In the early 1940s, a young Swedish boy introduced himself to the world of business by sourcing matches cheaply, in bulk and riding around his local town selling them individually. He made a handsome profit.
The young entrepreneur focused on learning commerce the best way possible, by identifying a niche opportunity and forming a business around it. Building on the success of the matches, he experimented with various other items to expand his product range – some failed and some worked. He found considerable success, however, with furniture. Today, his business is better known as IKEA.
I’m willing to bet selling matches was one of Ingvar Kamprad‘s greatest life lessons.
I mention all this as a nice, fluffy introduction to the lessons I learned when I first identified an opportunity and discovered the world of entrepreneurship. Although I haven’t quite reached the $37 billion level of sales IKEA achieved in 2013, it is nonetheless interesting to document the experience – one I was recently asked to share with a group of young schoolchildren in Ireland.
When I was 12 years of age, I remember picking up a copy of my Dad’s Viking Direct (Office Depot) catalogue and realizing how cheaply I could source stationery equipment in large volumes. Of course, Viking Direct said I couldn’t re-sell the items but 12-year-olds have a habit of not doing what they are told at the best of times. I spent weeks drawing up tables in Excel and figuring out cost prices per unit and margins. I had a range of 40+ products, with different markups depending on the quantities purchased by the customer (through a recent trip to the hardware store, I had learned about economies of scale) and every variation of color and size on offer, in that document.
Evidently, I was trying to do everything at once which was completely overwhelming – I had too many products, too many options, too many price ranges and too many potential customers to target – I didn’t know where to start. So overwhelmed, in fact, I saved those documents into my folder on the family computer and promised to re-visit it ‘soon’.
‘Soon’ turned out to be two years later. With my savings from my summer job slowly being eroded by the daily €4 bus trip to school, I decided I needed to take action. That €4 could have been better spent elsewhere. Like on PlayStation games. Or candy.
So, I set about answering some simple questions:
- What was the ‘pain’? I was the type of student that kept an ample supply of pens on hand. As a result, I became the go-to person when another student needed a ‘loan of a pen’. Now I could turn that frustration (a brilliant motivator!) into a profitable opportunity.
- Who was the market? Every pain-in-the-ass student that had ever bothered another student for a ‘loan of a pen’, which seemed like everyone to me at the time.
- What was the product? 1x blue pen, 1x black pen, 1x red pen and 1x pencil (all held neatly together with perfectly sized rubber bands I got from my orthodontist) for €1.
I located my stand (a borrowed school desk with an A1-size poster draped around it) at a busy intersection in the school. Eurozone Trading was now in business. The first couple of days of sales went very well. The price point was attractive and I was making €0.78 from every sale. Now, with some market traction, I added Post-It Notes, erasers, rulers, Santa hats and any other items that were on clearance from Viking.
Failure And Success
The biggest take away from this venture was the concept of repeat customers, recurring revenues. Unsurprisingly, turnover dwindled after a few short weeks – the market had been flooded with cheap pens and pencils – when was the last time you purchased a pen?
And so, with sales stagnant (don’t worry, I showed a decent profit by now), I put everything on clearance while I tried to come up with another concept for something that would sell to the same customers every day.
I couldn’t give the remaining stock away. I discovered the €2 Shop I used to visit had containers of cheap lollipops on sale one weekend so I decided they might make a worthwhile promotional item – and wow, did it work. Almost immediately, I was swarmed by students looking for their afternoon sugar fix.
Although Eurozone Trading had a short run, I loved every second of the sourcing, sales and marketing process. I loved talking to customers and satisfying their needs. What’s more, it was through these interactions that I had found my second opportunity – candy!
My first taste of entrepreneurship was delicious and I was hooked.