Jeff Morin is a Classic Small-Business Entrepreneur (CSBE). Here's how I define CSBE: someone who has deep knowledge of a market segment that is inefficient or poorly served and develops a way to correct the inefficiency -- preferably without too many competitors even noticing -- thus assuring higher-than-normal profit margins. That's Jeff and his Stafford, Va.-based business, Coins for Anything.
A brief background: Jeff is a 27-year-old former Marine sargeant who, at age 19, became interested in something called "challenge coins." If you're in the military, you know what challenge coins are. But most people don't. A challenge coin is a collectible coin that commemorates service in a particular military unit or mission. Jeff noticed that most of these coins were poorly designed and made and so he did what anyone would do at age 19 -- not! He borrowed $500 from his mother to start a business to design and make really nice challenge coins.
Fast forward: Jeff has 4,500 customers who bought $2.5 million in challenge coins from him in 2009 (down slighly from 2008). Along the way, Jeff discovered that he was not really in the challenge-coin business so much as the commemorative products business. There are tens of thousands of companies printing collectible t-shirts and similar paraphenalia, of course. So Jeff realized that if he wanted to expand beyond coins, he had to have some business attribute that could be leveraged. That turned out to be the ability to turn around orders faster than competitors."I have focused on systems and programs that take out days of turnaround time and get it down to 24-hour processing."
With fast production his company's special sauce, Jeff was able to start spin-off companies to make pins, signs and lanyards. His custom shirts business is about to go live, and next up after that will be a flower business -- not exactly an under-served market. "We will be able to process orders within seven to eight hours and with our volume of shipping, our discounts will be astronomical. We'll be able to do air shipping for the price of ground." Did you hear that, Jim McCann?
So now that he has a number of similar businesses, what's next? "Creating business synergy," he says. "If it costs $100 to gain a new customer, what can you do to expand the margin with that customer?" Jeff notes. The answer is cross-promotion. It's in the early stages, but Jeff is noticing that "soccer moms who order trophies also wants shirts and coins made. The military does end-of-tour awards, and we'll design the coin, and then they'll want a unit t-shirt or banner made."
It all sounds too easy, doesn't it? OK, here are a few trouble spots and teachable moments.
- Staying Ahead of Competition. "Our competitors have gained an advantage with in-house graphic designers, who are not cheap, especially for coins. In the next six months we'll bring design in-house so we can turn out art in 24 hours. Right now we use our factory's art department, which does a good job but takes 72 hours."
- Managing Infrastructure. "I am personally getting spread too thin. I need to take a step back and put some trust into someone else running some aspects of the business. I'm going to try to slow down after we get shirts and flowers up and running," Jeff says. His staff ranges from 15 to 20 including part-timers. He has an operations manager and then individual brand/product managers for each line of business, which leaves him with too much on his plate. That includes managing their $1 million a year in advertising spending on Google AdWords. While Google devotes a team of three people to helping Jeff's companies optimize their ad results, this is certainly a big responsibility for the CEO.
- Managing Employees. Hiring the right people is essential, as is making sure you don't succumb to the Peter Principle with existing employees. "Don't hire people because they're friends or have beern there since Day One. We put someone in management who should never have been there."
- Avoiding Distractions. It's important to stay focused on your original concept and follow it through to a successful model. It's too easy to get distracted by new ideas. Focus on your main idea until it's successful." (Want the opposite view on this issue from another entrepreneur? Click here.)
- Don't Underestimate Yourself. "I didn't take certain things seriously at first, like bookkeeping or accounting," Jeff says. "We had to spend countless hours fixing and reconciling things once we were successful. Make sure you do the things that really are going to matter correctly from the get-go."
- You Can Bootstrap Your Way to Millions. Aside from a $500 loan from mom, Jeff has taken no other outside capital and has invested 70% of the profits back into the company. He is the sole shareholder. While that's not the right choice for every small business, and poses the risk of lack of diversification, it's a conscious choice that many entrepreneurs have taken successfully. Being self-funded has the advantage of eliminating the distraction of securing outside capital, which can be nearly a full-time job for a CEO, especially nowadays with credit as tight as it is.