Giving Back: Some Lessons I've learned

[Atown512]

The other day, I realized that so far, I have taken more from this forum than I have given. Although I am not a millionaire at the moment, I hope I can offer something of value from a few of my success and failure stories. I have always heard that entrepreneurs fail more often than they succeed, and that always sounded scary. It took me a while to realize that I had several failures of my own already and I had never really stopped to think about what specific lessons I learned from them.

Failures can come in all shapes and sizes. It could be that terrible summer job you took or even a bad choice you made buying something. The key point is that lessons are everywhere and it doesn't have to be a huge experience to learn something useful. Hopefully somebody can get something useful out of some of my stories.



Success story: Retail sales

When I was 12, my brother and I made almost $6k profit selling sodas and snacks in two days during a PGA tour stop on our local golf course. My parents drove us to Sam's and we bought all of the inventory with our own savings. We made signs: "Sodas $1, Gatorade $2."

We did so well that during our third year there were probably 10 other kids trying it. None of them even came close to our results. Most of our traffic would come all at once when a big name golfer came by, so we had a system in place for rapidly cooling drinks when we got slammed. At the request of some of our customers, we set up a smaller cooler just to cool down some of our candy bars. After our third year, the PGA tour chose not to stop at our golf course, and we were out of business.

Lessons learned:

1. Undercutting a high margin seller with lower margins and volume can be very profitable.
2. If you are not the source of your traffic, you are not in control and business can dry up in an instant.
3. Listen to your customers. They will literally tell you how to make more money. The addition of snacks and candy bars increased sales by almost 30%
4. Three things led to our recognition of the opportunity:
   1. High volume of traffic
   2. Common need: (cold drinks and snacks)
   3. A problem: outrageous prices at the concession stands

Success story: Commercial Real Estate

I convinced my parents to look at rental properties for me to live at and manage while in college. We found a fixer-upper on nine acres with several buildings and two dwellings. One was a triplex and the other was a large two-bedroom house. One year before my graduation, the property was listed for sale at a price less than half of what it's worth today.

During my senior year, I found out the property was "grandfathered" with no restrictions on development. This meant we were the only piece of property in our area that had the legal right to develop multi-family housing. I begged my parents to take it off the market, until I proved to them it could make more money. For my senior project, I made a full business plan and presentation outlining the development of the property. Long story short, the numbers showed development was a no brainer and construction began immediately. Now the property is generating $9,600 per month in revenue with construction of new units already underway.

lessons learned:

1. Opportunities are everywhere. Always keep an open mind and take a hard look at any "game-changing" information
2. Creative methods of cost reduction can be huge. We turned a warehouse full of junk and an adjacent garage into two of our nicest and most sought after apartments.
3. Always collect as much in deposits as you can, you'd be surprised how much damage a renter can do in a short amount of time. Pets can be very destructive, so make sure to collect additional deposits.
4. Dealing with renters can be extremely stressful. In our case, a property manager was the only way to make this a reasonably passive investment. We found a trustworthy tenant and offered him free rent in one of our efficiencies if he maintained the property.

Failure Story: Automated Nano-brewery

My brother and I started brewing during my sophomore year in college. We started with a small system and after several equipment upgrades, we decided to buy a fully automated system. After shopping around, and posting on the homebrew forums, we found a guy who was building them for almost $1,000 less than the well known name-brand systems.

While the craftsmanship and quality was good, we still ran into numerous problems and inconveniences with the system. We had to research and fix the problems ourselves. After ordering extra parts, buying specialty tools, and way too many hours working on it, we finally gave up and sold the system unused for a small loss.

Lessons Learned:

1. You usually get what you pay for. The less you know about something, the more you should be willing to pay a higher price for convenience.
2. Never forget the value of your own time. If possible, try to put an exact price tag on the amount of time that convenience can save you. This one calculation can often shift your decision one way or the other.
3. Convenience factor is one of the most undervalued features, especially when dealing with price sensitive customers. If convenience is one of your product’s best features, make sure it is either obvious to the customer, or communicated very well.

Failure Story: Mobile keg beer dispenser

With all the extra beer we had lying around from brewing, we needed an easy way to bring it with us. We designed a very nice, double-wall insulated kegerator out of the wheeled trash cans that can be found at Home Depot. Everything was neatly secured and contained inside the trash can with one tap handle nicely mounted on the front. We used paintball CO2 tanks to eliminate the need for pumping.

The trash-can-kegorator worked incredibly well. It could keep a keg cold for seven days in the 100 degree summer heat of Texas. The CO2 system kept the beer from spoiling and going flat due to the oxygen exposure caused by normal mobile keg taps. We decided to try and sell them to fraternities and college students. We thought of a catchy brand name and bought the domain.

Before going any further we decided to ask around and see what people would be willing to pay for this. The price our customers had in mind was WAY lower than what it costed to produce. Despite this, we still thought we had a product that offered a ton of value, so we looked into selling them online. Once we figured out what our shipping costs were, the whole thing fell apart. We had a very specialized product that was low margin, and expensive to ship.

Lessons Learned:

1. Shipping costs and logistical problems can kill margins. Low margin products should aim for low transaction costs and high volume.
2. Customer research is vital before launching a new product. We could have easily wasted a lot more money if we didn’t do the research. Sometimes your customer may not “see†the same amount of value in your product as you do.

Success and Failure story: Professional Poker

I began playing poker my junior year in college. I didn’t know what I was doing but I quickly recognized the opportunity to make money. I spent a lot of time reading about poker and began to get better results. As I learned, I began to ask better questions and find better information.

One day I found a website advertising a rakeback calculator that promised to save me thousands of dollars. It seemed too good to be true. I looked into it, and everything seemed legit. All I had to lose was a couple hundred bucks that I had made playing poker anyways, so I took the gamble on the unknown site. This particular site was offering 165% of my rake if I started tables. This effectively meant that I was getting paid to play poker. Any money I made at the tables was icing on the cake.

I was making so much money I didn’t know what to do with it. The only problem is that compared to my college buddies, I was rich. Instead of spending every waking hour building up a fortune, I opted to work less hours and enjoy the free time. As you know, the US Government eventually cracked down on online gambling. I lost half of may bankroll and a large portion of my income literally overnight.

In the end, I made some bad decisions and wasted some money, but also made some good decisions. I got to travel a lot, and I learned some valuable lessons about risk, variance, and bankroll management.

Lessons Learned:

1. When you find an awesome opportunity, milk it for all it’s worth. You never know when it may dry up.
2. Failure is unavoidable. In the long run, all that matters is if your successes are bigger than your failures.
3. Emotions and money do not mix well. This is probably the fastest way to lose money at a poker table and any other business venture.
4. NEVER forget who your “customer†is. I have seen good players berate bad players that are literally handing them money for winning a lucky hand. The proper response is to congratulate the “customer†on the exciting pot and hope they continue playing.
5. Turning something you do for fun into something you do for money can quickly take the fun out of it.
6. In anything competitive, aggression is almost always a better strategy than passivity. This is because passive strategies require you to show the better hand. With aggressive strategies, you can win simply by pushing your competition out of your way.
7. When making decisions based on imperfect or incomplete information, making no decision can be worse than making the wrong decision. In poker, you HAVE to make a timely decision or else your hand will be folded for you. Procrastination in business is more of an “option,†but the price of inaction can be just as high.

 

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[ChickenHawk]

Opvisitvoph jux nepz ug vjiti tdipesout opwumwif liiqoph zuas izit uqip, epf vjip quapdoph cigusi vji uqqusvapovz tmoqqif exez. Vji geomasit, vuu, uggisif tuni hsiev veli-exezt -- neli jez xjip vji tap tjopit, fup'v ci egseof vu tqipf nupiz up huuf iraoqnipv, ivd. O figopovimz miespif gsun vjot. (tqiif +)

 

[Atown512]

O figopovimz miespif gsun vjot. (tqiif +)

O'n hmef O duamf uggis iwip e movvmi cov ug wemai jisi. O jewi ciip siefoph e muv, epf O vjopl O jewi gopemmz siedjif e quopv xjisi O vsamz apfistvepf xjev ov niept vu uggis wemai vu uvjist gostv. O'wi djephif vji xez O eqqsuedj qiuqmi, epf O en gopfoph vjev qiuqmi esi nadj nusi jimqgam epf ietz vu veml vu xjip zua edvaemmz desi ecuav vjin epf motvip vu vjin.

O xomm dupvopai vu miesp EPF tjesi xjev O jewi miespif emuph vji xez. Piyv nupvj, O xomm ci jiefoph cedl vu vji AT vu hiv tvesvif up e qsufadvoup nodsu-csixisz. O xomm neli tasi epf tvesv e qsuhsitt vjsief xjip O hiv cedl. Nz gostv tvuq xomm ci op Fipwis vu evvipf vji Hsiev Enisodep Ciis Gitvowem gus e movvmi "sitiesdj"

 

[Ivan]

Xjip O xet 12, nz csuvjis epf O nefi emnutv $6l qsugov timmoph tufet epf tpedlt op vxu fezt fasoph e QHE vuas tvuq up uas mudem humg duasti. Nz qesipvt fsuwi at vu Ten't epf xi cuahjv emm ug vji opwipvusz xovj uas uxp tewopht. Xi nefi tohpt: "Tufet $1, Hevusefi $2."

Og zua vsoif vjot vufez op Demoguspoe, vjiz'f tjav ov fuxp epf qav zuas qesipvt op qsotup. Pu kuli.

[*]Vaspoph tunivjoph zua fu gus gap opvu tunivjoph zua fu gus nupiz dep raodlmz veli vji gap uav ug ov.

Vjot. Vjot ot xjz O vjopl vji "fu xjev zua muwi" hasat esi uav ug vjios nopft. Vjiz cetodemmz ipduasehi qiuqmi vu vasp e juccz opvu e catopitt (us nusi moli, e KUC vjev zua xomm hsux vu jevi). Hsiev xez vu liiq qiuqmi catz xusloph gus qiepavt op tevasevif neslivt.

 

[Chitown]

Hsiev qutv. Tqiif +