Comments on: Million Dollar Update – 12 Month Update

By: Dave Bryant

Dave Bryant — Mon, 11 Jan 2021 15:59:55 +0000

In reply to Nick. Advertising, overhead, and just overall unexpected expenses which ALWAYS happen (think...freight costs going up 2x in the second half of 2020).

By: Nick

Nick — Mon, 11 Jan 2021 13:48:08 +0000

“You will notice that my gross profit margins are 24% (this takes into account all variable expenses except advertising which is approximately 3-5% of my sales). My goal is to be around 27-30% for a gross margin. I am always very skeptical of anyone who says they have a gross margin above 35%: normally it means they buy a new luxury vehicle every year or they don’t understand their numbers (normally the latter). Keep in mind, that after the smoke clears, my net profit margin before taxes and paying myself will likely be closer to 10-15%.”

What costs make you go from 24 to 10-15%?

By: Dave Bryant

Dave Bryant — Mon, 01 Oct 2018 15:42:21 +0000

In reply to Jamie. Hey Jamie, There is a podcast from a while back on types of financing BUT we did just do a podcast on improving use of your cash which should go live this week or next. Abby, in charge of editing the podcasts, will try to link to the other podcast.

By: Jamie

Jamie — Wed, 26 Sep 2018 00:56:41 +0000

Dave, here’s an idea for a well needed podcast. Handling financials. Specifically, managing cashflow. It seems to me that unless sellers can personally bootstrap their growth, things come to a grinding halt quite quickly. Guess that’s why Amazon loans are offered. But what other options are there etc?

By: Dave Bryant

Dave Bryant — Sat, 14 Jul 2018 00:00:36 +0000

In reply to randy. Hi Randy, I generally bank for about 10% of my annual revenue to be allocated for inventory costs. Yes, this business can be a big money suck. Thankfully I had a cash event with the sale of my last business. I seen a return on my investment almost from day one, although much of that money is being re-invested into the company.

By: randy

randy — Fri, 13 Jul 2018 00:11:55 +0000

what’s the startup capital, and did you have to use outside cash?

I think the biggest bottleneck once you find a product is having the money to purchase inventory. How quickly were you seeing returns on inventory investment on average per sku?

By: Davis

Davis — Thu, 05 Jul 2018 14:25:52 +0000

Thanks Dave – appreciated.

By: Dave Bryant

Dave Bryant — Thu, 21 Jun 2018 21:54:16 +0000

In reply to Davis. Each of those 3-5 SKUs I invested less than $5000 in initial inventory purchases. One-time costs are quite in-expensive, perhaps $500-1000 per SKU. The biggest cost is on logistics for small orders. When I do small orders I know I will make little to no money until I grow the order size because there's such big economies of scale with logistics. Regardless, I think $5000~ is a good estimate for launching a product.

By: Davis

Davis — Tue, 19 Jun 2018 15:44:46 +0000

Hi Dave
This is a great article and the associated podcast episode is also very good. Wanted to ask you, using your methodology if you only isolate the 3-5 SKUs you launched with first what would the investment dollars have looked like to launch and grow – and how do you split between initial one off brand setup costs, inventory, logistics, marketing- any rules of thumb?
Thanks!!

By: Dave Bryant

Dave Bryant — Tue, 05 Jun 2018 16:06:33 +0000

In reply to JZ. Hi JZ, The costs per click on Amazon and Adwords are about the same but the huge difference is the conversion rate on Amazon is about 10% compared to 1% for Adwords and my own website.