UniEntrepreneur
New Contributor
Hey brothers, I'm a long time reader of the fastlane, but only in the past year have I set my ideas in motion. A lot of people are intimidated by the process of starting a business, so I want to show how it's possible to create a successful business in under a week starting with low capital ($6) and free marketing sources. This business, KitchPack, is now set to turn over $100,000, so I thought sharing my experience might be informative and useful to the community.
As a quick background: I started with a few hundred dollars to my name and the option of going straight into a fully funded Masters Degree. However, I always liked the idea of taking complete responsibility, as well as the excitement and challenge that entrepreneurship brings - so I rejected the Degree offer and chose to devote myself to entrepreneurship. With a fast depleting wallet and no backup plan, I had to act quickly.
Day 1: The first event/opportunity we (me and my business partner) identified was the upcoming arrival of new students in a week. We considered several ideas such as: bedding packs, study kit (pens, highlighters, etc), food packs, arranging nightclub events and kitchenware sets. Since we had prior evidence of kitchenware sets working (some sets had been sold 5 years previously), we decided to research further: we addressed weaknesses in the overpriced or incomplete (stuff missing, too many spoons, etc) sets of our competitors and conducted extensive student surveys to come up with a 33 item list of high quality kitchenware that comprehensively covered the needs of both home and international students. We then checked the margins were there by surveying students to decide pricing and negotiating 9 kitchenware suppliers against each other to get the lowest possible unit cost. Negotiations resulted in us getting a 16% discount from our initial lowest quote, but we needed a minimum of 25 units to secure the bulk discount.
Day 2: We wanted to validate that the product would actually sell before spending anything (especially not the cost of 25 units). First, we created a simple e-commerce site that allowed us to collect pre-orders. This was $6 web hosting, a wordpress blog + paypal link. We then drove traffic towards it using exclusively free marketing sources. Given our margins, we needed 15 pre-orders to raise the capital to buy 25 units and secure the discount. Consequently, we decided that if we collected over 15 pre-orders from free sources then we'd proceed with the business and invest more time/money. If we received less than this, then we'd simply refund the money.
Day 3: The free marketing went a lot better than we expected and we ended up raising the capital for 45 units. Our market was new students arriving at University, so here's what we did to target them:
(1) Identified top academic Forums for the country (where incoming students posted questions and messaged each other before arriving). Found University specific subforums and identified incoming students through posts/threads. Sent them all highly personalised messages (often answering questions in their posts). We told them who we were, the reasons why we'd created the product and how they could get it. This was done in a very conversational and un-selly way, which we think was the key to our success.
(2) Identified relevant Facebook Groups/Pages. We then took the same approach to messaging students as (2), however, we also messaged group administrators and asked them to post about us. 2/25 of these said yes, but these posts had very large reaches. These were probably better given they could see exactly who they were talking to.
With all these we made sure to a) make every message unique b) follow up every answer c) ask for feedback/ask them kindly to refer us to their friends. We think this highly personalised approach was the key to our sales - those that didn't buy had a great impression and told their friends or liked our social media page, further increasing our reach.
Day 4-7: We used the capital to purchase stock and fund a Facebook marketing campaign (we used information about our customers locations so far to inform a few split tests then put $30 into the most effective cpm campaign). This resulted in more pre-orders for stock. We then negotiated a deal to sell on the University campus - which resulted in us selling out all our stock (120 units) in less than 24 hours for $3350 net profit in just under 7 days.
Day 7+: Since then we've designed a new business model and have been in talks with universities across the UK - we're set to be in 25 different University stores later this year predict to sell 5000 units.
By the way. We just started a blog with write-ups about the businesses we've created. Our goal is to write in a maximally transparent, informative and actionable way. The first post is about this business and goes into way more depth (the specifics of market research, negotiation, how we set up the website, what we wrote in messages, how we chose paid marketing campaigns, how we sold on the day and more) so check it out if any of this was interesting to you. Also eel free to post questions about any stage of the business.
Blog: http://unientrepreneur.com/2014/02/kitchpack-make-2000-week/
We'll be writing about the 4 successful businesses we've created since KitchPack, so be some of our first subscribers if this was useful to you!
James
As a quick background: I started with a few hundred dollars to my name and the option of going straight into a fully funded Masters Degree. However, I always liked the idea of taking complete responsibility, as well as the excitement and challenge that entrepreneurship brings - so I rejected the Degree offer and chose to devote myself to entrepreneurship. With a fast depleting wallet and no backup plan, I had to act quickly.
Day 1: The first event/opportunity we (me and my business partner) identified was the upcoming arrival of new students in a week. We considered several ideas such as: bedding packs, study kit (pens, highlighters, etc), food packs, arranging nightclub events and kitchenware sets. Since we had prior evidence of kitchenware sets working (some sets had been sold 5 years previously), we decided to research further: we addressed weaknesses in the overpriced or incomplete (stuff missing, too many spoons, etc) sets of our competitors and conducted extensive student surveys to come up with a 33 item list of high quality kitchenware that comprehensively covered the needs of both home and international students. We then checked the margins were there by surveying students to decide pricing and negotiating 9 kitchenware suppliers against each other to get the lowest possible unit cost. Negotiations resulted in us getting a 16% discount from our initial lowest quote, but we needed a minimum of 25 units to secure the bulk discount.
Day 2: We wanted to validate that the product would actually sell before spending anything (especially not the cost of 25 units). First, we created a simple e-commerce site that allowed us to collect pre-orders. This was $6 web hosting, a wordpress blog + paypal link. We then drove traffic towards it using exclusively free marketing sources. Given our margins, we needed 15 pre-orders to raise the capital to buy 25 units and secure the discount. Consequently, we decided that if we collected over 15 pre-orders from free sources then we'd proceed with the business and invest more time/money. If we received less than this, then we'd simply refund the money.
Day 3: The free marketing went a lot better than we expected and we ended up raising the capital for 45 units. Our market was new students arriving at University, so here's what we did to target them:
(1) Identified top academic Forums for the country (where incoming students posted questions and messaged each other before arriving). Found University specific subforums and identified incoming students through posts/threads. Sent them all highly personalised messages (often answering questions in their posts). We told them who we were, the reasons why we'd created the product and how they could get it. This was done in a very conversational and un-selly way, which we think was the key to our success.
(2) Identified relevant Facebook Groups/Pages. We then took the same approach to messaging students as (2), however, we also messaged group administrators and asked them to post about us. 2/25 of these said yes, but these posts had very large reaches. These were probably better given they could see exactly who they were talking to.
With all these we made sure to a) make every message unique b) follow up every answer c) ask for feedback/ask them kindly to refer us to their friends. We think this highly personalised approach was the key to our sales - those that didn't buy had a great impression and told their friends or liked our social media page, further increasing our reach.
Day 4-7: We used the capital to purchase stock and fund a Facebook marketing campaign (we used information about our customers locations so far to inform a few split tests then put $30 into the most effective cpm campaign). This resulted in more pre-orders for stock. We then negotiated a deal to sell on the University campus - which resulted in us selling out all our stock (120 units) in less than 24 hours for $3350 net profit in just under 7 days.
Day 7+: Since then we've designed a new business model and have been in talks with universities across the UK - we're set to be in 25 different University stores later this year predict to sell 5000 units.
By the way. We just started a blog with write-ups about the businesses we've created. Our goal is to write in a maximally transparent, informative and actionable way. The first post is about this business and goes into way more depth (the specifics of market research, negotiation, how we set up the website, what we wrote in messages, how we chose paid marketing campaigns, how we sold on the day and more) so check it out if any of this was interesting to you. Also eel free to post questions about any stage of the business.
Blog: http://unientrepreneur.com/2014/02/kitchpack-make-2000-week/
We'll be writing about the 4 successful businesses we've created since KitchPack, so be some of our first subscribers if this was useful to you!
James
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