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This could easily be a novel but I'll give you fellow YE's the cliff's notes version of my first entreprenurial experience. It might be helpful for you guys to learn from some of the things I did and didn't do.
In October 04' I started a business selling poker chips at mall kiosks. I did a fair amount of market research (though at the time, I thought it was overkill) and this was a no brainer at this time of the year for a number of reasons; 1) poker, specifically texas hold em' was (and still is) HUGE in popularity, especially in my particular region, 2) the only competition was online or the crappy plastic poker chips (with ridges that make them stay together when stacked) that you could get at Wal-Mart or Walgreens. 3) Because the margin on this product in my estimation and based on my research could be between 3x to 4x my cost while still being competitive with online pricing.
My first obstacle was getting a kiosk at a great location. I quickly identfied a location at a local mall in an area which had all the criteria I was looking for; high amount of disposable income, good balance of blue and white collar economy, predominantly caucasion, and most importantly a high traffic area. The problem was I applied for a kiosk in my perfect location and was quickly denied. When that happened I was pissed but I couldn't give up. I went to the mall leasing office and coerced them into giving me an appointment with the lady who accepts or denies applications for tenancy. At the meeting a week later, I completely sold her on poker chips and on the concept of my business and she accepted my application on the spot. With only one stipulation; that I move in the last week of September instead of my proposed Nov. 1. I knew at the time that it would be hard to secure my inventory by that date, but it was doable, so I agreed. Obstacle #1 hurdled. I walked away feeling like I was on cloud nine. I could see all my dreams of entrepreneurship coming to reality. I was even envisioning how I was going to quite my 9 to 5 and all the nonsense that I know you other YE's have felt before.
Once I locked down the spot the next problem was choosing a supplier. I had based my business plan on a certain price structure that many companies who were in China (and I had established contact with) would fall under. But the problem there is that it would take 6 weeks from placing the order to recieve the products and I had to open shop in two weeks. So I found some domestic wholesalers that could supply me immediately in the meantime at roughly twice the cost of china just so I could open in sept. It wasn't a decision I was happy about, but it was really my only option at the time. I figured as long as my china products were here by November 15th or so I would be fine since, within my 5 month business plan, 85% of my sales would come between nov 26th to dec. 25th.
September 26th. 2004 - I open shop. A very simple, humble beginning to what I felt (and still feel) is going to be a very successful life of entreprenuership. Most people who work white collar jobs like me would probably frown on working at a mall kiosk, feeling it was an inferior job for greasy faced teens, but not me. I was so proud of my little kiosk and to be working there as "the owner" as well. I had a good friend working the day shift during the week, and I would come and finish off the evening when I got off work. We BLEW our forecasts out of the water that first week. It was perfect and once again I was on cloud nine.
In the midst of my outstanding opening week sales I got to know some of my fellow kiosk owners and they were taken aback at how popular my product was. One little side note about the mall kiosk industry; the kiosks are primarily run by middle eastern or asian businessmen who employ mostly family and close friends...and the business model goes something like this; find out what the short attention spanned american public is into this week, find a way to manufacture it in China, sell it in every kiosk possible untill the market is completly oversaturated, then find a new fad. You're only real protection you have from them doing this to your product, is that most malls won't let two of the same products in the mall unless it's something EXTREMELY broad like cell phone accessories. If you're offended by this synopsis, I apologize, I'm simply relaying what I observed. They all wanted to know how I knew about this product and how I knew it was going to be successful. When I told them that playing poker and other card games had been a passion of mine since I was a kid, they seemed dumbfounded by the idea of actually being interested in something your selling. Anyways, I quickly met a Chinese man who, along with his wife, operated the crystal animal statue (no joke) kiosk next to me. We developed a rapport and he told me that whatever I was buying my products for in China, he could get me the exact same stuff for significantly cheaper provided I payed him a small agent's fee. Being I was 24 hours from placing my order my China manufacturer, I figured it was no hurt to give him a shot. Sure enough the next day he came to me with pictures of the items and pricing of an average of $20 per 500 pc. case (my china guy was getting them to me at $25) and that included his agent's fee. This again was a no brainer because the price was 20% lower but more importantly, I now had an agent I knew personally, who had demonstrated his experience in doing business in China, and could actually speak the language of the Manufacturer in case any problems arose with the order. I agreed to his terms, drew up a contract (this was VERY important later down the road) and put 20% deposit down on my first order of 25K (enough to last me till the end of my lease in February) in products.
So everything's looking good right now, we can't keep enough product in stock, cash flow is great, there's a nice little buzz in the mall about our cart, i have an english/mandarin speaking agent i see on a daily basis, and now i start thinking about expansion. I would later find out that many of my fellow kiosk owners were copying my business and putting it other malls with completely different demographics and losing their pants....haha I knew that if I didn't lock down every mall that I knew had similar demos, that these other guys would. So being that I had the luxury of ordering so much inventory I did the math and realized that I could support three kiosks untill around Dec 15th. So I called some of my buddies and showed them the numbers we were doing on a daily basis and they jumped on board.
So now everything is going REALLY good, I got three kiosks in prime locations. with two of my best friends, with the lucrative November-December season in our sites...again, entrepreneural euphoria is pumping in my veins.....but here is where things get sticky.
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Originally Posted by kioskexpert
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