You need a huge investment and a lot of experience to start a business. Or do you?
Let’s get straight to it.
The business in question was started by my girlfriend and I in the end of 2015. We didn’t make it a business right away, it was merely a side project.
This case study is proof that you don’t need a lot of investment or any investment at all. And you don’t really need any experience starting a business. In this case the business was started in an industry that I was not involved in before and it isn’t affiliate marketing or anything that I am used to doing.
This post is kind of a transcript from the podcast episode # 71. If you prefer to listen to this case study instead of reading it press the PLAY button below:
In a nutshell we are making and selling beard oil. I know that while reading this you might be thinking: “What the heck are you talking about Alex? Beard oil? What’s that?”
Beard oil is a product that bearded guys use on their beards to smooth the hair and moisturize the skin. What happens when you start growing a beard (and it’s a big trend right now if you haven’t noticed) is that your skin might get very dry, you might even get dandruff (beardruff?) and your skin might get very irritated and itchy.You need something to moisturize the skin and relieve the itchiness and the beard oil is the product that helps you do just that.
It all began when I started growing a bigger beard and I had these exact issues. My skin would get very dry and irritated so I started looking for solutions. This is when I discovered beard oils. My main issue with this product was that a small 1oz (30ml) bottle of oil would cost up to $30.
I got a first bottle as a gift. Than I tried a few different oils at barbershops and although the product worked great, I didn’t like the scent of it. That’s when my girlfriend proposed making our own beard oil and make it smell the way I wanted it to smell. How complicated can it be, right?
We started looking online for ingredients and recipes. There are basically a few main carrier oils that don’t really have any smell and there are scented oils that actually give it a nice scent. We went to a local organic shop that has all of these ingredients and purchased a few oils along with a few small bottles for the final product. The total cost for the first batch was about $50 Canadian. Remember I wanted beard oil for my own beard, there was no question of turning it into a business.
With the supplies we got for $50 we ended up making 10 bottles, that was the smallest batch of oils we could buy. So I have these 10 bottles and as I started using the first one I realized that one single bottle would last me at least a month, probably several months.
I loved the smell of it and quite a few people complimented that scent as well so we decided to try selling it to others (simply because I didn’t need the 10 bottles). Building a website was not our goal so we went for the easiest way: Etsy.com
Etsy is a marketplace where most of the products sold are unique, artisan and handmade. We listed our oils there and if I remember correctly it didn’t cost anything to create a listing and start selling. You do however pay a small commission per each item sold.
To our surprise the oils started selling. People were placing orders, adding the product to their favorites. Shipping was a big issue since it cost from 8$ to 15$ per order (welcome to Canada) so we ended up charging more for the oil and charging “less” for shipping however that’s a totally different story.
The Business Picks Up
We ended up going to the post office almost every single day to ship out those orders.
Eventually we thought we should try selling on Amazon as well. This was a long process because we had to prove to Amazon that the beard oil is not controlled by the FDA (Food and Drug Administration) and hence does not fall into a hazmat category. Even though we did complete this process, Amazon ended up not working for us. We sold a few bottles but decided to abandon this idea as there was too much competition on Amazon. Another reason for abandoning amazon was that our beard oil was still just a small side project and we didn’t want to invest any of our time in it.
After playing with Amazon and not seeing great results we switched our focus back to Etsy. Etsy has an internal PPC (paid per click) platform where your product ad is featured on the site. You only pay when someone clicks on the ad. Unfortunately their PPC campaigns limit you to a rather small budget ($8/day). It is helpful but hard (impossible) to scale.
We thought of marketing it other ways but it was extremely difficult. As you might already know, I’ve spent the past 8-9 years concentrating on affiliate marketing. Creating and selling my own physical product was a completely new territory to me.
As the time went by we got contacted by Urban Outfitters (UO) through Etsy’s messaging system. The person told us that UO might be interested in retailing our beard oil. Urban Outfitters runs over 200 stores all across USA, Canada and Europe so when we received the message we were (naturally) very skeptical about it. Sometimes we’d get messages from “popular vloggers” who asked for a free product so they could review it and feature it on their Youtube channel, blog, etc.
A little bit of research would usually show that this “popular blogger/vlogger” has 7 followers which means that they can’t really promote you in any way, they just want a free product. This is why the message from UO raised a red flag. However, we still did our research and it turned out that the person reaching out to us was in fact working for Urban Outfitters product research department (or whatever it’s called).
At that point we figured we had nothing to loose and we shipped out a free sample across the border to UO’s office in USA. This is where the story gets a little more complicated.
We sent the sample in December and did not get a reply for a few weeks, maybe even a month. We thought they didn’t like our beard oil and that was that. However, before giving up we sent an email to ask if they had a chance to look at our product and what they thought of it.
Guess what? We got a reply! They liked it and they wanted to sell it in their stores! We got really excited and told them: “Sure! Let’s do this!” … and then silence again.
This is just a speculation but I think that UO was simply testing how serious of a company we were. This is why they wouldn’t get back to us. I am sure they have contacted a lot of people with the same request and simply didn’t have enough time to get back to all of us. I am also sure that some other sellers from Etsy took this silence as a sign of “we don’t like your product”.
However, we didn’t like the silence. We contacted them again. This time they replied and actually gave us the green light. There was a long process involved where we had to create different merchant accounts and label accounts and a lot of other stuff that I can’t even remember anymore. Once again it was new to us but everything is “figure-outable” is you try hard enough.
We Got Into Urban Outfitters
Finally the very first order was placed with us about 3 months after we sent our free sample back in December.
Getting the order felt incredible however there was a little issue. When UO finally placed the order, we were not in Montreal. Or North America for that matter. We were on a 4 months trip around South East Asia and there was no way we could fulfill the order.
It’s in times like these your family and friends could save your life! I asked my sister and her boyfriend to make the beard oil for us. Package it, label it and send it to UO. I seriously have no idea what we would have done without them because leaving Asia was something we really did not want to do. We also didn’t want to skip on a chance of working with Urban Outfitters.
Two months later UO places a second order, twice as big as the first however we are still traveling somewhere in Asia. Once again my sister came to the rescue. We ordered all of the supplies and labels online but she had to make the actual oil and ship it out.
The second order didn’t go as smoothly as the first one. Out shipment got stuck at the US customs simply because DHL did not declare the goods properly. I wouldn’t wish this kind of issues on my worst enemies. The process of dealing with customs is very complicated mostly because you can’t deal with them directly. You give the info to your shipping company, they transmit that information to the customs, they get a reply and send it back to you 24 hours later and it goes back and forth.
When it was 2pm in USA it was 2am in Asia so we spent quite a few sleepless nights dealing with this.
After all, we got our shipment through. We didn’t have any experience with this, we didn’t even understand half of the lingo while trying to deal with customs and DHL but we were determined to make this work and we did.
The main point here is that we did not have the experience, we did not have the knowledge, and we were in a completely wrong time zone which made things extremely difficult. However, we managed to pull through because we wanted to make it work. Experience is acquired through doing, so start doing.
If you look at our very first batch, it cost us $50. This was the investment that started the whole business. It was so negligible, you might as well say NO investment at all.
Although our product is still available in UO physical stores and online stores we aren’t pursuing this venture. Beards are trendy but trends tend to die. We’re still making a little bit of money from it and we made close to $10,000 from this little project but we’re moving in a different direction right now. I have several online projects. Elizabeth has her own projects online and offline, including her vlog that you must definitely check out here. In short, we’re lacking time and interest to keep this business growing.
Let’s recap. We made about $10k. Started with $50. We had no experience and we barely invested any time into it. I think we put in 30-40 hours for the whole YEAR, maybe a little more but really not that much.
The Final Thoughts
The profit is great however the most valuable thing here is the experience. We now have an idea of how the big retailers work. We understand how to create a product, how to label it properly (and why labeling is crucial). We know how to ship products across the border, how to deal with customs, FDA and other agencies. And much much much more…
This learning experience opened our eyes to the whole new world of possibilities out there.
Here is what you should take away from this:
You shouldn’t be looking for perfection. You shouldn’t be looking for a way to create a perfect business or a perfect system because you will waste your whole life planning for perfection and not actually achieving anything. Start today. Perfect it later.
What matters is action. Start today. Take as much action as possible. You can fix things up later on but you need to start first.
You don’t have the experience? Start a business and you will earn that experience.
I hope you enjoyed reading this post and please do leave a comment below to let me know what you think of this case study. Questions? Comments? All welcome 😉