Why We’ve Decided to Start Sharing How We Make Money Selling Cat Furniture

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Why We’ve Decided to Start Sharing How We Make Money Selling Cat Furniture post image

A few days ago, our business clicked past the $1,000,000 mark in annual revenue. That was a huge mental milestone for us. We’re thrilled.

Despite that, I’m getting more frustrated about presenting the numbers that way. What if I could say: “we grossed 10K from our cat furniture brand last month and here’s how we did it…”

Writing about business without exposing the details of how you make money, or at least the details of your products and brands sucks. And so far we haven’t done it (except in the DC) for one reason.

We are scared.

I admire writers like Patrick McKenzie. He shares his business tactics with clarity and detail. The resulting information is insanely useful to entrepreneurs. Speaking of insanely useful, if you don’t yet know about Joe and Justin, Pat, and Spencer, getting to know them will likely help you grow the internet marketing side of your business. These guys have all inspired me.

We want to show how you can take a product like this to market for $3000 dollars. (Give us a few weeks!)

In part because of the influence of these blogs and inspiration from companies like 37 Signals, starting next week (or whenever Ian finishes his first product case study post with photos!), I’d like to start revealing one of our e-commerce and product businesses in detail. We’ll start with one of our smaller and simple product lines (our cat furniture brand), and work from there.

In some ways, this is a terrifying decision for us to make. It has the potential to create serious change, both good and bad. In our industry (e-commerce, manufacturing) you just don’t do it. Our industry peers, without a doubt, would think we are crazy.

Decision making via worst case scenario analysis.

If taking this risk were to have a catastrophic impact on our exposed business, could we replace the lost revenue with the new opportunities that would come along from making the change?

In the past 4 years, worst case scenario type thinking has lead us to make 4 critical game-changing decisions that turned out to be more difficult emotionally than financially:

  1. Deciding to start the business and take on an investment partner. (Emotional challenge: giving ourselves permission to be entrepreneurs, marching into the office of an investor and asking for big money).
  2. Hiring our first full-time employee very early. (Emotional challenge : parting with a huge percentage of our personal income to build something bigger than income for ourselves).
  3. Starting to share our business via blogs and podcasts. (Emotional challenge: exposing ourselves to judgment by others, and making ourselves available to the broader community of entrepreneurs).
  4. Buying out our 3rd partner and merging the blogs with the manufacturing business officially. (Emotional challenge: reconsidering the fundamental relationships in our lives and re-setting the concerete on which our business rested).
  5. (Pending) Share our business online with others. (Emotional challenge: re-considering the traditional manufacturing / e-commerce wisdom that secrecy is an advantage to businesses).

*  *  *

My hope is that by making this decision, we’ll be exposed to some of the following opportunities:

It will force us to be better.

Operating in public has the potential to be a huge kick in the ass.

Our first reaction when discussing this with our team was “maybe we should wait until we get this business a little ‘tighter’.”

We don’t consider getting this business tight until I mention sharing it with the world?!?! 

We don’t have enough eyes in our own organization to effectively monitor everything we are doing. Sure, we are opening ourselves up to competition, but we’ll also open ourselves up to a lot of people who can help us. I get 2-3 emails a week from talented people asking to help us for free. “What can I do?” they say. I’d prefer them to come to me and say “I want to do x for you.”

Of course they can’t do that now, because they don’t know what we do.

The chances that we could sell portions of our business for great multiples and on positive terms could shoot through the roof.

Oddly enough, the single best thing we could do to sell one of our businesses would be reveal them on our blogs. Instantly, 100’s of people would be discussing our business around the world.

Anytime you reveal the inner workings of your business to a potential buyer, NDA or not, you run the risk of them copying what you’ve built. In the case of more traditional business brokers, you are sharing your information with targeted business buyers, probably with similar business operations looking to take on complimentary operations. It’s reasonable to assume that a person who requests information from a business broker is more likely to copy us than a randomly selected blog reader.

Who would be more willing to make us an offer on the site? Both audiences have stated and acted on their interest in buying and building businesses. The blog audience has an immediate affinity with the business in ways that would take weeks to engender from business broker leads. They’ve seen it working, they know how it was built, and they know it gets them the lifestyle and profits they want.

The chances that people both try to copy and buy our business is inevitable. If we continue to our current course, my assumption is that we’ll receive a copy attempt before an offer.

Revealing our businesses could be the fastest way to accelerate both eventual outcomes and to flip this likely outcome in our favor. Imagine receiving offers on our business with no resources spent marketing it (businesses like ours aren’t super easy to sell), while simultaneously creating assets by documenting sales processes for our audience of entrepreneurs. Balla!

We’ll get world-class advice from experts and vendors.

I’m sure about this one. We’ve said on our podcast that the advice we receive from our listeners alone would make doing the show a good investment. If that is the case, this is the chance to double down on that suggestion. We are hampering our ability to get quality feedback from service providers, software vendors, and expert entrepreneurs because they don’t know exactly what we do.

Our ability to recruit world class talent could skyrocket.

The next level of our recruiting efforts is to get star performers who fit very well with our company. A move like this is the way to attract them. it’s no wonder that 90% of TMBA applicants are primarily applying for the travel and the lifestyle– that’s all we really talk about. I’d prefer candidates to apply in the future with messages like this: I’ve seen what you are doing on x and y domain and I can create 200% growth there in the next year by doing z. I’d like the opportunity to work with you on it.

In addition to the lifestyle perks, the fun, and the network opportunities, first rate talent would receive a kind of exposure and recognition for their work that few companies could (or would be willing) to provide. This is firmly in line with our core mission of offering our employees opportunities to achieve their personal goals via our business.

Sharing our income reports with the world could be the single biggest way to increase the reach of our blogs.

Everyone I’ve spoken to who has published their income reports on their blogs has said the same thing: “Income reports are our most popular posts.”

Trying to inspire entrepreneurs and other business owners without being able to reveal your brands (at minimum) is operating with your hands tied behind your back.

Our mission is to help other entrepreneurs grow great businesses. I hope this will help others…

I don’t think we can have it both ways, if part of our mission is to help other entrepreneurs start, grow, and improve their businesses, we need to take a little risk and share more useful information.

What do you think. Are we nuts?

Cheers,

Dan

PS, if you’d like to hear 50 podcast episodes that outline our journey build a million dollar business, just put your email in the form below.

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Published on 12.09.11
  • Tom

    Just following your thought process behind your decision to share is enlightening Dan:  “We don’t consider getting this domain tight until I mention sharing it with the world?!?! ”

    Really looking forward to learning about this, but really inspired that you’re steamrolling right over conventional wisdom as you do.

  • http://www.facebook.com/kmander Keith Mander

    Good stuff. If you’re going to be transparent, you’ve gotta talk a bunch about the costs. $1m/yr or $10k/mo revenue is impressive, sure, but it doesn’t mean very much at all. It could actually be generating a measly net income or even nothing at all. A large number of blogs talk only about revenue and I personally find it to be a big turnoff.

  • Peter langevin

    Maxed out contrarian thinking my friends!
    Your almost forced to do the opposite of everyone else to create a buzz these days. You’ll definetly get the eyeballs looking at you.
    So pump yourselves up and remember that running into a burning building while other are fleeing, sometime makes you a world wide media star over night.
    Here’s to brass balls.

    Cheers!

    Peter langevin
    San Clemente, CA.

  • http://www.facebook.com/AlexWMurphy.socialize Alex Murphy

    I’m pretty stoked for the posts to come and nicely done with the worst case scenario analysis! I definitely think this is a good move.  More eyes on your business from your blog readers could be invaluable to aiding in the growth or improvement of your business.  I somehow doubt that your blog readers would try to mimick one of your businesses unless it is primarily internet marketing related.  Cheers bro!  If you’re going to be in Lititz at all during the Holidays let me know!

  • Razaberry

    Love it! This is gonna make your blog a must-read for all aspiring entrepreneurs.

  • http://twitter.com/gracet07 Grace

    Agreed!

  • http://www.monthlyincomereport.com Adam

    Absolutely awesome, dude. Can’t wait to see how it unfolds. Bold move, but boldness is definitely rewarded online. 

  • JOB

    can’t wait to see whats behind the emperor’s robe!

  • http://www.mattpaulson.com Matthew Paulson

    I can wait. I really don’t want to see what’s under Dan’s robe.

  • http://twitter.com/JohnMcIntyre_ John McIntyre

    I think this is an awesome idea man. It must be scary as hell, but still. I think it will change EVERYTHING, in a really cool way. I remember thinking I wanted to hear more about the ins and outs of it. For those who have been more interested in the travel and lifestyle, it’s a great opportunity to learn about the ins and outs of a successful biz. 

  • http://www.adsenseflippers.com Joseph Magnotti

    Awesome idea guys, I’m glad you decided to make the jump.  Really looking forward to seeing the numbers.

  • Justin Miramontes

    Dang, gutsy call. I definitely see the potential upsides, but the downsides are also a given. Will the pros outweigh the cons… tough choice, but if ever there was a niche worth taking this chance on it’d be cat furniture, wouldn’t it? haha.

    I know I wouldn’t do it, but it seems like a good move for you guys.

    IT’S UP TO YOU! ;D

  • http://www.tropicalmba.com Dan

    Agreed, we’ll talk profit margins on the products. I don’t think we’ll ever get to the point of posting net income (isn’t that just asking for it?) but readers are a few calculator taps away and can use their imaginations ! :) Looking forward to it.

  • http://www.lifestylebusinesspodcast.com/ Ian

    Thanks for the inspiration Joe, had an blast with you and Justin last weekend.

  • http://www.tropicalmba.com Dan

    good point there! we’ll see, if we go down in flames it’ll make a good story :) 

  • http://www.tropicalmba.com Dan

    haha, i know that reference! :) exactly, if we end up throwing the cat furniture business under the bus, it might not be the worst thing. now is probably not the best time to admit that I’m allergic :)

  • http://www.tropicalmba.com Dan

    Cheers, I think we should be able to post a year-end wrap up before the new year and lay out some goals for 2012.

  • http://www.tropicalmba.com Dan

    Thanks man! Will be looking forward to getting personal consultations from you. 

  • http://www.tropicalmba.com Dan

    haha! agreed! +1 +1 

  • http://www.tropicalmba.com Dan

    ! Might even make your report!?!?! :D

  • http://www.tropicalmba.com Dan

    haha, that’s something to live up to !

  • http://www.tropicalmba.com Dan

    cheers, that’s a decent point, we do have some defensible products here and that’s part of the reason why we are starting with the furniture biz. i’ll be in lititz around the 20th i think, would be cool to meet up.

  • http://www.tropicalmba.com Dan

    hahaha… i might be steamrolling my biz! we’ll see…. I think it’s gonna be a lot of fun and spawn a lot of new opportunities for us. 

  • http://www.tropicalmba.com Dan

    oh yeah, you are basically responsible for this! don’t be surprised if Ian and I wash up on your couch broke looking for jobs! !! 

  • http://www.adsenseflippers.com Joseph Magnotti

    Hey we’ve got a second room though you and Ian would have to share a bed.  Maybe the couch is a better idea!

  • http://canislearning.com/ Todd Wieland

    Dan, you’re not only shifting ideas about Internet marketing. If you’re talking about building real brands around real products and the entire e-commerce process, you’re breaking new ground for the whole lifestyle business space. 

    Just the sourcing, branding and logistics aspects will open up potentially huge new wells of opportunity for you guys. I think you’re right. It’s going to spawn all kinds of new activity.

    Have fun.

  • http://twitter.com/tullibo Brendan Tully

    Dominate!
    Good move dude…personally I find talking about our biz and entities publicly in our small biz workshops delivers huge benefit. Its like you have a different filter/brain component when you push something public that you don’t normally have access to which then comes up with some amazing insights & ideas

  • http://locationliberated.com/ Adam Dudley

    I’ve been formally trained in strategic planning, so when presented with a business problem like this I ask, “What decision is in alignment with the business mission, vision, values, and strategy?”

    I don’t know all of these details about your business(es), but it seems to me that if the overarching mission of your entire enterprise is as you say, “to help other entrepreneurs start, grow, and improve their businesses”, then sharing the income reports would be in alignment with that mission.

    From my perspective, it’s unlikely someone is going to steal your idea because most people can’t even execute on an idea handed to them on a silver platter. That’s fact.

    Additionally, if new competition comes on the scene it could only help your business because it would compel you to improve even more, which would undoubtedly lead to you serving the customer better.

  • http://locationliberated.com/ Adam Dudley

    I’m doing a write up on your post for our blog, Dan, and it just occurred to me that if it were me, and I decided to make income reports and other such sensitive details available, I would make it available only to paying inner circle members.

    That would limit your exposure substantially, enhance the value of being a member, and let all us freeloaders know that you gotta “pay to play”. Because in my opinion, anyone that won’t pay for that level of information, isn’t qualified to have it.

  • http://www.tropicalmba.com Dan

    hey thanks! i especially am hopeful for the sourcing / product development efforts. we are relatively good at this stuff for a company at our scale, i think we can help a lot of others get good at it. 

  • http://www.tropicalmba.com Dan

    if it’s good enough to for your, man, SOLD. :D

    i agree– in your words– its the dominate mindset 

  • http://www.tropicalmba.com Dan

    Hey Adam,

    I really enjoyed reading your response here. For the readers:

    http://locationliberated.com/key-business-decisions/

    My first thought is that it might be less valuable to the inner circle members since many of them have businesses set up already and can effectively get that information from us anyway (we post information about our niches in there and are available for phone calls etc). 

    My concern about using it for bait is that it could attract the wrong crowd to the group (tourists, beginners, etc). That said, we never considered it so I’m going to go over this with Ian and David.

    To me the mission oriented thinking was the primary motivation. This small little post really hit me:

    http://sethgodin.typepad.com/seths_blog/2011/11/theres-nothing-wrong-with-having-a-pla.html

    I thought, fuck yeah that’s true! :)

    So I went and wrote a mission. 

    Here is a draft: [ahem, google docs won't open, thanks Asia!]

    But anyway, I’d prefer to help lifestyle entrepreneurs than cat owners (sorry guys!) so that’s part of the inspiration too. It’s also a nice evolution for me personally at this point in time, it’s tough to sustain a passion for cat furniture if you aren’t a designer (our design team loves it!) but for me as a traveler, writer, etc, I basically don’t have much to do with the business unless I make a move like this. Now I’ll be kicking these guys butts so we don’t look soooo bad in front of everyone! :)

    So… I’m going to run this inner circle only idea by the boys.

    Cheers,Dan

  • http://locationliberated.com/ Adam Dudley

    Guess it’s true what they say about great minds, Dan. I riffed on that 17-word Godin post when he first published it: http://locationliberated.com/fail/. (Hope you don’t mind the link…seems relevant to the discussion).

    I understand your concern about using the income reports, etc as bait. Guess I’m from a different school where “bait” = “qualifier”. It is a tool to separate your simply interested people from your true action-takers. (E.g. I think that people who’ll give you an email address for an e-course or manifesto today, are w-a-y more qualified to talk to you than an RSS subscriber.)

    My perspective is that when you put something like the income reports out there for everyone to see, you actually attract more of the wrong crowd to your blog (window shoppers/freeloaders/trolls) that would never, ever take action on anything practical you post, regardless of how valuable they perceive it to be.

  • http://www.tropicalmba.com Dan

    Adam, 
    Link away sir! That’s a good perspective. I shared this with my mastermind call this morning and now have heaps of suggestions. I think I’m going to take some of your suggestions here, the opt-in bait/qualifier idea is great.D

  • http://www.facebook.com/AlexWMurphy.socialize Alex Murphy

    Hey man let’s go for a beer.  Bulls head perhaps?

  • http://www.tropicalmba.com Dan

    that works.

  • JustinWCooke

    Funny add here guys: After extolling the benefits of being public with beers in the pool in Bali, Joe and I get back to Davao and are discussing an idea we’ve been kicking around with another marketer in our space.  Unfortunately, stating it publicly probably WON’T work in this case…those that would want to help us could, unknowingly, do some damage…and I wouldn’t want to put the people it damages at risk.  I can’t say much more than that, but will post about it in the DC as we get closer to get some thoughts from others about the issue, heh.

  • http://www.tropicalmba.com Dan

    hahaha…. you guys were a big inspiration for sure. can’t wait to get there to hear about it!!! Looking forward to getting on the webinar later this week. 

  • http://awebsitedesigner.com.au Dan Norris

    Looking forward to learning more about this.

    Not that my business is in any way comparable, I post every secret to my blog http://awebsitedesigner.com.au I don’t mind, there is plenty of work to go around. Even SEO stuff, I post exactly what I’m doing to get rankings.

    I figure even if my competitors copy everything I do I will still win because they won’t reveal all of their secrets like I do and in doing so I will create the more compelling content and win out in the long run.

  • http://www.tropicalmba.com Dan

    Getting a lot of guys like you, Justin, Joe, Brendan et all saying it was a net positive move. One motivator for me– I’d rather be doing business with fellow entrepreneurs than with people who want to buy cat furniture. Thats obviously not the official view of our company (ahem), but this is way more fun for me 4 years in to the journey.

  • http://awebsitedesigner.com.au Dan Norris

    Yeah I think you come to a point where it has to be more than just enjoying the concept of having a business. You have to gain energy from the business itself but that’s another topic for another time I guess. 

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