Startup Stories – MotoSmart: Part 3

Posted by on Aug 2, 2013 in Blog, Featured, Startup Stories | 0 comments

This is Part 3 of a three-part series where Lincoln tells his story about starting MotoSmart.  Please also see Part 1 and Part 2.

The inventory, photo, and shipping processes were the biggest things to set up, but I continue to make and tweak new processes as I go. I made 5 large engine leakdown tables for tearing engines down and letting the oil collect in the middle, draining into a bin below. I am continually figuring out new tricks to take engines apart, and adding specialty tools to my collection. Finding just the right tables and carts, spacing the aisles right, getting the right computers and barcode equipment, making checklists for employees to remember key tasks – the tasks go on and on. It all take time and thought to get it right.

Now after running the business for nearly 4 years, I have been through a lot. The business has been the best learning experience I’ve had. I have also had countless frustrations, scary financial moments, all-nighters and long weeks, but somehow everything always works out in the end. If it doesn’t work out, it’s not the end. We are close to finishing the inventory work for the rest of the parts in the warehouse, a task that has taken much longer than I anticipated largely due to limited funds to hire employees. Once the rest of these parts are online, sales should improve significantly and things won’t be as stressful.

For some reason, I always want to tackle bigger and better challenges. This business has been a huge one, but now I’ve chosen to get an MBA with a focus on operations management, and then work for a manufacturing company with significantly larger-scale operations than what I’m used to here. I would love to end up at a company like Honda, Polaris, Yamaha, Ford, or anyone else that manufactures things I’m interested in. I’ll keep running my business remotely while I’m in school, having an employee come every day and ship (the heavy work is largely done now). For the right price, the business is also for sale – but whether I sell it or not things should work out fine. After MBA school and some time at larger companies, who knows where I’ll go from there – I may stay in the corporate world for a while, or my inner entrepreneur may start itching again after a few years… time will tell.

Key Things I’ve Learned:

  • Cash flow is tough – be extremely aware of the money you’ll need to start and maintain your business.
  • Don’t be afraid to jump in and create systems and processes to meet your needs – it allows you to control the quality of your product well, and set you apart from competitors. Just don’t reinvent the wheel – only make a custom system or process when there is no viable alternative already available.
  • Hire good people that you immediately trust and show quality work through their resume and application. If you don’t sense that trust or see the quality of work from the beginning, it’s unlikely that it will develop later on (usually it just gets worse). If someone doesn’t check important things like their resume and email correspondence for grammar and spelling errors, they will usually write even worse on the job – especially if there is no spell check in your system.
  • Hire people that WANT the job most – even if they initially lack all of the required skills, they will work the hardest to prove themselves and learn.
  • Do whatever it takes to keep overhead costs low – once they are as low as possible, use your time efficiently so you are maximizing those overhead costs (have as many employees and processes as you can possibly manage at a time). My biggest regret is not finding a way to get more funding and hire more employees sooner. I could have finished inventorying all of the parts a couple years earlier, and saved many thousands in overhead costs as well as years of my own time. Hindsight is 20/20.
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Startup Stories – MotoSmart: Part 2

Posted by on Jul 26, 2013 in Blog, Featured, Startup Stories | 0 comments

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…

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