Sunday 15 March 2020

Business Plan and First Steps

My wife and I are setting up an Amazon FBA (Fulfilled by Amazon) business. The products we plan to sell are:
  • Miscellaneous flavors of beeswax skin cream, the first of which is antiviral
  • One or more T-shirts
  • One or more polo shirts
  • Anything else we can think of that looks profitable
I came across this idea originally through a Youtuber named Shelby Church:

The person she interviews, Kevin David, is supposedly buying stuff from China and marking it up seriously; for example, buy a ceramic cup for $1 and sell for $20. (He also has some detractors on YouTube, but I wouldn't necessarily discount the idea just from that.)

In our case we have products that the market clearly demands; my Lovely Wife has been making this stuff in our kitchen for years and it sells quickly. One product, Thieve's Oil Cream, is specifically antiviral and should sell almost instantly in our current coronavirus-obsessed culture ...

(The New York Times just published an article on some "retail arbitrageurs" marking up masks and hand sanitizer hugely ... )

We have three possible ways of funding this business:

  • Bootstrapping: make enough cream in the kitchen, saving profits from that until we have enough to buy an industrially-made batch
  • Debt: borrowing the money we need to get a third party to make the products
  • Equity: giving a stake in the business in exchange for working capital for the first batch or two
The problem with the bootstrap approach is that it's probably too hard on my wife. It's completely on her with just a little tech support doing labeling and accounting and so forth.

Debt would be OK with us, but my credit score recently has been around 640, which is too low for some funding agents.

Equity: seems feasible if I can get someone to take a deal that seems reasonable to us.

An Example Equity Deal

We currently have a sole proprietorship called Healing Bees Company. For this new business, we would change it to "Healing Bees LLC" with some structure like:

  • Mark McWiggins 40%   managing member, CTO
  • Kate McWiggins 40%    chief scientist
  • Intrepid Investor  20%    Your Name here ... working capital

Our Next Steps

We have just started to look for a manufacturer to make Thieve's Oil Cream and probably ruled one out (too expensive) and waiting to hear back from another one. We can probably sell a 150ml jar of this cream for $30, so we probably need a manufacturer to be able to produce them for $10 or less apiece.

A Sketch of Our Business Plan and Exit Strategy

When we get the two items mentioned above (manufacturing and funding) handled, we should be able to sell 1000 units per month pretty quickly and ramp up from there. With Amazon FBA, it's a "passive" investment that as long as we have a manufacturing contract and shipping set up to Amazon ... then we should be able to scale it to any level.

I've seen a couple of mentions of this company Viral Launch and as their beginners pricing seems doable we'll probably try that ...

The exit strategy: sell for $5 million or more within 5-7 years. (Intrepid investor: your $100,000 or less investment becomes $1 million, on top of the 20% profit you've been getting all along.)

Interested? Contact me at mark <at> ... Thanks!

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