even trusted. A few sellers were offering a limited range of similar products to mine really cheaply so I just made a note to keep an eye on them now and then.

As I mentioned above, the business grew quickly for a few years and I only started to notice the impact towards the end of my third year in business. eBay had grown like wildfire and quickly become a "household" name in the UK.

It seemed like everyone with a credit card was buying goods from China and selling on eBay, happy to make razor-thin margins by undercutting each other's listings, sparking a race to the bottom.

A few competing businesses had also popped up and were selling many of the same products as I was. Even though I had a recognized brand and packaging, the product inside was essentially the same whichever vendor a customer bought from.  

This made price the deciding factor for a significant proportion of customers. I knew many of my customers who had been ordering from me for years would always buy from me as long as my prices remained competitive. But stretched out over years, the competition would only become more fierce.

Reduced margins and falling or even steady sales would eventually crush my business. Unless I could find a way to pivot to something else or find a new way to compete.

My lifestyle and personal expenditure had increased with the fortunes of the business. I hadn't left myself much wiggle room for any kind of downturn. I had no savings either, other than a few months of aged debt from a handful of trusted clients.

For the next year, I made a few changes to increase sales like upping my marketing spend, networking, and improving the website search engine rankings, which all worked well, but my heart was no longer in the business.

After plenty of reflection and soul-searching, I realized my life had become incredibly unbalanced. I was working non-stop and not spending as much time as I would have liked seeing friends and my girlfriend, and zero time on fitness. It wasn't a sustainable way to live.

I wanted out.

Selling To A Competitor

In my second year of business, I'd popped onto the radar of the main supplier in the UK who had a near monopoly on glow in the dark products.

They were keen to meet and see who I was and what I was up to. They also tried to get me to buy through them instead of importing. They couldn't quite match the prices I was paying from China but they became an important backup, especially for a few huge orders. Over the years I did a lot of business with them so they were the obvious first choice to sell to.

I'd never sold a business before and figured it would be messy. It turned out to be very simple. They didn't want to buy the business, just the assets. The name, logo, web domain, my customer list, and all my remaining stock. I could wind the company down in my own time.

I drove to their offices and sat down with the CEO who had his secretary write me a check. A friendly chat and handshake later and I was done. Free to start the next chapter of my life.

Successes, Mistakes, and Takeaways

Steve Jobs gave a commencement address at Stanford in 2005 which I love watching now and then. His "connecting the dots" story really resonated with me when I first heard it and thought back to my first business.

He said, "Of course, it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backward 10 years later. Again, you can't connect the dots looking forward; you can only connect them looking backward. So you have to trust in something - your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life."

This leads to my first point:

1) Hiring a Coach or Mentor

This is one of the things I wish I had done early on in the business when I started to see some success. It seems obvious now, but hiring a coach would have enabled me to see my blind spots, as well as point out opportunities I might have overlooked or not assigned the appropriate amount of importance to.

The irony here is I didn't even consider hiring or consulting with a coach at any point in my business. That in itself was a pretty big blind spot. I thought I knew it all. And to some extent I did. I knew everything that was going on in my business because I was doing everything and playing every role. But I lacked perspective about business in the broader sense. Things a business coach would have easily spotted and brought to my attention.

A few hundred bucks a month for an hour or two of sage advice would have brought a huge ROI.

2)  Saving for a Rainy Day

Instead of saving a percentage of my income from the business, I plowed it all back into growing the business. My thinking at the time was that investing all my income back into the business made more sense and would yield a greater return than leaving it to sit in a savings account.

And since the best kind of saving would be putting the money to work in an investment with a good return, it made sense to me to put it into my own business which had a great return.

As in point 1 above, I should have consulted with a professional like a coach, accountant, or financial adviser who would have opened my eyes on how to manage my business and personal finances better.

3) Outsourcing

One of the first things I should have done as the business took off is to outsource the packaging and shipping of orders. If I had hired someone locally part-time, I could have reclaimed 2-3 hours a day and spent that time on higher value, revenue-generating activities.

I enjoyed the physicality of the shipping process though, and when you're working almost all the time anyway, a couple of hours spent wrapping orders up seem like no big deal. I also enjoyed having complete control of processing the orders, knowing that every order going out contained the customer's exact product order.

Nowadays, outsourcing this would be a no-brainer with so many dropshipping services available.    

4) Work Ethic and Work-Life Balance

The whole time I ran this business, my work ethic was pretty much flawless. Maybe not the most efficient, but combined with the high energy levels of my early 20's I was able to achieve almost everything I set out to do every day, with plenty of flexibility built-in.

Having a good daily routine helped, getting up early around the same time and the phone ringing on and off from 9am to 5pm kept me on my toes. The courier would show up at the same time every day so that made me stay organized preparing customer orders so they were always ready to ship out on time.  

I had no real work-life balance during all the years running the business. Looking back I would have made sure to keep my evenings free for hitting the gym, socializing, and relaxing more.

I think for a startup, it's natural for the first couple of years to be completely unbalanced. There are so many challenges and unexpected problems happening all the time that it makes sense to overcome them as fast as possible.

Validating the business and making it profitable is vital early on, especially when there's been a significant investment of time, money, and other resources.  

5) Building a Mailing List

Auto-responders have come a long way since the early 2000's. Back then I used Aweber, but for the first few years of my business I used Outlook exclusively. I was quite hesitant about sending mailshots for fear of being considered spammy and only sent about 4 or 5 email blasts to my Outlook contact list per year.

The importance of building a list can't be overstated. In fact, for many businesses, it's worth starting a list before launch so when the business or product goes live you already have a bunch of people eager to check out and buy your widget.  

6) Selling A Business

By the time I got to the point of wanting to sell the business, I didn't care how much I sold it for. As I mentioned earlier, I approached one of my suppliers who I knew would be interested, received a reasonable offer and accepted it the same day.

Removing the emotion from the selling process I would have done several things to package the business up for sale, including:

A) Getting the books in order and seeking a professional valuation based on the financials.

B) Prepare a document in PDF with details of the business - assets, clients, financials, stock - ready to send to any potential buyer.

C) Solicit offers from at least another 3 companies.

D) I would also make it clear that I'm not in a rush to sell and be prepared to say no and wait to get the best offer.

7) Marketing & Growth Strategy

I would have been way more aggressive in all my marketing, especially online. From spending more time writing and spreading content, increasing paid ads budget, to building a mailing list as fast as possible, and making offers to subscribers more often.

Ranking in search was much easier back then and browsers were much less spread out than they are today. Although I made sure I ranked on the first page of the search engines for my main keywords, I'm sure I could have ranked for many more keywords in a wider variety of places and gained more exposure.

I was fairly conservative with my ad spend, and ads were very cheap compared to how they are today. With a proven range of products, I would have spent 5x as much on paid ads.

8) Diversifying income

While my business grew, digital products came onto my radar but didn't seem relevant at the time to my physical product business. I would have tried to find a way to create and sell ebooks as an additional income stream.

This would have provided more income to spend on growing the business even faster, buying more stock, saving more, and streamlining cash flow.

While the profit margins on my product range were fantastic, nothing compares to the margins of digital products.

9) Selling A Product People Want

Business is a lot more fun when you're selling a product people want. Even better if they want AND need it. The marketing conversation becomes less about convincing people to buy and more about getting in front of as much of the target market as possible.

Being passionate about the products combined with selling to excited customers creates a virtuous cycle. It's motivating, rewarding, and fuels you from the inside and outside to keep going and keep growing the business.  

10) Passion in Business

If I could point to one single factor (in addition to having desirable products) that helped my first business become a success it's the passion I had for both the products and being in business for myself.

Being passionate about your work and business enables you to stay motivated and taking consistent action no matter if things are going well or you are dealing with tough challenges.

That's problably a good point to wrap up this article on.

Solve valuable problems in niches your naturally interested in, serving clients and customers you would be happy to communicate with daily. This will give you the best possible chance of success, and you'll never struggle for motivation or inspiration.