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    6 Replies Latest reply on Jun 2, 2014 9:10 AM by Moderator_JoleK

    Business Advice Needed

    krzyace Wayfarer

      Hi everyone. This is my first post here and I'm in need of some advice. Right now I run at least in my perspective a somewhat successful Business that is helping me pay my bills. I started this business with $200.00 in April 2013 and by Tax time my business netted 24,000.00 in sales and 9,000.00 total profit for the year and I'm on track to reach $45,000.00 in sales in my second year with much better margins this go around. But I'm at a very critical point in my business. My business sells Organic Soils & Fertilizers to grow Medical Cannabis. While my products will work for any gardener my target market in Cannabis growers. I have the #1 placement for my main keywords I need for people to identify me without paying for marketing. I also receive many word of mouth referrals and I have some very dedicated customer to help me get my businesses name known.

       

      My problem is my business needs to expand. I cannot take away from my family again to put back into the business for one I just simply don't make enough in profit to be able to expand how I need to expand, and two I have a newborn that is 7 Days old and I cannot mentally depriving my child or my wife of the essentials we need to get through the month which is what would have to be done to expand with out help. My Credit Score is 635 which just isn't good enough to get real funding. I can get $2,500.00 from Kabbage but no real bank will fund me. Unfortunately when I was 13 Years of age I mad a few mistakes with Drugs and living in Florida they charged my as an Adult at 13 and because of this I cannot receive any SBA Funds. I know quite a few Wealthy Men as I live in Boca Raton and all of them like to say they love my business and some have even setup times to sign a contract and invest but they day it comes to sign they bail. None of them have given a reason for bailing on me either so I don't know if it's me, the business and my customers or what. Out of my friends and family I am the only person that owns there own home and can live with out the support of mommy or daddy and my family has never ever had any money.

       

      I'm at a loss. I feel like I've failed again but for no reason. In this last year I have fought with lawyers over copywrights, domain names, and products and I have prevailed in every situation. If I don't get funding somehow when one I finally get my large customer I will have already failed as I need a 60 Day lead time on making the product to be usable when shipped, and with the capacity my little Two Car Garage allows me I recently had two of my normal customers Completely wipe me out of Product for Two weeks. This is a wonderful thing but makes me understand if a real business which I'm in the discussion with a few want my products I will not be able to provide it to them with in a reasonable amount of time.

       

      I'm a hard headed individual who is willing to do what it takes if I can see the glimmer of hope but that glimmer is fading on me fast and I don't know what to do. Thanks for any advice in advance.

        • Re: Business Advice Needed
          Moderator Rebecca Guide

          Hi

            • Re: Business Advice Needed
              krzyace Wayfarer

              Well all my products I still be retail. I don't pay hydroponic store retail prices but the cost of my products are high for what they are. The products I sell are 100% All Natural Products like Worm Castings, Organic Soils, Kelp Meal, Bone Meal, Blood Meal and more. I have a few specialized products of different fertilizers mixed that are my best selling products. To get a real wholesale account with a manufacturer many want a $10,000.00 - $20,000.00 initial purchase to get the account even though they offer only one product I can use. If I go to a company called Sunlight Supply to get a wholesale account the initial purchase is $1,500 which isn't bad but I only use one or two products they offer which still leaves me either paying retail or having to purchase large amounts from each manufacturer.

               

              I sell only online through my website. My customers have a range of options to pay. I charge $6.00 per item to ship until the Order Total before shipping reaches $75.00 then shipping is free. UPS provides me shipping prices that are very low. So low in fact it's cheaper for me to send through UPS over a USPS Small Flate Rate Box. I achieved this by having UPS and Fedex bid for my account back and forth. Many of my customers are return customers and I pickup probably 3 - 5 new customers monthly.

               

              I do not advertise because I haven't found any form of advertising effective yet. Ad Sense cost me $250.00 to get a $400.00 sale which $150 was used on Shipping. I tried a specific publication that discuss how to grow cannabis in the exact manner my products are made for. Infact my company name is named after the growing style the magazine talks about every month. But the man that wrote the book for my growing style allowed me to use the name but refuses to have any part in my company and refuses to even try my products. In every publication he writes he will advertise every one else's products but mine yet I promote the hell out of him and his book.

               

              I try to be fare to all my customers and work with them if they need a discount. I have had a couple shops inquire about Wholesale accounts but only want to try a $100.00 order worth of products and I refuse to provide them the wholesale account for less then an initial $300.00 order. If a shop can't afford to test a $300.00 order I believe they aren't serious about my products. I don't want my products sitting on a shelf for long periods as eventually approximately 1 year the product will begin to loose effectiveness.

               

              There are a few Dispensaries that are interested in purchasing my products but the amount of product even 1 dispensary needs is at least 100 times the capacity I can put out in my current setup. I can truly only support a handful of customers with my limited space none of which could be a very large client.

            • Re: Business Advice Needed
              hconnections Adventurer

              kryace I am not sure if I am overlooking information in your post and if I did, I do apologize but are you Incorporated or not? I only ask because you mention your personal credit score and if you are Incorporated, you have a chance of building your business credit separate from your personal credit. Building separate business credit might enable you to secure a Line of Credit.

               

              Also...sometimes it's a little easier to get a Line of Credit versus an actual business loan because with the Line of Credit, you only use what you need.

               

              Just some suggestions.

               

              http://www.smallbusinessstartupconsultant.com

                • Re: Business Advice Needed
                  krzyace Wayfarer

                  My business is Incorporated. The problem lies not a single creditor will provide my business credit without a personal guarantee. I have business credit cards but they are personally guaranteed. I have been turned down for business loans based on unverifiable income but never asked me to provide such paperwork or information. Besides personally guaranteeing a loan I don't see how my business that's just over a year old can get a business loan.

                • Re: Business Advice Needed
                  koln123 Tracker

                  If you are in the Region where many of your sales are, then possibly you can add to your website sales by making traditional field representative visits since your product is a niche product.  If this is possible, this might help you expand without the expensive advertising you mentioned.   It could also establish excellent personal relationships and trigger more word of mouth sales. 

                   

                  If those additional sales are in the volume range you can handle now,  they may get you to the point that you can handle the large customers you ultimately want.   One good answer may be to increase the sales volume with gradually increasing volume sales rather than abruptly jumping to a large customer.

                   

                  Maybe you can try to negotiate net payment terms with some of the manufacturers.  If they are unwilling to do this now, maybe they will consider it again if you go back to them with the request after a three month period.  Good Luck

                  • Re: Business Advice Needed
                    blueskyglass Adventurer

                    Step back and take a breath.  What you need to do is grow your business organically and without bringing on debt.  Use what you have to your advantage.  You need to build some cash reserves to let you grow incrementally. It will not be as fast as using debt but will not be as risky either.  Since you product is scarce you should stick to retail and avoid wholesale for now so you can keep margins up and volumes down.  Stay diversified on clients and don't get owned by any one.  Raise your prices to improve profits and reduce demand a little.  That will allow you to accumulate cash.  Then sell your clients on long term contracts paid up front.  That way you can use clients to fund your growth.  Here is what I mean.  Let's say your product sells for $50.  Raise the price to $65.  Then turn around and sell the "bag a month deal" for $50 per month or $600 per year.  Have them pay in advance for future deliveries.  They pay you $600 and ship one bag a month for 12 months.  That locks in the demand, allows you to schedule your production, funds the purchase of materials, and you are on your way.

                     

                    Rod

                    Blue Sky Glass

                    www.blueskyglass.net

                      • Re: Business Advice Needed
                        Moderator Rebecca Guide

                        Thanks for this great advice, blueskyglass!  Building reserves or capital by using advance sales is a great way to not only have more money available instantly, but also making your customers feel special by providing them with great volume discount deals.

                         

                        I'm looking forward to see what options

                      • Re: Business Advice Needed
                        krzyace Wayfarer

                        Alright I want to first thank everyone for there input. The one thing I know I've been losing money in for my business is not charging the full price of shipping and then providing Free Shipping once a $75.00 min is met. What I'm going to do is take a play from blueskyglass. Instead of upping my price I will now charge the full price for shipping. In this way I have a much higher margin and the people that really want my product will buy it. I may have to offer some of my more loyal customers that purchase large a discount of some kind on every order so they don't get upset. And in this sense I will find out truly if my product is worth it. If anyone has an opinion on if this could break me let me know. What I intend to do to make up the money I will no doubt loose I do woodworking as a hobby and sell some pieces on etsy every now and then instead of worrying about etsy I will build a local client base refinishing furniture and custom woodworking, which actually may prove more successful in my area as every carpenter/wood shop around me is booked solid for a min of 2 months. Does anyone see anything wrong with this plan?

                          • Re: Business Advice Needed
                            Ranger

                            Loyalty rewards are always something that will pay you back in the long run. I like your thinking . Best of all you are looking ahead , not making decisions just for today and tomorrow. Shipping is an easy thing to manipulate - If the client thinks they are getting a good deal when you discount it , so be it ! But I don't think anyone balks at full shipping when it happens either .  I'm sure others here in the community can give you more in-depth critiques .

                            Looking forward to more discussion on this .  Thank you for the update!

                             

                            Joleen