I have been meaning to write a new post for a long time. But every time I get ready to log in and write, I have had something else that has demanded my attention. So, I am now in Toronto surrounded my my team that is working with me on a temporary contract and I am going to make the time to fill you all in on what has been going on since January and what my takeaway lesson has been.
This year has been all about persistence and survival. I've written at length before about how many do not understand how difficult it really is to establish and build a business that is successful and pursues a vision through to fruition. This distinction is important because pursuing and seeing a vision through is not the same thing as making money. Most e-commerce sites and social media emphasize the "flash in a pan" types of businesses, like drop shipping, where the only motivation is to make money through arbitrage. There is no real focus on value creation and the emphasis is on quick and dirty success. All this can give the impression that building a business should be easy and quick if you have the right product at the right price, and that if it isn't happening quickly for you, it is because you are doing something wrong. Over the past few years I have had many commenters who have pointed out to me that they think I am wasting my time, since I could just go work for a large company and make 6 figures and why wouldn't I do that, and what if my business never makes me that much?
My answer to that is that true entrepreneurship is about filling an unmet need and filling it well. The part that is not often mentioned is that it is not necessary for that need to be felt by the masses. It can be a small group of the population. That is what it means to have a true niche. It can take years to develop and perfect a product, and this indeed is part of the difficulty in building a business. But the true difficulty lies elsewhere I find. Even if you have the perfect product, or all your inventory on hand, you still face the challenge of getting people to buy it. That challenge is a series of challenges that starts with creating awareness and then winning trust. Unless you are selling novelty products such as 99c fidget spinners, you cannot get around the process of building trust. Unfortunately too, the process takes a lot of time and persistence. The internet is awash with consultants, agencies and "gurus" promising you a "quick fix" to this problem for a fee that will "put you in front of the right audience". After months of experimentation, I have come to the conclusion that almost all of it is a scam, designed to relieve you of your money. The harsh reality is this:
The reality is that this takes a lot of time and effort, and so the real challenge for the entrepreneur is how to keep the bills paid while this development of the client base is being undertaken. Many imagine that the way to do this is to save a bunch of money to act as a war chest and to declare the whole business a failure if that war chest runs out before the business gets off the ground. Giving up at this point is indeed the reality for a lot of businesses. However, the true entrepreneurs realize that it is not just a possibility that the war chest will run out, but a liklihoood, since the timelines in the business plan are always arbitrary. Thus, the mettle of an entrepreneur is tested when they run out of money and lies in how they handle this setback.
This is what happened to me in December last year. e-Bay decided, as they always do to established sellers to throttle my traffic, which caused my sales to stay at between $2,500 and $3,500 a month, which was not quite enough to stay afloat. After a year and a half of this, my credit cards were all maxed out and I was out of options. So I decided to turn to my skills as an accountant an offer myself to the local accounting firm to do file reviews. They were happy to have me, but their work didn't start until late January and by December I was broke. So, I started a Go Fund Me campaign to raise money for December. Fortunately for me I had enough friends and people who believed in me that I was able to raise enough to get through the month until I could invoice the firm.
In late January while I was doing the accounting work and running my business I decided to apply with Business Development Bank (BDC) for a loan, since I had a good business plan and needed money to hire an employee so that I could finally list all my inventory on my website and have a marketing budget to promote the site. I spent almost a full month on my business plan, had meetings with the local BDC representative, and was told that yes, I would qualify for the full $175,000 I was seeking.
This was in late February. About 2 days after I received this news my phone rang. It was Hammad, a partner with my old firm in Toronto. His senior manager had just given his notice - at the beginning of tax season. Hammad was right royally screwed. He asked me if there was any way I could consider coming to Toronto for 2 months in March and April to help him out. Now, at this point I'd been through enough shennanigans and bullshit with lenders to know that until I had that $175,000 in my bank account I had diddly squat. Besides, I knew what Hammad must be going through so my wife and I looked at each other and thought "Why not?". So I said "yes". I packed up my inventory, rented a large SUV, loaded everything into it, kissed Steph goodbye and set off for the 14 hour drive to Toronto. It was a crazy 2 months: between continuing to do file reviews for my local firm, running the stamp business and working for Hammad I was going full bore 7 days a week and was getting 4 hours of sleep on a good night. BUT, I made enough in those 2 months to last through to now (end of October) AND I was finally able to figuratively tell e-Bay to fuck off by closing my store and yanking all my listings off there. My wife joined me in the last week of April and we had a nice trip back to Saint John, through Boston.
I arrived back in Saint John in early May, ready to get the $175,000 that BDC had promised me. Remember that? I paid the commitment fee of $1,750 and got the last of the paperwork in and waited - for 2 weeks and nothing. Finally the BDC guy got back to me and said "just 2 more weeks" and so I waited some more. Then, at the end of May, came this "Yeah about that. I'm sorry but I've hit a snag. Seems your business does not meet our eligibility requirements. You see you are a speculative business." WTF? What are you talking about? I thought. I'm not speculative. I have regular customers who come back all the time, I write and publish a blog, I carry an inventory. Speculative is the LAST thing I am. I tried to reason with them, but to no avail. The bottom line, as I would learn in talking to other banks is that they just don't "like" businesses that sell collectibles. They see them as too risky and they just don't want to get involved with them period. It doesn't matter if your inventory is bought and paid for. It doesn't matter if you a world class expert. It doesn't matter if you are a CA with 25 years of experience. None of it matters. They don't care.
So, very quickly it became apparent that I was never going to be able to borrow the money I needed to hire staff. The only way to move forward was by myself. It was at this point that my wife agreed that after B&B season, which was just beginning, that she would re-join the business to give me the help I needed. I realized that in the stamp business model, the labour component is the biggest hurdle, and if I could gain mastery over that, I could significantly improve my ability to compete on price and reduce the need for staff. But I also realized that I would likely never have the marketing budget to be able to spend hundreds or thousands of dollars with Google and Facebook. So I would have to find a better way to generate traffic to my website. So I devoted my summer months to four things:
This year has been all about persistence and survival. I've written at length before about how many do not understand how difficult it really is to establish and build a business that is successful and pursues a vision through to fruition. This distinction is important because pursuing and seeing a vision through is not the same thing as making money. Most e-commerce sites and social media emphasize the "flash in a pan" types of businesses, like drop shipping, where the only motivation is to make money through arbitrage. There is no real focus on value creation and the emphasis is on quick and dirty success. All this can give the impression that building a business should be easy and quick if you have the right product at the right price, and that if it isn't happening quickly for you, it is because you are doing something wrong. Over the past few years I have had many commenters who have pointed out to me that they think I am wasting my time, since I could just go work for a large company and make 6 figures and why wouldn't I do that, and what if my business never makes me that much?
My answer to that is that true entrepreneurship is about filling an unmet need and filling it well. The part that is not often mentioned is that it is not necessary for that need to be felt by the masses. It can be a small group of the population. That is what it means to have a true niche. It can take years to develop and perfect a product, and this indeed is part of the difficulty in building a business. But the true difficulty lies elsewhere I find. Even if you have the perfect product, or all your inventory on hand, you still face the challenge of getting people to buy it. That challenge is a series of challenges that starts with creating awareness and then winning trust. Unless you are selling novelty products such as 99c fidget spinners, you cannot get around the process of building trust. Unfortunately too, the process takes a lot of time and persistence. The internet is awash with consultants, agencies and "gurus" promising you a "quick fix" to this problem for a fee that will "put you in front of the right audience". After months of experimentation, I have come to the conclusion that almost all of it is a scam, designed to relieve you of your money. The harsh reality is this:
There is no way to shortcut the process of building your client base.
This is what happened to me in December last year. e-Bay decided, as they always do to established sellers to throttle my traffic, which caused my sales to stay at between $2,500 and $3,500 a month, which was not quite enough to stay afloat. After a year and a half of this, my credit cards were all maxed out and I was out of options. So I decided to turn to my skills as an accountant an offer myself to the local accounting firm to do file reviews. They were happy to have me, but their work didn't start until late January and by December I was broke. So, I started a Go Fund Me campaign to raise money for December. Fortunately for me I had enough friends and people who believed in me that I was able to raise enough to get through the month until I could invoice the firm.
In late January while I was doing the accounting work and running my business I decided to apply with Business Development Bank (BDC) for a loan, since I had a good business plan and needed money to hire an employee so that I could finally list all my inventory on my website and have a marketing budget to promote the site. I spent almost a full month on my business plan, had meetings with the local BDC representative, and was told that yes, I would qualify for the full $175,000 I was seeking.
This was in late February. About 2 days after I received this news my phone rang. It was Hammad, a partner with my old firm in Toronto. His senior manager had just given his notice - at the beginning of tax season. Hammad was right royally screwed. He asked me if there was any way I could consider coming to Toronto for 2 months in March and April to help him out. Now, at this point I'd been through enough shennanigans and bullshit with lenders to know that until I had that $175,000 in my bank account I had diddly squat. Besides, I knew what Hammad must be going through so my wife and I looked at each other and thought "Why not?". So I said "yes". I packed up my inventory, rented a large SUV, loaded everything into it, kissed Steph goodbye and set off for the 14 hour drive to Toronto. It was a crazy 2 months: between continuing to do file reviews for my local firm, running the stamp business and working for Hammad I was going full bore 7 days a week and was getting 4 hours of sleep on a good night. BUT, I made enough in those 2 months to last through to now (end of October) AND I was finally able to figuratively tell e-Bay to fuck off by closing my store and yanking all my listings off there. My wife joined me in the last week of April and we had a nice trip back to Saint John, through Boston.
I arrived back in Saint John in early May, ready to get the $175,000 that BDC had promised me. Remember that? I paid the commitment fee of $1,750 and got the last of the paperwork in and waited - for 2 weeks and nothing. Finally the BDC guy got back to me and said "just 2 more weeks" and so I waited some more. Then, at the end of May, came this "Yeah about that. I'm sorry but I've hit a snag. Seems your business does not meet our eligibility requirements. You see you are a speculative business." WTF? What are you talking about? I thought. I'm not speculative. I have regular customers who come back all the time, I write and publish a blog, I carry an inventory. Speculative is the LAST thing I am. I tried to reason with them, but to no avail. The bottom line, as I would learn in talking to other banks is that they just don't "like" businesses that sell collectibles. They see them as too risky and they just don't want to get involved with them period. It doesn't matter if your inventory is bought and paid for. It doesn't matter if you a world class expert. It doesn't matter if you are a CA with 25 years of experience. None of it matters. They don't care.
So, very quickly it became apparent that I was never going to be able to borrow the money I needed to hire staff. The only way to move forward was by myself. It was at this point that my wife agreed that after B&B season, which was just beginning, that she would re-join the business to give me the help I needed. I realized that in the stamp business model, the labour component is the biggest hurdle, and if I could gain mastery over that, I could significantly improve my ability to compete on price and reduce the need for staff. But I also realized that I would likely never have the marketing budget to be able to spend hundreds or thousands of dollars with Google and Facebook. So I would have to find a better way to generate traffic to my website. So I devoted my summer months to four things:
- Attending stamp shows to get my name out there. By May I was too late to get into many of the larger shows like Mississauga and ORAPEX. However, I registered for what I could - the 2019 Royal, the Polish Cultural Centre and CANPEX, and put my name in for the others, for next year. I spent money getting professional banners for my booth, as well as a series of informative brochures about all the collecting opportunities that exist with Canadian stamps. These I would hand out at the shows. My attitude was that my goal in attending these shows was to be pure advertising. They weren't cheap, and I went all out, getting double booths and paying for a full page ad in the show programmes. BUT, I met a lot of my long-time customers and cemented that bond, met a lot of customers and more importantly I stirred up the pot, big time. I can tell from the varied reactions that many long-time dealers had to me that this was the case.
- Engaging more closely with the customers I do have by making a serious attempt at filling want lists, actively, rather than just being passive about it. I had to sacrifice my margins, but I was able to get a lot of business this way - $3,000+ per month thoughout June through September. One of my best customers now started getting serious with me this way and several others, who were previously just casual e-Bay buyers have become regular customers just by my providing them SERVICE.
- Working on completing a master Excel listing template. One of the problems with marketplace interfaces like e-Bay and even Shopify's product creation page is that it takes forever to fill out all the information for a listing and to make and attach a scan - about 10 minutes, on average, per listing. That is if you are working flat out focussed. On a good 16 hour day you would be lucky to get 100 listings up, which in the scheme of my inventory is nothing: it would take a decade to list everything at that rate. But Shopify allows sellers to create listings en-masse using delimited Excel spreadsheets. Then it hit me: I DON'T TOUCH A SINGLE STAMP UNTIL I HAVE A MASTER LISTING TEMPLATE THAT CREATES THE LISTINGS FOR ME. That is the key to being competitive. Create a template so that all the information is there and all I have to do is identify what the stamp is, grade it and enter the quantity into the spreadsheet. Then, at the end of the day, I upload the whole damn thing to Shopify and it creates the listings for me. So I have been working diligently on that when I have time, and now I am a few weeks away from being finished and having 15,000+ line items created for Canada and Nigeria.
- Finding a way to generate website traffic in anticipation of having (3) above complete. In May my average number of daily organic website visitors was 20-25. I had tried paid Facebook ads with a $300 monthly budget, and while I did get clicks, they did not lead to a single customer. I had tried sharing my blog content with many of the stamp collecting groups on Facebook, but again, I found little engagement. I had tried using Google shopping and after spending about $600 I had one sale for $10. I could see that even if I were to scale upward, I wasn't going to get any traction this way. So I started thinking of alternatives. I had to be creative. I needed to find ways to get people to engage with my content. So, one of the first things I did is I bought and installed an app to create a community forum on my website. It hasn't had a lot of activity - YET. But there have been some fruitful discussions between my a few of my customers on there, and they have a safe, ad-free environment in which they can engage with each other. Second, I got serious about making better use of Outfy. Outfy is an automated social media sharing tool, kind of like Hootsuite. But the main difference is that you can set up autopilots to do your sharing for you. If you set them up right, you can control whether your content gets repeated and what gets posted with it. You can share products and blog posts. So I set up autopilots to share my content to Facebook, Tumblr, Juxtapost, Fancy, and most importantly Pinterest. I spent a lot of time upgrading my Pinterest page. I saw my traffic jump from the social media networks to 30-40 visitors a day, which was good. But I needed more. So I got serious about setting up a regular e-mail to my customers that were on my mailing list, as well as getting as many of my former e-Bay customers to opt-in as I could.
This was all going well and I could see things beginning to improve. But, by August, I could see that if I didn't do something more that I would run out of money by October when B&B season was over. So I came up with my last bold move: a weekly auction. I borrowed heavily from my past experience working for Weeda stamps and decided to offer 40 of my better inventory items each week for no minimum bid. I made the rules really simple: no set increments, so that customers could bid whatever they wanted without having to try and remember what increments were in effect. I varied the offering and sacrificed some of my best material. I knew that for at least the first few auctions that they would be suicide: I would get very little for the items being sold, since there would be few bidders. But my reasoning was this: it would be cheaper in the long run to advertise this way, since I would get engaged customers this way for the same price or less than I had been paying Google or Facebook. It has proved to be a very powerful hook to engage customers, because you have the opportunity to buy a $200 stamp for $1. You are going to want to check that out if you are serious. And so, as expected the first few auctions were slow: my total realization was around $300 for the first sale - a $500 loss. But every week I have seen the number of bidders grow by 2 or 3 new bidders every week. More importantly though, the unsuccessful bidders from one week will still come back and try again, and the regulars bid and buy every week. I've gotten regular, weekly customers from this auction that before were only buying once in a while on e-Bay.
I had underestimated the tremendous power that auctions have: to get people in the mood to spend money. One side benefit to them is that several customers will go to my retail listings if they miss out on an item they were bidding on, or they will buy complientary items. The other thing is that they now give me something to talk about and promote in both my e-mails and social media that is time sensitive and plays on people's FOMO (fear of missing out). It's one thing to run a Facebook ad that takes someone off Facebook and offers them nothing immediate. It's quite another to run an ad that allows them to stay on Facebook and obtain an immediate benefit: notification of the bargain auctions. So I created a series of Facebook landing page ads to encourage people to join my mailing list for the weekly auction. These ads have been much cheaper and more effective: for $120 or so a month, I have been able to add 50 names to my mailing list each month: much, much more effective than chucking $300 a month down the drain for likes and clicks. I watched my daily traffic exceed 100 visitors and 500-800 pageviews a day. My bounce rate fell to below 50% and sometimes as low as 35%-40% and average session duration went over 5 minutes per visitor.
So, now in my 11th week of auctions, I am averaging $1,000 a sale and now my auctions are attracting a flurry of bids as soon as the material is up and at the very end. Many items go into overtime bidding and it allowed me to get through October with very little B&B revenue.
But as October approached, I had both the Polish show and CANPEX coming up. So again, I made preparations to rent an SUV and pack everything up. Hammad and I had discussed the possibility of him needing my services again in October, back in April and so I got in touch with him. Lo and behold, he did need me again and so we decided I would come out for 6 weeks from October 17 to November 30. This necessitated 2 trips to Toronto: one for the October 6 show and then again on the 17th. But I made the drive both times and now I am in the middle of my contract with Hammad. The hours are still busy but less crazy. I have time to continue the auction and work on my spreadsheet to get it finished for December when I am back.
As if that wasn't enough, a major break came at CANPEX. Jim Watt, who is a leading collector of modern Canada - well all Canada actually, whom I had met and agreed to work with at the Royal show in July, came to my table and asked me to sell his Centennials. I said yes, thinking it would be months down the road. Then last week we had several discussions that led to me going to his residence and picking up the entire lot. I went out with the intent of itemizing everything, and spent 9 hours, but only got through 2 of the 11 bins containing material. It was the most amazing collection of this material I've ever seen - easily $150,000 to $250,000 worth of material, and here I was being asked to handle it for him! Every successful stamp dealer has their story of THAT collection - that first collection that got them on the "map" so to speak. Well, I think this is mine.
So I have my work cut out for me, but I will head home with enough cash to get through the winter and a monthly cash flow that is almost sufficient to get through anyway, which means I can either begin reinvesting in the business, or reducing some of my debt. Either way, it looks very much like I will ultimately succeed despite all the hardships I have faced to get here.
Just before I made the trip out here I read an article in a leading business magazine about how long it takes to establish a business and the author said that it takes a minimum of 4 years just to get your bearings and to know what works and what doesn't. He laid out a 4 year timeline as follws:
YEAR 1: EVERYTHING IS A SMALL VICTORY
YEAR 2: OK, WHEN DO I START MAKING MONEY?
YEAR 3: OMG WHAT HAVE I DONE? I HAVE SO MUCH DEBT
YEAR 4: OK, IF I STICK WITH THIS I MAY BE OKAY
In year 1 everything is a first and therefore a victory. You are also operating on your savings or borrowings, if you were lucky enough to get a loan. So, the lack of revenue and customers is not really a concern. You are so happy to be "in business" that everything feels like a victory. But in year 2, as your resources start to dwindle and the setbacks begin, you start wondering when the customers will come. Many give up even at this stage, when the customers don't start coming right away. In year 3 your resources are almost fully exhausted and you have customers, but not enough to sustain the business. Your finances get stretched to the breaking point and many business owners do not have the bravery to stick it out past this point or they are not fortunate enough to have a backup skill that they can fall back on. I've been fortunate to have my accounting skills and to always have left my clients and jobs on excellent terms so that when I need them, they are more than happy to give me work. But not everyone is that fortunate. Getting through year 3 might require putting the business on what I call "slow simmer" and taking another job. Slow simmer is not the same as putting it on hold. It is essential to your professional credibility that you remain available to your customers during the day, otherwise you run the risk that they will see your business as nothing more than a hobby that you do in your spare time and you will miss the opportunity to build a close relationship with them.
To put a business on slow simmer means that you don't launch any new initiatives. You fill existing orders and you answer any e-mails or telephone calls that come in, while you earn enough money to save so that you can eventually quit and come back it it full boil. Contract work is perfect for this.
Then, in year 4, where I am now you reach a point where the cash flow from your business is enough to pay the bills without additional borrowing or additional income for 2 months in a row. It is at this point that the realization begins to set in that if you continue on the same path and remain adaptive that you will be okay and have a viable business.
So that's it, that is everything that has been going on since January this year.
