Please see the first installment of Lincoln Spencer’s article, MotoSmart: Part 1
I learned the hard way that the main challenge for startup companies is usually funding/cash flow. The motorcycle parts I had initially purchased were a significant startup cost, but the ongoing operating costs were significantly higher than I thought. As it turns out, it is very hard to predict all of the little expenses that come up from day to day. Things like general liability insurance, worker’s compensation insurance, utilities, and shop supplies may seem insignificant, but can quickly rack up significant costs.
Around the time I was starting the business, a wise investor gave me some great advice: double your projected expenses, and cut your projected sales in half. Can you still show a profit after that? If so, you probably have a solid business model. If not, you might want to go back to the drawing board. I thought my projections were reasonably accurate, and didn’t take his advice all that seriously at the time. Later on, it turns out he was surprisingly accurate! While I’ve been able to get by, it hasn’t been easy and the reality of my sales and expense numbers hasn’t been as ideal as I had projected.
Now, back to the story. I had made the initial purchase of motorcycle parts with money scraped together from my savings and borrowed from family. There was little time to waste, because warehouse rent was not cheap and I had little spare cash to survive on. The parts were jammed in a warehouse too small to adequately operate in, so I rented a larger warehouse around the corner that would provide enough space to shuffle parts around while they are being inventoried as well as leave some room for future growth.
The second warehouse needed some work before I moved the parts in, including cleaning and sealing the floors, painting the walls, wiring new electrical outlets, among other tasks. As much as I wanted to hurry and start selling parts, I knew it would be much easier to get the warehouse in proper shape now while it was empty. After many long weeks and all-nighters, things were coming together. I hired a few temporary guys to help move the mountain of motorcycle parts from one warehouse to the other. The move came together well, but I quickly realized how hard it is to find good workers, train them for the task, keep them busy, and maintain the quality of work I wanted.
After everything was settled in the new warehouse, it was a huge relief to quit paying rent on the old warehouse. One lease payment was hefty enough! My next challenge was creating a system to accurately inventory, photograph, and ship each part in the warehouse. I figured it was worth getting this right and spending some time developing a great process, rather than jumping in haphazardly and doing poor work that may need to be re-done.
I looked into different inventory systems, and there wasn’t anything available that would meet all of my specific needs for running a motorcycle parts business. Not only that, but many inventory systems cost thousands of dollars and some even require steep monthly recurring payments. All for a system that doesn’t do exactly what I want it to? No thanks. I put my Excel skills to the test, and decided to develop a very complex Excel spreadsheet with all sorts of functions and VBA macros to help me export parts to automate eBay listings, create QuickBooks sales entries, make pricing decisions, look up fitment and manufacturer part number information, and much more. My spreadsheet keeps growing and growing, and it’s now over 50MB and running fairly slow (whenever Excel needs to recalculate cells it can take a minute or more). The spreadsheet system isn’t perfect, but it is super customizable, fast to set up, and cheap. For now, it’s getting the job done.
Industrial-sized photo booths weren’t any easier to find, so I made my own once again. I built it out of pallet racking pieces I had around, bought photography flashes and softboxes, a few Canon cameras (two of the S5IS models for mounting on a tripod and at the top of the booth pointing down, and a G9 for handheld detailed shots). The S5IS is remotely controllable with software, and also remotely zoomable, something you can’t do with DSLRs. It works great for shooting the tops of parts rather than standing on a ladder. I set up two computers, one for the top camera and one for the front camera on a tripod. Those two are great because you can really dial in the lighting. They also save the pictures right over to the computer as you’re shooting them, so you can immediately organize the pictures in a folder for each part and delete the bad ones. I got an Eye-Fi memory card for the handheld G9 camera, and it also syncs pictures over to the computers (but wirelessly). The photo booth has been something that really sets my listings apart from everyone else on eBay – the difference in picture quality is huge.
For shipping, I found a great program called ShipWorks that has made my life much easier. It automatically conects to eBay and downloads orders that are ready to ship, eliminating the need for employees to get into your eBay account. The software is very customizable, and by tweaking the XSLT templates I’ve created pick lists, packing slips, and tracking emails that all contain the exact information I want. My employees use the software to compare USPS and FedEx rates, and ship with the cheaper option. UPS, OnTrac, and other carriers as well have a ton of shopping cart sites that are also supported, although I’m not using them. FedEx gave me better discounts than UPS, so FedEx it is!
Stay tuned for the third and final installment…