Although this meeting was short, it was a key point in BowBars history. The company probably would not be what it is today, without learning the 2 key things from that night.
Since I don't have his permission to use his name, we will call him Mr. Win.
Mr. Win was a local entrepreneur who had been involved with marketing of some local breweries who had exploded in popularity over the past few years. He was well versed in the ways of the web, having created quite a few websites and experience with digital marketing.
Mr. Win and I met a local tavern and have a few beers and talk business for about 2.5 hours. Over the course of that time we discussed many things:
How business is just people helping people?
What the price of a product actually is?
How to know if you have a good idea or not?
After it was all said and done, I learned 2 key things:
- When doing direct to consumer sales. Set your margins at 60% and go with it.
I know, that's high but here is the thing.
When you are first starting out, you don't know what you don't know and because of that you need to charge more for your product. You can't afford to have tight margins or they will eat you alive before you even start.
You forgot to charge for a box to ship in - 5% loss.
You forgot to charge for shipping - 5% loss.
Your supplier doubles the cost of a part - 10% loss.
The post office damages half your orders and you don't have enough insurance - 50% loss. (That happened to me)
As you get more sales and figure out your process, you increase your margin and can start running sales, while still making enough money to grow the business.
- You don't know you're idea is bad until 1 million people who would be ideal customers have seen it, and 0 buy it.
At that time, I had about 50,000 impressions on all of my social accounts. Since no one was buying, I thought my idea was terrible but really, all those impressions are not the most ideal customers. They are just Facebook's algorithms guess.
The ideal BowBars customers are at shoots and shows, go there. If no one buys it there, then it may be a bad idea.
Leaving the meeting, I knew what I had to do.
- Raise my prices. A LOT.
- Go to where the customers are.
