This article was written of February 2nd, 2016.
This story of how I took my side business from $0 to over $600,000 in 365 days, while working 60 hours a week in my day job.
And it all started with $2200 in rice cakes…
Who Am I?
My name is Ben. My Startup Bros friends call me ‘Dr. Ben’, because I'm a practicing resident physician. I never know how many people understand what that means. I always describe it as “a lot like the TV show Grey's Anatomy, but with less sex.” We work too much, get paid too little, and are trapped by student debt. Sound familiar?
My $1,000,000 Business.
One year ago today, on February 2, 2015, I started a side business with $360 of spare cash. Since then we've grossed over $600,000. If you extrapolate our current monthly sales volume of $90k (without factoring in growth), that puts us just over the $1 Million mark for the next 12 months.
Is that cheating? I don’t think so…
We’re going to destroy that projection.
Watch this video to learn how I launched my $1 Million business with $360.
Here's How It Happened.
Rewind to nearly two years ago, in March 2014. I was driving home from a night shift in the hospital with a zombie stare on my face that would probably get me a guest spot on The Walking Dead. There's something satisfying about being a doctor, about “saving lives”, if that's what I did that night. But the drudgery wears you down.
To keep from falling asleep on my drive home, I was listening to one of my favorite podcasts of all time, The Smart Passive Income Podcast with Patt Flynn. Heard of it? I thought so…
In particular I was listening to Episode 99 with Jessica & Cliff Larrew that detailed how she and her family were making hundreds of thousands of dollars by buying things from big box stores like Walmart or Target and reselling them on Amazon. A process that's known as Retail Arbitrage.
By the time I finished the podcast, I was hooked on the idea of giving Retail Arbitrage a try. And because I'm addicted to taking action, I did it.
The Results of Taking Action.
By the next day I had hit all three Walmarts, the Target, the Lowes, the Home Depot, the Big Lots, and the Sam's Club. By the end of the week, I'd bought $389 worth of retail goods to send into Amazon.
That’s when I found the backbone of my retail arbitrage products. Quaker Popped Variety Packs. These sucker’s cost me $3.50 a bag at my local Walmart and sold for $15 on Amazon. That’s $7 profit.
There’s nobody even selling these things right now. If you see them on the shelf in your local Walmart, it’s like picking up $7 off the shelf every single time.
In 90 days I'd sold over $4500 on Amazon, which included $2200 of rice cakes. That's over $1000 in PROFIT on rice cakes!
The whole reason I started doing retail arbitrage wasn’t to make a big business out of it. I just don’t think it’s easy to scale an RA business. No, the reason was simply because I wanted to learn the process so if I happened to see an opportunity in the future, I’d be able to take quick action on it.
Learning skills just for the sake of learning them has been a recurrent theme in my life. This last year, those skills I’d amassed helped me achieve such rapid success.
Eventually, I got bored with the whole RA process and I began to go back to my normal routine. Cash continually trickled in for the next 4-6 months as the inventory I’d accumulated slowly sold out.
Amazon had become an afterthought.
The Return to Amazon
Several months later in November 2014 I was listening to yet another podcast discussing the merits of making money on Amazon. Niche Pursuits Podcast 53: How to Earn Over $12,000 Per Month Selling Physical Products on Amazon with Chris Guthrie. In this episode they discuss the idea of importing and private labeling on Amazon.
There was a little pitch for an Amazon selling course at the end of the episode, but after Googling it a little bit, the course seemed a little to “Internet Markety” for me.
Nevertheless, I was SOLD on the idea of importing from China and selling on Amazon, so I went searching for more information and came across Will Mitchell’s post on Startupbros.com, How You Can Make Big Money Importing From China – The Rise and Fall of My Empire…
We’ll take a brief intermission while you go read that….
Done? Ok good.
I ended up joining the Startup Bros Import Empire January Jumpstart Group, now called the Ecommerce Empire Program. I was a little apprehensive to spend big bucks on a course, because after all a resident’s salary isn’t exactly a King’s Ransom. But it’s a good thing I did, because my investment was returned hundreds–and I do mean HUNDREDS–of times over the next 365 days.
But this isn’t a pitch for Ecommerce Empire Elite. If you want to hear more about EE and get some exclusive bonuses to launch your own Ecommerce Empire, sign up for my 3 part video series “How I Launched My $1 Million Business with $360.”
The First Sale
WIthin 30 days of joining EEE I had sourced my first product, ordered 40 units, and sent them into Amazon FBA.
Did I mention I’m addicted to taking action?
While my inventory was in transit to the FBA warehouses, my buddies and I left Missouri and headed up to Crested Butte for a much needed ski vacation. I was driving through the mountains just outside of Denver listening to a live EEE webinar when I get an email alerting me that my inventory had been checked into Amazon and my listing was now live.
An hour later, just before we we lost cell signal I decided to check my Amazon stats one last time. Just for kicks… When I opened my Amazon Seller Central app, I could hardly believe my eyes. I’d made my first sale of my private label product within an hour of hitting the Amazon warehouse.
For the next 5 days, I was getting sale after sale while knee deep in powder on the side of a mountain. I had to order 300 more units on the 2nd day of my vacation!
The Next 365 Days.
The next year was a crazy whirlwind of sales, product launches, travel, team building, speaking, product sourcing, number crunching and growing. It won’t happen the same way for everyone, but here’s how it happened for me.
Month #1: Feb 2 – Mar 2
Gross Revenue: $4,620
In January I spent probably 100 hours researching my first product and setting everything up. That means a thorough listing on Amazon including GREAT pictures. When I finally launched on February 2nd, I spent the next 30 days in a hyper-focused state.
I launched this product on my personal Amazon account. I didn’t have a business setup. I didn’t have an EIN number. I didn’t have a business bank account. THAT CRAP DOESN’T MATTER RIGHT NOW! My single focus was simply reviews. You CANNOT have a good product launch on Amazon without getting hustling for reviews. Period. I got my reviews by giving away product to friends and family.
- Reviews, reviews, reviews. REVIEWS!
Month #2: Mar 2 – Apr 2
Gross Revenue: $12,368
By the second month, I knew that I was going to be able to make this product a success. I was working at a little over a 40% margin, so profit was somewhere around $5000. It was at this point that I partnered up with a friend of mine from med school, Peter. We both saw the potential and decided to each invest $10,000 to stock up on inventory and launch some new products.
We decided to open a new Amazon Seller Central account just for the business, which is why you see the sales at zero at the beginning of the month. We setup an LLC S-crop, setup a bank account, and got our EIN.
At this point we also started researching and ordering test products for a second product line in a new niche.
- Stay in stock.
- Reviews, Reviews, Reviews.
- Feed the beast (reinvest).
- Setup business structure.
- Research new products.
Month #3: Apr 2 – May 2
Gross Revenue: $17,782
By month 3 we had stocked up enough inventory of our first product, which included 2 color variations. We received about 100 units of 3 new products in an entirely different product line. These three products accounted for a $2,500 bump in revenue during this month. Having multiple products within a product line allowed us to start getting some cross-selling between our own products. HOORAY!
- Stay in stock.
- Test multiple new products in a new product line.
- Reviews, Reviews, Reviews.
Month #4: May 2 – June 2
Gross Revenue: $21,704
We continued to expand Product Line #2 as sales of Product Line #1 continued to grow. At this point we placed large orders for all 5 new products in Product Line #2.
- Added 2 more products in Product Line #2 giving us a total of 5 products in the line.
- Reviews, Reviews, Reviews.
Month #5: June 2 – July 2
Gross Revenue: $31,225
Same old story here. We continued to add to our product lines and test new products. As sales continued to grow, it became more and more time consuming to answer customer emails. I started to get stuck working in my business rather than on my business. Age old problem.
That’s when I began the search for our very first employee, a customer service agent. At this point we had more time than money, so I opted for Chris Ducker’s, Virtual Staff Finder service to find myself a Filipino virtual assistant.
- Added a 3rd product to Product Line #1, which we launched as a variation of product #1.
- Tested a 6th product in Product Line #2.
- Reviews, Reviews, Reviews.
- Started interviewing Customer Service Agents.
Month #6: July 2 – Aug 2
Gross Revenue: $53,734
While we were in Alaska fishing, err… I mean discussing business strategy… a couple things happened. First, Amazon had Prime Day. We weren’t a part of Prime Day, but we say a good 50% boost in daily sales. Second, we began doing heavy promos on a few of our products using Viral Launch, which really pushed our sales to the next level. We also saw our organic sales on our two product lines continue to grow.
There’s no feeling quite like being on a river in Alaska and knowing that your business is bringing in cash all by itself. This was the first day off that I had taken since launching in February. The only reason I was able to get away with this was due to our recent hiring of Dyan, our customer service agent.
- Began running aggressive promotions.
- Hired our first employee.
Month #7: Aug 2 – Sep 2
Gross Revenue: $54,164
We hit a bit of a plateau phase when we started to streamline our business processes and develop new products that were taking a little bit longer to get to market. It can be a little discouraging to see your revenue flatline after such tremendous growth, but it was all part of the plan.
- Stay in stock.
- Continue developing new products.
- Streamline business processes during the plateau phase.
Month #8: Sept 2 – Oct 2
Gross Revenue: $70,148
We had another pretty decent jump here as we launched a few new products. Notice the increase in average sales price per order jumped up about 50 cents. As we built out our product lines, we noticed more and more cross selling, which increased our average order size.
- Continue to expand your product lines.
Month #9: Oct 2 – Nov 2
Gross Revenue: $82,450
In October we applied for and were accepted into 4 days of lightning deals that included 5 of our products. The first one that you can see as the giant sales spike, is responsible for the $12,000 revenue increase in October.
- If you get an opportunity for lightning deals, jump on it.
Month #10: Nov 2 – Dec 2
Gross Revenue: $105,532
The lightning deals continued into November and December and we saw BIG spikes in revenue. Early in November we realized that we needed to buy a crapton of inventory, but we didn’t have the money to do it because we put it all into new products in August and September. So we took out two personal loans totaling $30,000. Our company was now in debt $50,000.
- Manage your cashflow while experiencing rapid growth.
- Consider taking on debt to fund key parts of your business.
Month #11: Dec 2 – Jan 2
Gross Revenue: $93,364
Oh no! Our first month of regression! This was to be expected as the lightning deals ended and the Christmas buying season came to a close. Many people see a tripling of sales leading up to Christmas, but our organic sales were relatively flat with a minimal 50% increase.
- Expect a decrease in revenue at the end of December and into January.
Month #12: Jan 2 – Feb 2
Gross Revenue: $96,994
In January sales picked back up for us and we were finally caught up with all the inventory that we needed. We all of a sudden had a lot of cash coming in and not a lot of cash coming out. For the last year we had focused on top line growth by reinvesting all of our profits. Once you decide to stop reinvesting, that’s when things start to get really exciting.
- Reinvest for top line growth to scale fast.