Am I wasting my time?

Hi all

I am 44 years old and financially secure for the rest of my life. I have several property investments, debt free and earn a nice little income that allows me to save over $100,000 per year after allowing for all of my living expenses.

A couple of months ago I got the urge to find a small business to get involved in and one thing has led to another and a manufacturer located in the US has agreed to appoint me as one of their distributors for their product line, the other Australian distributor is actually located in Canada! It is a product that I would enjoy to import and in an industry I have no doubt I would like.

One good thing about these products is it requires no capital outlay for me whatsoever as each product is custom ordered where the customer has to choose from over 70 different potential colors and then supply their height and weight and the product is made specifically to suit their requirements only after they have made payment in full to me for the item.

For these reasons having stock in Australia ready to go is not required because the chances of having a configuration to suit a particular enquiry is extremely low as everyone is a different height and weight and then you have to have the right color that they want.

The profit level is ok per product but as the product is of the highest quality as prices are very expensive the turnover really isn't going to be that great. Should I bother with this small business that may only have a profit return of say $10,000 in the first year gearing up to profit levels of $20,000 to $30,000 in the next 3 or 4 years? Am I wasting my time on this one?

 

How much effort will you need to put in for marketing, management, landed costs, distribution etc? Will that increase with the greater turnover?

Is the profit based on the fulfilment of 1 unit or 1000's of individual orders?

 

The marketing of the product/brand itself has already been done, in other words people are already purchasing these items as it is regarded as the best in the industry and the buyers are currently either buying direct from the manufacturer right now or from other distributors located in other countries and the manufacturer has confirmed they are excited to have a presence in Australia through me. I will be able to supply the same products at the same price as the manufacturer but with a minimum of 40% and up to a 50% margin.

I would need to develop a website though, facebook business page, business cards, customer order form and also just get my name out in the Australian market that I am able to supply the product line. I could do this by joining a few online forums and becoming a registered vendor with a small fee to pay per forum, for example one forum wants approximately $250 for me to be able to promote these products per year.

My details have already been put onto the manufacturers website as an Australian distributor. Cash flow wise this business is a no brainer as the customer must pay me before the product goes into manufacturing.

I expect to get approximately 20 orders for the first 12 months with this to increase each year moving forward. The industry is the motorcycle industry and I hear that the sale of new motorcycles in Australia has been dropping each year for the last 3 years.

Time spent on managing the business would all depend on the amount of sales/turnover but I wasn't envisaging any gold mine from this business and it would only be a venture that requires attention as a sales enquiry comes through email or phone call. I also wouldn't have to pay any rent anywhere as I have access to commercial space in a suitable location in Moorabbin, Victoria.

 

If you're financially secure for the rest of your life it might be worth asking bigger questions.

What do you really want to do with your limited remaining time on the planet?

If its running this business, then go for it! If not....

 

+1

 

This...
What’s the goal? You say your saving 100k per year but how are you achieving that? Is it from passive income that this will not effect?
Or will you have to reduce time in that to put more into this? If so then how will that effect your income?

Also the business model doesn’t make much sense if I’m being honest. Your not going to do any of the manufacturing, storage, delivery...so what are you actually doing? Why doesn’t this provider just sell direct from their website to the AU market??

 

There's value in doing more of what works well.

It sounds obvious but it's easy to get distracted by the shiny new idea and neglect the older and proven method, sounds like you have done some things very well in the past to be in your situation.

One metric to measure could be your hourly rate, how much effort will it take to make the profit? Big difference between having to work a few hours a month and hundreds if the profit is not flexible.

 

What have you got to lose???

it may not be great from a ROI perspective ,but if its your hobby/passion, then why not,

not many people are retired, and have a hobby/passion that earns them some money

 

Hi albanga, I am already achieving my high savings from passive income from property investments. I will have to be more efficient with my time to make sure my new business venture doesn't affect my passive income.

My business model is taking orders from customers in my area which is Australia and yes you are right I am not doing any manufacturing or storage but I am involved in the delivery side of things. This manufacturer wants local distributors in each region of the world and is how this opportunity came about and they aren't interested in selling to the AU market from their website, in fact you can't even choose Australia as a shipping address as the choices are confined to USA & Canada.

Very true Andrew Allen, yes I need to watch the hourly rate as I have already noticed in setting up a pty ltd, dedciated bank account, getting public & product liability insurance, building the website, developing order forms, starting a facebook page and dealing with the US manufacturer between 1am & 9.30am (but preferably before 7am!) slowly taking its toll on me. Bit late for me to complain now as I am full steam ahead and have already made 4 purchases! I will run it for 12 months and then re-assess the business but so far I am really enjoying it.

Spot on TMNT, I am only investing my time which is going to be more productive investing it into a small business than drinking at a pub. Yes the passion stems as it is a product in the motorcycle industry and I like everything with wheels and an engine!

i will remember to return to this thread in 12 months time and update where I am at in regards to passion for the business and whether I am still doing it.

As "hammer" stated above, if it is something I really want to do, then go for it.

Regards,

alicudi

 

Hi all

Bit of an update since my last post in this thread a whole month ago. One thing has led to another and I have had 12 sales since the business started, considering I was hoping to achieve 20 sales for the first 12 months I am very happy with this result.

From what started as the Australian based distributor for a single brand has now grown to include me been an Australian distributor for a 2nd brand and I have just included a 3rd brand as a local re-seller which I am ok with.

My website needs a lot of work as it is very basic and amateurish and needs a lot more time spent improving it. The only negative I can find from starting this very small business is I wish I had started 25 years ago!

For those of you considering whether to take the plunge, determine the risk/reward and whether you have the time and skills and if your stars all line up go for it.

Regards,

alicudi

 

In your position I would say it's more about liking and knowing the product.
Then promoting the benefits.

It's fun when there's no wolf at the door

 

Just out of interest, why won't the manufacturer post directly to the customers? What benefit do they get from an Aus distributor? What value do you ad to the process?

 

Hi danvestor, thanks for your message. The manufacturer prefers to have a local presence on the ground in regions around the world that support their product line, in my case I have Australia/New Zealand and it seems to be working well after what is approximately 6 months of me dealing with them.

The benefit the manufacturer gets from having me located in Australia is that I can communicate with customers directly in the same times that they are awake and want to speak to a supplier ie: 9am to 6pm via a phone call, when you take into consideration the time difference from USA to Australia this is a huge benefit I am offering local Australian customers.

Have my instagram page, facebook page, website all up and running and my little showroom now due to open in the next 2 weeks in Moorabbin, Victoria. I will have a very small range on display for local customers to come and see, plus have the full range of colour samples in stock that potential customers can touch and feel the quality.

Also been dealing with a number of motorcycle showrooms around the country and they are telling me how much easier it is to deal with me versus dealing with the manufacturer in the USA. The manufacturer also finds it more efficient to deal with 20 to 30 dealers around the globe versus dealing with thousands of individual new customers each month.

 

Fair enough. Just from the outside with the manufacturer custom producing all items after being paid in full I'm surprised there is much profit in it after you pay GST and import taxes etc, normally the benefit of a local distributor is to hold stock, save shipping costs by shipping a bulk parcel into the country and having a single point to go back to if there are issues.