Advice on Offline Idea

[richkid]

My brother owns this Builders marketing Company that creates series of house plans all artistically drawn up, and they are quite successful, and provide a good passive income for him on top of his normal drafting work.

I have been trying to think of a way to make it something bigger (of course with me getting a cut of extra sales :P) and I have come up with an Idea.


I want to start a loyalty program with builders - which for $150 a month they receive 1 new house plan a month (this is exclusive to their area). They would be signed up on 6-12 month contracts and the aim is to start when we have 10 builders ready to join -with the aim of increasing this to 100 builders by the end of next year. This would result in $15,000 in gross income per month.

A strategy I had was to sell off master resell rights to our old series' as most have only been sold in south east queensland. With a master rights reseller for each major state in australia. So we have 6 major states (not including Tasmania and ACT).

I was thinking that we could sell the master resell rights (they can sell it for what ever they want, but we sell it for $1,500) for $4,000 per state per series).

So we are working on $4000 X 6 X 2 (2 series) = $48,000 in sales.

This not only gives us some working capital, I would like to word something in the resell rights contract that we get the contact details of each builder that purchases a series from our resellers - so that we can then market the new loyalty plan to them.

Im sorry it has been such a long post, but I have just been talking with my brother, and really want to make a go of this. It is still only early days, but I would love to hear some thoughts you have have of this idea.

Let me know if there is anything you dont understand and ill try and clarify.

Thanks
Tom

[richkid]

no one have any comments or feedback?
good or bad?

[akula]

sure..let's chat

what problem are you solving?

[jasaunders]

I didn't really understand what you were talking about.

[richkid]

The problem we are solving, is for builders.

We are helping them differentiate themselves from other builders by selling them series' of concept house plans. I might have to wait til we upload the demos to show you guys what I mean.

Im going to a home show with my brother today to check it out, we are aiming to get a booth in the HIA building industry show in Brisbane next august.

[jasaunders]

Why do builder's need concept houses?
Builders usually build the same model or just a small series of models over and over.
Architects might design some type of concept house, but they already have the ability to design and draw these. I don't understand your offering or your market.

[akula]

We are helping them differentiate themselves from other builders by selling them series' of concept house plans..

Ok..sounds like problem, except you'd benefit from quantifying it, and if the problem is unquantifiable, then it's not a good problem. A good business idea is one where you can approach the customer and say "every 3 months you're losing $100k in profit because of [problem]". However, at this stage, that's not something you're capable of doing, and so you need to correct the situation.

Likewise, then there is the solution side of things. You need a differentiated, scalable, defensible, high margin solution which is a substitute without substitutes. Does "plans of concept houses" pass any of these tests? Probably not. Is there anything you can do to manage that issue? Probably yes. Is this stuff important? it sure is. If you're gonna commercialise an indefensible solution, any profits you plan on making have to be discounted for greater risk...basically, it's harder to recruit financiers, employees and partners when what you're selling is generic quality, undifferentiated and uncompetitive product...and so you need to alter the marketing mix if you have a weak position in product attributes.

[richkid]

Ok..sounds like problem, except you'd benefit from quantifying it, and if the problem is unquantifiable, then it's not a good problem. A good business idea is one where you can approach the customer and say "every 3 months you're losing $100k in profit because of [problem]". However, at this stage, that's not something you're capable of doing, and so you need to correct the situation.

Likewise, then there is the solution side of things. You need a differentiated, scalable, defensible, high margin solution which is a substitute without substitutes. Does "plans of concept houses" pass any of these tests? Probably not. Is there anything you can do to manage that issue? Probably yes. Is this stuff important? it sure is. If you're gonna commercialise an indefensible solution, any profits you plan on making have to be discounted for greater risk...basically, it's harder to recruit financiers, employees and partners when what you're selling is generic quality, undifferentiated and uncompetitive product...and so you need to alter the marketing mix if you have a weak position in product attributes.

thanks daniel, these are some great issues that we will have to address.

The fact that the product is already selling is a good sign.

[akula]

thanks daniel, these are some great issues that we will have to address.

The fact that the product is already selling is a good sign.

Well..yeah...of course it's a good sign..but I do wanna bitch about something for a second...if you'll indulge me

I think that the greatest trap or pain for entrepreneurs isn't failing quickly, but succeeding slowly..ya know, being caught up in a small business which is doing just enough sales to prevent you from closing shop - but not doing enough in revenue to satisfy the requirements for a great exit

..I mean, sure, I'm a paid up member of the richkid fan club, but it might suck if you get caught in small business purgatory

[richkid]

Well..yeah...of course it's a good sign..but I do wanna bitch about something for a second...if you'll indulge me

I think that the greatest trap or pain for entrepreneurs isn't failing quickly, but succeeding slowly..ya know, being caught up in a small business which is doing just enough sales to prevent you from closing shop - but not doing enough in revenue to satisfy the requirements for a great exit

..I mean, sure, I'm a paid up member of the richkid fan club, but it might suck if you get caught in small business purgatory

Good point, but for me this is just a means to an end. It looks like im losing my job at christmas, and I just want something to tide me over until i find out what I really want to be doing.