I'll tell you the story of how one of my startups died.
Some years ago, I was looking for the next business the start. Being one of those serial entrepreneurs, I was used to searching for products that could be easily marketed by me. I'm one of those weirdos who enjoys to program and enjoys marketing. Anyhow, I found my next product on a magazine article. There it was, all shiny and plasticky. Why? Because it was actual plastic. Or better yet, shrink wrapping plastic. The one used to cover botas during winter.
The magazine article talked about a business in Arizona who was shrink repo'd houses, cars, boats, equipment, etc. They were doing a fine job with all the people going bankrupt, and all the banks needing a way to keep their properties in good shape for re-sell. I did some market research and it was a viable business to do locally. There were plenty of things to shrink wrap.
The shrink wrap was sourced from a distributor in Michigan. It was dirt cheap, and would allow me to mark it up without fear. Each sq. foot cost me around fifteen cents, and I would sell it for three dollars. Problem was the shipping. I reside in the Caribbean. The plastic had to travel all the way down from Michigan, get on a plane, and to my doorstep. The costs tripled, but the nice margin kept things at bay.
I went off to market it the product and made a huge first sale. It was for about $2k worth of shrink wrap. It was to wrap industrial machinery that was being shipped overseas to Zeus knows where. I got so excited by the "sale" that I ordered a roll of shrink wrap without taking a deposit or a purchase order number (the sale was for a local construction company). The client was actually pressuring me to get the material so they could ship it out. It was a safe bet, or so I thought.
The plastic arrives a couple days later, and its a heavy sumbitch. I pushed and pushed until it was resting in my garage. I call the client and let him know that everything is ready to. He replies by stating that everything will be setup for me to go and do the shrink wrapping. Awesome!
But wait. He asks for my proof of insurance. Yes. I had forgotten to check with the local insurance company to see if they would insure me. So I told him that I would process the insurance, but to go ahead and schedule, because I was sure someone would step forward and insure me. After contacting every insurance agency, pawn shop, church, and barber shop on the island, my dreams of being the shrink wrap king were fading away.
I call the client and let him know that no one would insure it. Surprisingly, he told me that they were so needy of the product (I was the only person offering the service locally), that they would take the risk. At the end of that phone call he said "I'll call you back when it setup."
One week passes. Two weeks. On the third week I call him. He says they were having trouble scheduling access to the equipment, but to not fear, because they need it to do it. I wait another week and he calls. Finally!
That was not a good phone call. They had sold the equipment to a local, and would not be needing my product. I did not have an agreement, deposit or anything. There was no way to get them to pay, and it was a waste of time.
From that experience, I created my party-pooper business checklist. It has all sorts of questions that I must answer before even thinking about investing my time or money into anything. It has saved me countless headaches, and resources. It keeps my serial entrepreneur in check, and forces me to think about every little bit before doing anything. Sadly, it cannot predict when people will scam me. I've had people in the valley scam me out of work, just like every freelancer out there. It sucks, but each time it happens I get to learn from it. One thing you get to learn after doing business for as long as I've been doing it, is that bad shit is going to happen no matter what. You are going to get scammed by people who sell you their close association to YC-funded company (which I thought made their project more legit, but it doesn't), and you will make costly mistakes. Being really good at marketing doesn't save me from those things. But anyhow, realize that you will make mistakes. Those mistakes do not define you, but teach you. Failure is all but guaranteed. So have fun, learn, and don't take it personal. After all, like the founder of a startup that scammed me not long ago, its business and not personal.
Great story. Would you mind sharing with the HN community your checklist? I'm sure we could all learn something from that... or maybe would make a nice blog post?
I will include it on a book that I'm writing. Don't call me a spammer, because the book will be available to read for free online. Once its done, I'll post it here.
In all seriousness, if you've already put in the effort to write a book, it's pretty hard to lose money selling it through a print-on-demand service. (It might be hard to make money, but it's pretty damn hard to lose money.)
There is more to life than money. Writing such a book allows me to share my wealth of knowledge. So what if I don't make a million dollars out of it? That's not the purpose. I want others to benefit so they can grow their businesses. And in turn create new opportunities for others.
It was not required by law. I wanted insurance, because the shrink wrapping process used an open flame to shrink the plastic. It reacted to heat. I could have continued without it, but it was too much risk (for all involved).
Out of curiosity, where does all the used shrink wrap go when winter is over? I'm picturing a whole house's worth of plastic wrap ending up in a landfill or floating its way out to trash island in the middle of the Pacific Ocean, and it makes me throw up a little bit in my mouth.
Anyway, thanks for sharing the story -- a good case study to learn from -- but I hope for the sake of humanity that this business of shrink-wrapping boats and houses is a thing of the past.
It is recyclable. The clients would put the plastic in a special recycling bag. I love my planet too much to damage it like that. Even so, that I stopped driving my truck and now cycle everywhere.
Apart from all the industries, services and products that exist because of by-products and waste, you are correct. Businesses don't have to worry about waste and can still be successful. However, I'd argue that eating healthy and exercising is an important part of any life. You can still have a good life if you don't, but the benefits are well documented and very clear.
Some years ago, I was looking for the next business the start. Being one of those serial entrepreneurs, I was used to searching for products that could be easily marketed by me. I'm one of those weirdos who enjoys to program and enjoys marketing. Anyhow, I found my next product on a magazine article. There it was, all shiny and plasticky. Why? Because it was actual plastic. Or better yet, shrink wrapping plastic. The one used to cover botas during winter.
The magazine article talked about a business in Arizona who was shrink repo'd houses, cars, boats, equipment, etc. They were doing a fine job with all the people going bankrupt, and all the banks needing a way to keep their properties in good shape for re-sell. I did some market research and it was a viable business to do locally. There were plenty of things to shrink wrap.
The shrink wrap was sourced from a distributor in Michigan. It was dirt cheap, and would allow me to mark it up without fear. Each sq. foot cost me around fifteen cents, and I would sell it for three dollars. Problem was the shipping. I reside in the Caribbean. The plastic had to travel all the way down from Michigan, get on a plane, and to my doorstep. The costs tripled, but the nice margin kept things at bay.
I went off to market it the product and made a huge first sale. It was for about $2k worth of shrink wrap. It was to wrap industrial machinery that was being shipped overseas to Zeus knows where. I got so excited by the "sale" that I ordered a roll of shrink wrap without taking a deposit or a purchase order number (the sale was for a local construction company). The client was actually pressuring me to get the material so they could ship it out. It was a safe bet, or so I thought.
The plastic arrives a couple days later, and its a heavy sumbitch. I pushed and pushed until it was resting in my garage. I call the client and let him know that everything is ready to. He replies by stating that everything will be setup for me to go and do the shrink wrapping. Awesome!
But wait. He asks for my proof of insurance. Yes. I had forgotten to check with the local insurance company to see if they would insure me. So I told him that I would process the insurance, but to go ahead and schedule, because I was sure someone would step forward and insure me. After contacting every insurance agency, pawn shop, church, and barber shop on the island, my dreams of being the shrink wrap king were fading away.
I call the client and let him know that no one would insure it. Surprisingly, he told me that they were so needy of the product (I was the only person offering the service locally), that they would take the risk. At the end of that phone call he said "I'll call you back when it setup."
One week passes. Two weeks. On the third week I call him. He says they were having trouble scheduling access to the equipment, but to not fear, because they need it to do it. I wait another week and he calls. Finally!
That was not a good phone call. They had sold the equipment to a local, and would not be needing my product. I did not have an agreement, deposit or anything. There was no way to get them to pay, and it was a waste of time.
From that experience, I created my party-pooper business checklist. It has all sorts of questions that I must answer before even thinking about investing my time or money into anything. It has saved me countless headaches, and resources. It keeps my serial entrepreneur in check, and forces me to think about every little bit before doing anything. Sadly, it cannot predict when people will scam me. I've had people in the valley scam me out of work, just like every freelancer out there. It sucks, but each time it happens I get to learn from it. One thing you get to learn after doing business for as long as I've been doing it, is that bad shit is going to happen no matter what. You are going to get scammed by people who sell you their close association to YC-funded company (which I thought made their project more legit, but it doesn't), and you will make costly mistakes. Being really good at marketing doesn't save me from those things. But anyhow, realize that you will make mistakes. Those mistakes do not define you, but teach you. Failure is all but guaranteed. So have fun, learn, and don't take it personal. After all, like the founder of a startup that scammed me not long ago, its business and not personal.