Social Media Small Business Success, Finding Suppliers and Delighting Your Customers – Small Business Show Episode 92

The Small Business show, episode number 92 for Wednesday, November 9, 2016. Greetings, folks and welcome to the Small Business show here at BusinessShow Co, where we talk about things that matter to, by, for and about small business owners. Here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean. How are you, Dave?

I'm good. Shannon. We should be honest with people that we're actually recording this before the election has happened.

I was thinking the same thing on the way here to the studio.

Yeah. If there's anything. Not that there would necessarily be something here to talk about, but I figured I'd just get that out of the way.

Yeah, that's good. So we have no idea.

We have no idea. Do we actually know? But we've been sworn to secrecy.

That's right.

That's right.

Our contacts.

That's right.

Yes, that's right. Special contacts. So that's awesome.

You have your tinfoil hat on, right? Everything's good.

Yes. Okay. We just don't have time. We talk for hours about that, so.

Right. Yeah, yeah, yeah, yeah, yeah, yeah, yeah. It's been great. It's been entertaining. That's.

It's political theater like we've talked about.

It really is definitely that way.

But here, you know, we talk, we, we only talk about politics as it relates to your small business. And you know, there's a lot of local stuff going on you with politics where, you know, I always comment that, you know, the folks that talk the most about job creation have, most of them have never created a job in their life. And that can, that kind of alludes to how I feel about some of our local politicians. So we'll skip over that one. Okay. Yeah. We had a good question that came in. I've been, I've been the last few weeks I've been mentioning, hey, we should do an update on the social media business experiment that I started in June. And so why don't you read our question and we'll chat about it.

Jacob wrote in and it was short and sweet. He says, can you guys do an update on Shannon's social media phone based business experiment? I'm very curious about this because I'm working on something similar on my own. Is it working for you, Shannon? Are you still doing it? What have you learned that you can share so far?

Yeah, that's cool. I'm glad you asked. I am too.

Yeah, it gives us something to talk about that's not politics.

Yeah, exactly, exactly. Right. And so, you know, the concept was back in June. You know, I always kind of lament the fact that this technology business that I'm in, which is one of our big primary companies that we're involved in, they're really event driven, meaning we're always kind of struggling to put ourselves out there in front of the customer. But they don't really need us unless they need us. Right? Yeah.

That's interesting. Right?

Yeah. So we do it and we come up with all kinds of different ways and we've talked about on the show a lot. But I wanted to do a couple things. One, get involved in a new business and experiment with it. Something related to something a little more trendy that was maybe you could talk about it every day and people wouldn't feel like you were just hitting them over the head with a hammer. So we decided to get in the fashion business. We have some experience in the watch business, the high end watches, from doing those for years with another company. So we decided to get into the designer handbag business. These are again, small products are really important, easy to ship, lightweight, high dollar value, 3, 4, $500 bags and up. Yep. And what I wanted to do was I wanted to start a business and just run it on my phone, meaning I wasn't going to do the traditional thing. We weren't going to build a website, we weren't going to go out to all these, you know, traditional marketplaces. We're going to come up with new places. So we found some really powerful fashion apps that are really growing fast. The one we're heavily vested in is called Poshmark. And it's, you know, there's millions and millions of folks buying, you know, bags and clothes and that kind of thing. And so we started, we started in June and you know, it's worked pretty well. It's at a point right now. And this is one of the reasons why I want to talk about it. Because to be successful and really grow on its own, it has to be scalable. And so I thought we'd talk about, you know, what we found in the last few months. So kind of where we're at now. We've been doing it for about five months. The key for us has been getting more followers. The more followers we get, you know, the more sales we're making every single day. Right now we've got about 28,000 followers between our, we sell on Poshmark, a couple other apps and we do a lot on Facebook. We're doing more and more on Facebook. The reason we want to do more on Facebook is because there's no selling fees yet and, you know, we're sure at some point. But Facebook is a great way to connect with your fans. And in this kind of business, you really do get fans, which I love. And the nice thing about this fashion business is there's no, there's no sizes. People have multiple of this product. And you know, we tried shoes a little bit and that was a nightmare, you know, because not only do you have what styles you like and taste and but you have all these different, oh, I want that shoe. But that's not the size.

You don't have my size. Right, that's right.

And, and you know, for us, we look for a niche in our niche. You know, I'm not going to call Michael Kors or, you know, these other designers and, and start buying bags from them directly. There's no margin in that for us because they're, you know, they're selling to these massive stores and they usually don't want to talk to us little guys. Sure. So we buy at Reach out, we start building a supplier list and pounding the door, you know, earlier this year. And we buy overstock, we buy seasonal. We, you know, stores all over the country usually don't like to have one of anything on the shelf. And so we go out and contact those places and say, hey, we'll buy a hundred and it can be one of each. That's a great solution. And they love to hear that because again, you're trying to find what's their problem. And I've talked about it here before, teaching or treating your suppliers like their customers. And that's what we do.

Well, of course, because if you don't have those suppliers, you're not in business. Like you said, you can't go to Michael Kors and buy those bags and expect to make any money.

Yeah, they don't want to talk to you because they've got, you know, Nordstrom and Macy's and these, and they're buying millions and millions of dollars. And hey, we're just a small guy.

Right. One phone call with you just cost them a million dollar order because you're not going to make it the million dollar order.

Yeah. So, you know, by buying this kind of product or that condition. And we also buy store returns, which is another problem they have because most of these big, big stores have very liberal return policies and they don't want to hassle their customer and then they wind up with all this product. So we go in and again, try to identify what that problem is and buy that kind of Product and then develop a market for it. And so, you know, right now I probably spend about 90 minutes a day on there, you know, between pulling my phone out, you know, over and over and over, the biggest time. And I wanted to do this whole thing myself so I could. And that's what I've done in the past where I've started, so I could do, you know, all this stuff. And then over time, I. What I do is I take a spreadsheet. And I learned this by reading a book. I'm not this smart. So I read the email, and one of the things they do is they suggest you develop an org chart, so an organizational chart, even when you're the only employee. And to write down everything you do and place that, even if your name will be on every single thing that's happening in the company, you're going to do accounting, shipping, sales, procurement, customer service, all those things that, you know, it could be as broad as you. As it has to be.

Yeah.

But for me, and this may not be the fastest way to scale it, I'm a small business guy. I'm a nuts and bolts guy. I always use my own money and just kind of bootstrap it up. And it's worked well for me in the past, over and over again. So I'm doing everything and now I have some help because I have to. Sure.

Well, but no developing that org chart early on. I remember with Backbeat when we first started hiring other people and I started, you know, I put out a call for interviews, right? I mean, you know, I put out a job posting and I had some people reply. And, and so then I had, you know, people coming in for interviews and it was like, wait a minute, I need to tell these people what it is they're going to be doing. Yeah, I really don't have, like, I know I need someone to do these things, but holy crap, somebody's coming to my office in an hour. And you know, but there's nothing like a deadline, right? So I had to kind of do this. And then over time, especially once I hired that person, that first person, it was like, oh, yeah, I'm not giving you enough to do, so let me give you this and these other things.

Oh, yeah, sure, right.

But by building that org chart early, you're making that process easier for yourself. Because frankly, if I had stopped to think about it, I might not have ever put the job posting out because it would have been too daunting to try and figure out what the heck this person was going to do. Right. You know, if I realized how difficult that was, I may have procrastinated that a little bit, you know, like, oh, I'll just deal with it, because I don't want to have to deal with that. But I had a deadline, so I figured it out, and it was actually, it didn't take much more than an hour, you know.

Yeah. And the org chart helps you also identify what tasks fit together. It makes sense where you may think, oh, you know, well, the person that does this should also do this. Well, if you're involved in. Yeah, if you're involved in doing it, it's like, well, you know, and you have kind of this, you know, just do it on a piece of paper or doing a spreadsheet like I do, and then you can just go, no, no, no. You know what? During the. I'm a real process flow guy. I. I want to see how it works from the time. If you're in a product business, from the time you buy it, how you get it to your facility, how you manage it when it comes in, keep track of it, how you prepare to sell it, how you distribute it to the customer, how you handle the money, and how do you handle the customer service, and how do you handle the inevitable returns? And all of those things should be on your org chart. And, you know, when you hire somebody, you may say, hey, you're this half now, you know, and I'm this half. But eventually, you know, you've got to have a roadmap, if you will, and that early org chart can really help you to do that, you know, so. And that's kind of where we are now. You know, to me, it is successful. The margins are really good. We're making money every day. You know, it's not a huge amount of money, but we're still, you know, we're five months into this thing. And, you know, we typically, you know, Paul Downs, our author that we had on the small business guy, he always talks about the numbers. You know, I usually don't. But, you know, I will tell you, you know, we've invested about 25, 30 grand by. Sure. Our sales are very good. They're steady. You know, we sell, you know, some days we sell three bags, some days we'll sell 15. You know, and, you know, those bags, we are net after paying fees and everything. They typically range between 30 to 50 bucks a bag. Okay. So, you know, it's a good little small business, that one. Like, if you were somebody that wanted to be a sole proprietor and just do your own Thing you could easily make, you know, 60 to 100 grand a year doing this at pretty much the level I think we're at right now. Yeah, if you have the capital.

You have the capital. And the contacts.

And the contacts. And. Let's talk about that. So when I. When I first started, I didn't know anybody, and I just started researching. The one thing I do know is I, over years of finding product, because I'm a product guy, is I do have a pretty deep background in how to research where to find this type of product that I. We talked about that I want to buy. Yeah. So researched and researched and started buying a little bit here. A little. Just small deals. And I realized that we were pretty far downstream, meaning that the stuff we were buying had been kind of stepped on by maybe another broker or a distributor. There's all kinds of people that buy this kind of product and aggregate it and aggregate it and try to sell it to the dreamers. The guy, you know, people that, oh, I want to buy a pallet at a time because I don't have enough money to buy a truckload, you know, that kind of thing. Right. So I spent probably the biggest amount of my time in the first three months was swimming upstream and fight and trying to make more connections and using the data from buying, you know, where product was coming from, everything from. If you want to know where something's coming from, I guarantee you on the bottom of the cardboard boxes that they use, there's a stamp that the cardboard box company in many, many cases is being manufactured nearby because people don't like to ship cardboard, you know, And I learned this. It's a waste. And I learned this years and years ago. And so I'm paranoid. I'm ultra paranoid about every box that leaves our facility because for one of those reasons. So, you know, you do some deductive research and, you know, you just keep digging, Keep digging. And so we landed a pretty large supplier, a big fish, you know, a couple of months ago. And it really changed the dynamic of the numbers. We were able to eliminate one and in some cases, two levels of other people that were making money on this product by selling it to us.

Right.

And so your margins go up as well. The quality of the product has gone up as well.

I was gonna say, I mean, you're. You're effectively, you're. You're. You're running a business that you're building a business based on somebody else's leftovers.

Yeah. I mean, that's the opportunity, right?

That's the opportunity Opportunity. I get it. But. But if it can be, you know, instead of it being three people's leftovers, if it can only be one person's leftovers, that's better. Or instead of it being ten, if it can only be seven, that's better, right?

Yes. Right. Yes. Now, if you're a small person, you know, guy, and you don't have a lot of capital, and you really only can buy a thousand bucks, you're a couple thousand. Well, that's fine. And you. You can do that. I've done that for a long time with. With different entities. And that's okay.

Yeah. But just don't. Don't resign yourself to be there forever.

Yeah, yeah, you can tell. And for me, one of the big drivers of it was quality of merchandise. I couldn't help but feel that somebody else was kind of cherry picking, because one of the things, the secrets that gets people's attention when you want to buy product is two things. I'll take everything you have, I'll take it as is, and I will not return anything at all. So that's three things. But those things, those terms are really powerful because most of the time, people are calling that want to cherry pick and want to take the best of everything. They only want to buy little piecemeal stuff, and if they're not happy, they want to send stuff back. And so if you can. If you can handle that, if you have the depth and the, you know, to do it, and it can be expensive sometimes because that's how you learn. You know, years ago, it was way before Tech Restore. You know, we were a company called Mac Rescue, and we wanted to be in the ipod business. Well, you know, the way I. Okay, well, let's. Let's get in that. So we start calling around, doing something, and we bought like, 20, 30 grand worth of, quote, defective iPods using that same thing. Hey, do you have some ipods? Oh, we have, like, this $50,000 load, but we got to break it up into 10 small batches because we got to get it out, and nobody wants to buy it. And people get. Want to return. And again, I'll buy it all. I'll take everything as is, and I won't return anything. We got that deal right away, I would imagine. I mean, right away, that's somebody's problem.

Yeah, you just solved my problem. Go. Yeah.

Yeah. And so. And then, you know, that's how you figure it out. And you definitely, definitely make mistakes. And you'll know, you know, oh, I cannot buy from this source. And that's why doing it in little pieces. If you can create. Sure. And you can certainly call and say, hey, I want to buy a sample order. Let's, let's see the, what the products look like, you know, that kind of thing. And that, that's fine. But you're going to get more attention. You know, the, the, the bigger gulps you can take and the more problems you can, you can solve for them. So, so you know that on that, on that end, you know, from a supplier standpoint, you're trying to get better quality, you're trying to get, you know, better margin. And on the sales side, you're trying to find the venues that are going to be charging you the least percentage, you know, because I will tell, like, we've done great on Poshmark. It's been very productive for us, and we have a great following now, and we move product through there every day. But they, but they want 20 points on everything you sell. Yeah, it's very expensive. I don't mind paying it because they're bringing the market to us.

I was gonna say they're putting people.

To your front door, no question. And, you know, often if you think about it, I mean, you're paying for customers somehow.

You're paying customer acquisition cost.

Yeah, it's a thing. It is a thing. You're going to pay Google, you're going to pay ads, you're going to do whatever you want.

You got it, people. It's not an. If you build it, they just magically appear. No.

No way. No. And so unless you build it in.

The right spot and then you. And then you're paying to be there. Just like you pay Poshmark.

Yeah, yeah, that's right. You're paying rent. So that's effectively our rent and advertising for that. And again, I respect them. They come up a great concept, and it works out well. And I would say another bit of advice I would give you, if you're selling in these marketplaces, one of the big things you don't want to do, and you'll get enticed almost daily to do it, is you want to be sure that if the customer comes to you from that marketplace, that you make the sale on that marketplace, because you're putting your entire relationship with that marketplace at risk for one sale. And you may think, well, I'm gonna save, you know, whatever a big ticket item, whatever it is. But in the long run, and you want to tell your customers this, oh, hey, let's, you know, yes, I will do this. But you Know, we're gonna, the transaction is going to happen on Poshmark, on the marketplace, whether it's Amazon, ebay, whoever you're selling through. Then now there's lots of opportunities after the sale to get a direct relationship with that customer and that's where you can certainly, you know, the box is a really critical part of the sales process. It's the first instance that the customer is really having a physical experience with you or your company.

Yeah.

So you really need to spend a lot of time on that box and what it represents when it shows up at the door. It should be exciting. They should be thrilled when they open it up. They should get a delightful little surprise. You know, at Tech Restore, we put ninjas, little plastic ninjas inside the box and, and that we, we, people talk about that forever. They post blog posts about it, they do little pictures, you know, and then we do the same thing with this fashion business, you know, and, and we, we, we address it a little differently.

But sure, but same concept because.

Same concept, yeah, yeah.

Because they're opening this thing. I mean, presumably somebody buys from you on Poshmark or anywhere because you've got something at a price that they can't get somewhere else.

That's right. Of course.

But yes, there's always, you know, I don't care who you are, you're always going to have somewhere in your mind, maybe it's the back, maybe it's the front. What's the catch?

Right. Oh, yes.

And so it's in really what they're asking is how do I know I can trust you?

Yes.

And by controlling and making, like you said, a delightful out of box experience, it makes it seem less like you packed this in your basement, even if.

In fact you packed it in your basement. Right, that's exactly it. Yeah. You can make yourself look. I mean, if you're shipping usps, they will provide you all the free, most professional looking boxes that you can imagine. Yep. They will, they will drive the truckload to your house or your business, wherever you're at, and they will give you free boxes that are there that when you start shipping a lot of product, you know, packaging and boxes is not an insignificant amount of money. So take advantage of everything you can and put a note in every box. And if you're shipping lots of volume. Yes. You're going to print that note out in volume and stick it in there. But like you said, Dave, the customer, in the back of their mind, they're ready for something bad to happen.

Right.

They're ready for It So when you delight them like that, man, they go up and they leave you a good review, which builds more trust for your future customers. And the other thing, kind of where I started with this, that box allows you to try to get a direct relationship with the customer and to get them to your Facebook page, to your blog, to your website, whatever it is, because you want to tell them, hey, next time you want to buy Product X, let me tell you where to get it. And you can save some money because you're going to save, you know, if you sell on ebay, you're paying 13%. I mean, if you're a huge volume seller, you're negotiating better rates, of course, but you know, the average seller is paying 10% to eBay and 3% to PayPal. You know, if you're selling on Amazon, Amazon, it goes, you know, it's 8 to 15% and so on and so forth. So you, you can spend some of that percentage to get a direct relationship with the customer and give them better service as well. I'm always, you know, when they can come direct to you. And yeah, so, you know, but then.

You have to have, then you have to manage your own website. I mean, part of what you're paying Poshmark for is to deliver customers to your door. The other part of what you're paying them for is your door.

Right, that's right. You know, and I'm very happy to do that. But if you're, you know, it's like our Facebook group, you know, at BusinessShow Co Facebook, when you go over there, it's much easier to communicate with folks in that venue. So it's great. And I can, you know, because on the org chart, when you look under customer service, guess whose name is there right now?

Of course it's you.

Mine. Mine. And that's fine because I'm learning. I gotta tell you, we use this term a few shows ago, but I'm definitely a small business vampire. I take a ton of energy out of starting a new business and being involved with existing ones when you can go in and solve problems and that kind of thing. And this business has definitely energized me. And I'm always yelling out to my wife, sold another bag. The numbers, again, are not dramatically huge, but they're there. You know, I look at different success points. Okay, maybe we didn't make a lot of sales today, but how many followers did we gain? And you know, on some days we'll gain 500, 600 followers. And I'm like, great, that's that's a success. And so, you know, for me, when we talked, you know, last week's show, we talked about having a greater purpose. That's a big part of my greater purpose is to energize myself throughout the day, which makes me a better person, a better businessman across all the different companies I'm involved in. And I would say it just makes me a better person to be around in general.

Of course.

Yeah.

Because you're enjoying what you're doing.

Yeah, yeah. So, so that's, that's the update. You know, it's going good. We're kind of at the point where, you know, I brought one person in to help because I definitely can feel the log jams and where they're at right now. There's a lot of opportunity out there and we're coming up on these last two months of the year, you know, sales. And so we're, you know, we're ramping up and increasing our, our spending on product and getting ready to do it after the holidays. It'll be, the opportunity will be reversed. You'll have the most buying opportunities that you'll have out of the year in January and February because all the holiday returns come back and that's a big opportunity. So you gotta look at it from both sides. So it's great. And you know, we'll check in again another four or six months and if you have questions about it, feel free to visit us up in the support group. I'd be glad to talk to you, share any details that I can. And we're having a great time, which is really important to me.

That's awesome, man. It's fun kind of following along with this.

Yeah, it's cool.

Yeah. Because I've never been in an inventory based business like this.

It's interesting. Yeah, yeah, it's good.

Yeah.

Thanks for the question, Jacob. And we'll check in if you have any questions about it. Again, just reach out businessshow co Facebook and post a comment in the support group.

Yeah, we'd love to see you there, folks. And it's always good. It's a pleasure to be able to do this for you every week. So we'd love to hear from you, hear what your questions are and hear what you're doing to lead a charm life.