Close to ten years ago, shortly after we opened our field, we had some local kids (3 brothers), some still in High School open a retail paintball store. We didn't have a local paintball store and these kids (young men) figured they would open a store that would serve the local paintball community as well as doing some on-line sales for the rest of Canada. They got some financing, I assume from their parents, rented a small retail space, bought a bit of inventory (the store was stocked quite sparsely) and opened the doors and their website.
They were budding speedball players. They were young. They were keen and full of enthusiasm. It was quite obvious that they wanted to operate their store exactly the way they, as paintball players, would want a store to be. Namely, they had cheap prices (about the cheapest in Canada at the time), and provided pretty good service (there were three of them plus a few young friends eager to help).
What they lacked was business experience. They became one of Canada's favourite online dealers. After all, with low prices and good service, how could you go wrong. They lasted a couple of years if I remember right. Their prices were low. So low that the mark-up they had didn't cover their overhead, even with the relatively low overhead they had). In effect, with each sale they had, they lost a little money. As the number of sales increased, so did their losses. Eventually, they were using the money they received from people prepaying their purchases, to fund the purchase and shipping of previous sales. They ended up falling further and further behind until they closed their doors and the people who prepaid their orders last, lost their money and never received their orders.
It was a sad story. I felt bad for the people who lost their money and didn't get their orders filled, but I also felt a little bad for the brothers, who had good intentions but lost everything in the end as well. The brothers dropped out of paintball completely after that as I'm sure it was much too embarrassing to run into people whose money they had taken but never filled their orders.
Seeing as I don't run a retail paintball business, next time I'll relate this to running a paintball field.
Stock Class
5 years ago
I think the relationship(s) are pretty clear - you need to know paintball but you need to know business also.
ReplyDeleteIn fact, "knowing" the market for whatever you are selling is pretty much the only prerequisite.
But I'm also sure that your future piece is going to focus at least somewhat on the similarity between selling yourself out of business in order to offer competitive priving and doing the same thing by encouraging your field customers to spend themselves dry....