Business Lifestyle Design

In January I was a little hard on myself when evaluating my ’08 progress and my ’09 goals. I try to somewhat separate myself from the business because they’re not necessarily correlated, and because I’m evaluating more than just the company. It’s easy to get caught up in always trying to do whatever it takes to make more money, but I want to make sure that I’m not doing that at the expense of things that are more important to me. Finding time for my friends and family, making sure I get to the gym, making sure I get enough sleep, making sure I have some time to relax each day, finding time to get involved in some new things. Those things matter to me as much or more than my company.

Yet those things are easily lost when all you can think about is next months sales or that new feature. After a not so good January, I really needed to trim my life back a bit and focus on getting our new e-commerce platform done. I did, we got it up on 5/1, and it’s since paid off more than we imagined it would. We’ve had a few huge months where we’re hitting revenue and profitability numbers that I could only dream of in January. Remember that huge Black Friday we had? That’s now a normal weekend. It’s nuts. We’ve turned a corner in the sense that we’ve become very self-sustainable. If things keep up like this we shouldn’t have any troubles meeting our financial goals for the rest of the year: have a profitable year, pay ourselves a bit more, expand to a few new product lines, and hire a few part-time warehouse workers (we have our first starting on Monday).

For the Biz

So what’s next? For every person and every company, the answer would be different. For us it starts with our personal goals, which pretty much all align, and then trickles down to the business. We don’t want to have 100 employees. We don’t want outside investors. We don’t want a 500,000 sq-ft warehouse, nor do we want to run fifty e-commerce sites. Other people would probably take our company in that direction. I think it could be done. But it isn’t the type of company we want.

We like not having set hours. We like emphasizing productivity over hours put in. We like going to the warehouse 2-3 days/week from 9 -3. We like working from home on the other days. We like having the flexibility to work more or less if we want to or need to. We like being able to do whatever we think is “right” for our customers. We like not having to deal with the HR issues that inevitably come along with having a lot of employees. Basically, we like owning all of our company so that we can make all of the decisions. To me, that’s what makes running a business fun. We can do whatever WE want. If we had a bunch of investors to answer to, it would be like a job to me.

We’ve decided that for the time being our main focus needs to stay with Detailed Image…probably through 2010. We went through our list of planned projects the other day. There is easily 1 year+ worth of work there, but each task is easily identifiable as something that will make us more money, save us more time, or eliminate common problems/mistakes.  In addition, with a few part time employees, we should be able to knock each of us down to 2 warehouse days/week and get rid of most of the grunt work that is tiring and eats up time. We’re able to make those improvement claims with relative certainty because we’ve been in business for a few years now.  We have data, we know our customers, and we (think) we know the direction that the web is going.  DI is becoming a much more mature business.  I’d imagine that by the end of 2011 we’ll be close to being the largest US based site in our niche, which in and of itself is a nice business, but not something that we’ll be satisfied with.

The other limiting factors are cash flow and warehouse space – we can’t just grow in e-commerce with reckless abandon because we don’t have the credit available or space available to risk stocking $30k worth or products that don’t move.  Not to mention the other time and work involved in another e-commerce venture.  At this point, I’d imagine that non-DI e-commerce expansion isn’t going to happen anytime soon (unless it’s done with a dropshipping model, which we *may* do on Tastefully Driven because of how much organic search traffic it pulls in).

Then the next logical question is:  is Pure Adapt just Detailed Image?  And if so, what happens when you do hit that wall in 2010 or 2011 or 2012?  On the e-commerce side, we’ll have to start up again on the fitness and poker sites that we had planned, both of which have had success on TD and Amazon for us.  But as I mentioned above, e-commerce expansion is tough and it might still be in a year or two.

To me, the key is SportsLizard.  Not SportsLizard per se, but the SportsLizard model. I spend about 1 hour per month answering emails and maintaining the site.  We spend $0 marketing it.  We make money from eBay ads and Price Guide subscriptions (a web app I developed).  It’s not enough to live off of, but it would be if you had a few SportsLizard’s.  That’s exactly what I want to do – between Mike and I, develop a few more SportsLizard’s in the next year.  Z.ips.ME doesn’t really count, but it might surprise me and make us a few dollars here and there.  First things first, we want to expand Hotteeez, which despite not being updated in a year makes us pretty decent money.  With a few new well-planned shirts each month, it could easily become a SportsLizard by the end of the year.  Beyond that, we have two other planned projects that I think could do the same.  Maybe they will, maybe they won’t, but over time some of them will hit.  And hopefully one or two is even bigger than SL. If not, there’s really no loss for us and we can just try some more until something works. How fun is that?

For Myself

On a more personal level, I couldn’t be happier with the first half of ’09.  However, since I spent every waking hour through May working on getting the site up, I lost a little of the work/life “balance” that I had achieved prior.  I followed the site up by moving, so I’m only just now getting the opportunity to get back to a spot like I outlined in my productive output post.  I’m only checking email twice per day on weekdays, at 7 AM and 5 PM, and then once per day on the weekends.  Since I’ve got everything filtered pretty well, my inbox is usually near empty when I open it.

I’m not really setting a time constraint on my working “hours”, but I just want to make sure that I spend a little more time with my friends, family, and girlfriend.  In particular, there are a handful of people that I just haven’t had time for the past six months that I want to make sure I get back in touch with.  An hour phone call or a night of drinks needs to be OK now, whereas in March it wasn’t unfortunately. It sucks, but there’s always a trade off. If you want to go balls out on a project something is going to suffer.

I LOVE the fact that with a few part-time workers I can get my warehouse days down to 2/week and eliminate things like stocking shelves and breaking down boxes. At this point, all of our time is much more valuable than that. The more freedom I have, the more driven I am, the more productive I am, and the happier I am. I feel like we’re really really close to hitting that point where my job is almost “perfect”, which is exciting. Instead of focusing on getting to that point, I can focus on achieving some higher level business and personal goals.

Hobbies are a different story.  I realized something these past few months – my favorite hobbies are running my blog (and all of the emails and meetups that result from it) and working on web-apps. Which is great, because both are beneficial to our business.  I just don’t really have the desire right now to watch movies or play video games or read fiction books or make a custom.  I see so much opportunity out there and I want to “throw some shit against the wall and see what sticks”.  Having the steadiness of DI allows me to just do whatever I want when it comes to the side projects without much financial risk.  The only real non work related hobby (if you call it that) I still have is working out.  I still am on my regular gym schedule and I enjoy going for regular hikes with my girlfriend.  That won’t change.  I’m constantly challenging myself to be in better shape and to eat better.  But the other stuff really does nothing for me anymore.

For Everyone

I realize that for a lot of people the lifestyle that I’m creating for myself and that we’re creating for our business would not be desired. Or maybe more appropriately, not ideal. That’s OK, as long as you recognize what is important to you. I value time and freedom over money. I didn’t leave my job to make more money. I was making more than enough at age 23. I could have made that salary with a 3% bonus each year and been monetarily satisfied. It was everything else that I wasn’t happy with – the purpose behind the work I was doing, the lack of freedom at a traditional 9 -5, and the bureaucracy of a system that prevented people from doing their best. For you, the goals might be different. If you want to solve the energy crisis or buy the New York Yankees, you probably won’t be satisfied with a business as small as ours.

21 comments on Business Lifestyle Design

  1. Dale says:

    Adam congrats on all your successes! I’m like you, I’ve got all kinds of pipeline of stuff that I want to do. Unlike you, I haven’t gotten to the point of being able to quit my job yet (only take 3 months off!). But I’m definitely sure that being entrepreneurial you’ll have plenty of new and exciting projects to succeed and fail at once you finish with the current stuff (and unload it for piles of cash :)).

    • Adam McFarland says:

      Thanks Dale. That 3 months off is a HUGE deal. Not many people get that opportunity. I’m excited to see how it goes. One way or another that’s going to pay off big time. Besides, nothing wrong with being a corporatepreneur if it doesn’t work out right away 🙂

  2. nethy says:

    Hi Adam,

    First, congratulations on your success. I assume that bringing in staff will be a great learning experience an will teach you a lot about how to grow in the future. Come to think of it, having 4 partners makes this business slightly unusual. It will take a lot of employees before their presence is diluted at all.

    I’m slightly surprised to hear you mention web apps as the way to go. They can just as easily suck all your time (ans several other programmers’) and return nothing. In fact, that’s the model followed by most of the world’s big web apps. I know you are well aware of all this since you have written about it yourself.

    On the other hand…

    I guess it’s a tricky question.

    • Adam McFarland says:

      Nethy –

      I guess the key is simple web apps that require almost no maintenance, don’t spend any marketing dollars, and have legit potential revenue models…in the SportsLizard mold. I’ve probably got 100 solid ideas, but only a few that I think can actually make a little money. Not easy to do, but not impossible.

      If it works, we make some extra cash and hopefully can use it to further fund our DI growth or pay ourselves some more. If it doesn’t, I have some fun and learn some new programming tricks.

      I did briefly mention dropshipping, which could be big for us, assuming we get the programming down correctly (how to charge shipping for items from multiple vendors, how to actually place an order without doing it one by one manually, etc). I’m going to build a dropshipping system on DI in the coming months. If that works, we’ll definitely expand it to TD and maybe try a dropshipping-only e-commerce site that works on our platform.

      For now though, we don’t have the resources to expand directly in e-commerce the way that I think we’d all like. I’m doing most of the web-app stuff on nights and weekends after completing the core projects I’m working on, so I look at it as a low risk, high reward type of thing.

      Adam

      • nethy says:

        What is the way you would all like? Larger stock/range?

        • Adam McFarland says:

          Good question.

          In detailing, according to George and Greg, there are 10 – 12 brands that we could pick up that would have an impact right away and help us. Those take precedence right now, but because of cash flow might take a few years to get to.

          I think we’d also like to expand the poker and fitness offerings on TD in anticipation of building dedicated sites for those things, but we just can’t take the risk of stocking that inventory that won’t move nearly as fast as the detailing stuff right away. We have relatively well thought out plans for both. If money wasn’t an issue I’d think we’d get to them soon. As it stands now, it may be several years.

          • nethy says:

            Is it a question of risking inventory (you might get stuck with it) or increasing your inventory costs (larger range = larger inventory sitting in the warehouse = more money tied up in inventory)?

            * If any of these are not OK to answer, don’t. You disclose a lot publicly on this blog anyway.

          • Adam McFarland says:

            Nethy, your question says it all. Both of those things are exactly the concern. It’s amazing how much cash flow we need just to pay our bills. Almost all of our large bills are due within a month (net 30 terms or AMEX Plum). Our credit line helps, but that’s relatively small compared to the amount of inventory we have. Basically, if we don’t turn over the majority of our inventory over a 2-3 month period, we’re in trouble. It works for Detailed Image because of how good Greg and George are at picking what will sell based on our data and their “gut”. The only way I see this changing unfortunately is several more years of profitability or a large investment/credit increase.

  3. Josh Turner says:

    Hey Adam. Been reading your blog for a few months now. Question about your dropshipping comment regarding Tastefully Driven. You mentioned that it was appealing for TD “because of how much organic search traffic it pulls in.” What is it about high organic search traffic that makes dropshipping more appealing?

    Is it because you want a site that requires a lower marketing expense to offset lower margins?

    • Adam McFarland says:

      Hi Josh –

      Thanks for reading. I probably should have been more clear with that.

      TD already ranks very well for the products we ship from our warehouse. Almost all of the sales come from some sort of organic search (including Google Product Search). So I think the thought is that we might as well throw some related products up at no cost to us and see if they sell. No cost to us, minimal time involved (again, working under the assumption that we can semi-automate our dropshipping process), and the potential for some easy sales.

      I don’t think organic search should ever be solely relied upon for sales, but it’s your best friend if it’s working for you. Not only is it free, but you don’t have to manage it like you do a PPC campaign or an ad sponsorship.

      We’ve already seen a big jump in organic search traffic on the new DI solely because of the on-site improvements. Better URL structure, better inner linking, and w3c compliant code have helped us a ton. If we end up dropshipping a lot on TD, it would be once we have the same platform ported over there and hopefully would be working with the same potential jump in rankings/traffic.

      • nethy says:

        How do you think drop shipping affects customer-relationships? You don’t have as much control & they may get an order over a few days in multiple packages, your drop shipper could screw up, etc.

        • Adam McFarland says:

          I think it could be a big problem. The successful dropshippers I know are very active with their suppliers. Problem for us would be that we’d have a lot of suppliers. We’re going to do it on a small trial run to work out the kinks on Detailed Image. There are a few products that don’t make sense to stock, but will sell occasionally (like a paint thickness gauge). If we can make it work, we’ll probably try to give it a shot on TD. If we can’t we’ll probably ditch the idea. It definitely presents a new set of problems.

          • nethy says:

            Would you make it obvious these are different (sort of like Amazon do for their 3rd party sellers), or would you just add them to your shop?

          • Adam McFarland says:

            Hmm good question. I don’t know. I think we’d make it semi-obvious. When you’d add 2 items from 2 sellers into the shopping cart I think it would have to say “shipping from 2 different locations” because they’d be getting charged twice for shipping just like on Amazon.

  4. Oke says:

    It was everything else that I wasn’t happy with – the purpose behind the work I was doing…

    I feel that phrase so much. I felt it the first months I was starting out and still to this day feel it. To me, there is no purpose in what I’m doing at work, but I can improve personally through it. I’m glad that your life is in balance and you are realizing that there are still a couple of things in your life that needs to be cut.

    I read this book earlier in the year called, The Power of Less, it helped me to realize that I was doing way too much for myself and at times other people. I made a list of 5 things that were important to me and what situations in my life were in the way. I was honest with myself, but still had a couple of activities that naturally fell off the list.

    Right now I am even more clear on what I want and am taking those steps to get there. I wish I did have a side-business that was generating some kind of money, but with the past experience of failing at a business, I have come to the point of knowing what is right and what is too much work for me.

    Sharing your experience to the world helps us realize that it is okay to listen to that voice in our hearts and to let things happen organically!

  5. Adam McFarland says:

    Appreciate the kind words Oke.

    “To me, there is no purpose in what I’m doing at work, but I can improve personally through it. ”

    This is a great approach. Regardless of how your current situation pertains to your long term goals, you still have to be open minded and learn as much as you can from it.

  6. nethy says:

    Adam,

    This is going pretty tangent but..

    I tried to do a bit of research in to drop shippers a couple of years ago. I wasn’t highly motivated, since it was I was just trying to get a feel for the market. It seemed saturated with scams. Sales letters with stories of guys on beaches if only you’ll subscribe to their exclusive drop shippers report for only $xxx.

    So much of that stuff, that it was impossible (ok, probably possible. Just not a matter of an hour or tow on Google) to get an idea what the actual deal was. I have no problem paying for actual information, e-books or services, but that kind of a scene makes me want to lock my wallet.

    On a more general note, whenever you bring up difficulties, these are almost always on the retailing side, never on the supply, sourcing side. You mention potential difficulties in coding the features into your site, automating & making sure you don’t create any nasty surprises for your customers. But you don’t seem worried about finding a decent drop shipper. Has sourcing always been relatively easy for you?

  7. Adam McFarland says:

    Nethy –

    That’s kind of funny. No, we actually have quite a bit of troubles with our vendors. The reason I don’t bring them up is because I don’t deal with them. Greg does a fantastic job with it. He brings up all of the issues at our meetings, which are twice-weekly. There is always some new issue of how they’re trying to screw us this way or that way. Generally we give Greg our 2 cents and then he makes the call and deals with the issue. George works with him on the finance side of things (making sure we have enough free cash to make large purchases), but again that’s something I’m pretty far removed from. Basically, the things that stress me out and keep me up at night are the things that I know I’m going to be relied upon to come up with a solution for. Not that I don’t care about the other issues, but if I spent too much time thinking about them I would be spending less time on the functions of the business where I can have the most impact for our team. This blog is mostly an extension of what I’m thinking about, so just naturally I’m going to post more about programming and less about supplier relationships.

    As far as good information out there, it’s tough. I tried the exact same thing you did while I was in college and didn’t have much luck either. Nev is the only one I know personally who runs a successful dropshipping company and is willing to share a lot with people for free. In 2007 he did a 6 part series about the ins and outs of his business. Very very interesting read.

    • nethy says:

      Nev recommended going via another retailer. How would you guys feel about drop shipping for another retailer?

      • Adam McFarland says:

        I don’t think it would be all that much different than what we do now. All of the products we sell right now are available from the manufacturers website, some of which are our biggest competition. The other large auto detailing sites all have their own brands in addition to selling other lines of products. We stock those brands when we know they’ll be of value to our customers, even if we’re directly helping our competition.

        Plus, I’d like to think that in most cases we can be better at selling their stuff than they are 🙂 Areas like SEO, PPC, conversion rate optimization, accurate descriptions and videos, related articles, showing relevant upsells, making it easy to find the exact product they’re looking for, etc.

        It’ll be an interesting experiment if and when the time comes.

  8. […] income is a no brainer, I think.  Like Adam said about projects that don’t pan out, ” If not, there’s really no loss for us and we can just try some more until something works. How fu…“  That’s the truth, these are not high risk projects that we’re taking on and […]

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