Why We've Decided to Start Sharing How We Make Money Selling Cat Furniture
A few days ago, our business clicked past the $1,000,000 mark in annual revenue. That was a huge mental milestone for us. We’re thrilled.
Despite that, I’m getting more frustrated about presenting the numbers that way. What if I could say: “we grossed 10K from our cat furniture brand last month and here’s how we did it…”
Writing about business without exposing the details of how you make money, or at least the details of your products and brands sucks. And so far we haven’t done it (except in the DC) for one reason.
We are scared.
I admire writers like Patrick McKenzie. He shares his business tactics with clarity and detail. The resulting information is insanely useful to entrepreneurs. Speaking of insanely useful, if you don’t yet know about Joe and Justin, Pat, and Spencer, getting to know them will likely help you grow the internet marketing side of your business. These guys have all inspired me.
We want to show how you can take a product like this to market for $3000 dollars. (Give us a few weeks!)
In part because of the influence of these blogs and inspiration from companies like 37 Signals, starting next week (or whenever Ian finishes his first product case study post with photos!), I’d like to start revealing one of our e-commerce and product businesses in detail. We’ll start with one of our smaller and simple product lines (our cat furniture brand), and work from there.
In some ways, this is a terrifying decision for us to make. It has the potential to create serious change, both good and bad. In our industry (e-commerce, manufacturing) you just don’t do it. Our industry peers, without a doubt, would think we are crazy.
Decision making via worst case scenario analysis.
If taking this risk were to have a catastrophic impact on our exposed business, could we replace the lost revenue with the new opportunities that would come along from making the change?
In the past 4 years, worst case scenario type thinking has lead us to make 4 critical game-changing decisions that turned out to be more difficult emotionally than financially:
Deciding to start the business and take on an investment partner. (Emotional challenge: giving ourselves permission to be entrepreneurs, marching into the office of an investor and asking for big money).
Hiring our first full-time employee very early. (Emotional challenge : parting with a huge percentage of our personal income to build something bigger than income for ourselves).
Starting to share our business via blogs and podcasts. (Emotional challenge: exposing ourselves to judgment by others, and making ourselves available to the broader community of entrepreneurs).
Buying out our 3rd partner and merging the blogs with the manufacturing business officially. (Emotional challenge: reconsidering the fundamental relationships in our lives and re-setting the concerete on which our business rested).
(Pending) Share our business online with others. (Emotional challenge: re-considering the traditional manufacturing / e-commerce wisdom that secrecy is an advantage to businesses).
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My hope is that by making this decision, we’ll be exposed to some of the following opportunities:
It will force us to be better.
Operating in public has the potential to be a huge kick in the ass.
Our first reaction when discussing this with our team was “maybe we should wait until we get this business a little ‘tighter’.”
We don’t consider getting this business tight until I mention sharing it with the world?!?!
We don’t have enough eyes in our own organization to effectively monitor everything we are doing. Sure, we are opening ourselves up to competition, but we’ll also open ourselves up to a lot of people who can help us. I get 2-3 emails a week from talented people asking to help us for free. “What can I do?” they say. I’d prefer them to come to me and say “I want to do x for you.”
Of course they can’t do that now, because they don’t know what we do.
The chances that we could sell portions of our business for great multiples and on positive terms could shoot through the roof.
Oddly enough, the single best thing we could do to sell one of our businesses would be reveal them on our blogs. Instantly, 100’s of people would be discussing our business around the world.
Anytime you reveal the inner workings of your business to a potential buyer, NDA or not, you run the risk of them copying what you’ve built. In the case of more traditional business brokers, you are sharing your information with targeted business buyers, probably with similar business operations looking to take on complimentary operations. It’s reasonable to assume that a person who requests information from a business broker is more likely to copy us than a randomly selected blog reader.
Who would be more willing to make us an offer on the site? Both audiences have stated and acted on their interest in buying and building businesses. The blog audience has an immediate affinity with the business in ways that would take weeks to engender from business broker leads. They’ve seen it working, they know how it was built, and they know it gets them the lifestyle and profits they want.
The chances that people both try to copy and buy our business is inevitable. If we continue to our current course, my assumption is that we’ll receive a copy attempt before an offer.
Revealing our businesses could be the fastest way to accelerate both eventual outcomes and to flip this likely outcome in our favor. Imagine receiving offers on our business with no resources spent marketing it (businesses like ours aren’t super easy to sell), while simultaneously creating assets by documenting sales processes for our audience of entrepreneurs. Balla!
We’ll get world-class advice from experts and vendors.
I’m sure about this one. We’ve said on our podcast that the advice we receive from our listeners alone would make doing the show a good investment. If that is the case, this is the chance to double down on that suggestion. We are hampering our ability to get quality feedback from service providers, software vendors, and expert entrepreneurs because they don’t know exactly what we do.
Our ability to recruit world class talent could skyrocket.
The next level of our recruiting efforts is to get star performers who fit very well with our company. A move like this is the way to attract them. it’s no wonder that 90% of TMBA applicants are primarily applying for the travel and the lifestyle– that’s all we really talk about. I’d prefer candidates to apply in the future with messages like this: I’ve seen what you are doing on x and y domain and I can create 200% growth there in the next year by doing z. I’d like the opportunity to work with you on it.
In addition to the lifestyle perks, the fun, and the network opportunities, first rate talent would receive a kind of exposure and recognition for their work that few companies could (or would be willing) to provide. This is firmly in line with our core mission of offering our employees opportunities to achieve their personal goals via our business.
Sharing our income reports with the world could be the single biggest way to increase the reach of our blogs.
Everyone I’ve spoken to who has published their income reports on their blogs has said the same thing: “Income reports are our most popular posts.”
Trying to inspire entrepreneurs and other business owners without being able to reveal your brands (at minimum) is operating with your hands tied behind your back.
Our mission is to help other entrepreneurs grow great businesses. I hope this will help others…
I don’t think we can have it both ways, if part of our mission is to help other entrepreneurs start, grow, and improve their businesses, we need to take a little risk and share more useful information.
What do you think. Are we nuts?
Cheers,
Dan
PS, if you’d like to hear 50 podcast episodes that outline our journey build a million dollar business, just put your email in the form below.