In a previous post, I revealed that I started my first company in high school at the urging of a family friend. Today I’ll share what I learned from what became a seven-year experience.
I essentially developed and executed plans to customize customers' vehicles (think Pimp My Ride). I sourced and sold the required parts to my customers and then partnered with local shops to install them. I was pretty busy, so this was a part-time business. (After high school, I became a full-time college student and worked two jobs, one on campus and the other at a lobbying organization as an intern.)
I was a traveling salesman. I met customers in parking lots and other random places. I then brokered deals around town to get the installation work done. Looking back, this was pretty dangerous, considering that most customers paid in cash. It was also crude and unsophisticated—but it provided funds that made high school and college a little easier and it was an eye-opening, transformative learning experience.
Here are my takeaways from that first business:
- Sales Process - I talked with a lot of people, but only a small percentage forked over money. In hindsight, I see that I was learning about the sales funnel, sales cycle, and close rates.
- Reputation - People did business with me because they knew I wouldn’t run off with their money. It takes years to build a good reputation: protect it.
- Relationships - I developed strong relationships with customers, vendors, and installers. When someone needed a favor, I obliged. Healthy relationships are bilateral.
- Scalability - Driving around meeting customers and installers took tons of time and wouldn’t scale.
- Customer Acquisition - I leveraged relationships with friends and paid commissions to people who brought me paying customers. How you acquire customers can make or break your company. Think hard about it.
- Information - The lack of information available to consumers was the main driver of high retail margins.