How We Turned A Fun Idea Into A 6 Figure Business In Just 1 Year
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12 months ago I launched a fun little side project with my business partner Nick Haase called Startup Drugz. The concept was incredibly simple, but nobody was doing it. We decided to put funny startup and entrepreneurial sayings like “I’m A Millionaire On Paper” on t-shirts. Basically we wanted to create an apparel brand for entrepreneurs like myself.
After coming up with the idea I spent a few days building out a basic Shopify store and designing a handful of t-shirts. Once the store and initial products were ready we went live and submitted the store to Product Hunt. Within 24 hours of launch we knew we were on to something big.
During our first 48 hours in business we generated over $2k in sales with 15,000+ unique shoppers visiting our store. Pretty amazing right? What’s even more amazing is that our sales could have been 3-4x higher, but we made a ton of amateur mistakes. For example, Shopify automatically sets shipping at $10 flat rate for all new stores, so we were charging $10 shipping on $20 t-shirts. We lost a ton of sales because of this.
All entrepreneurs (even the best in the world) frequently make mistakes. However, successful entrepreneurs learn from each and every mistake. After our first week in business I put together a list of every mistake we made and then spent the following week fixing them all.
Flash forward to today and Startup Drugz is now a 6 figure business, which generated $200k in just 12 months. We’ve expanded our product line beyond tees to include hoodies, posters, mugs and phone cases. We have over 20k followers on social media and a 10k person email list. What’s even more exciting is that we are on pace to do over $750k in sales during the next 12 months.
Throughout the past few months I’ve been asked repeatedly to share the Startup Drugz story and more importantly how we got to where we are today in such a short period of time. What follows is our blueprint for success, which helped us go from $0 to $60k+/month in sales in less than 12 months.
Combine Passion and Opportunity
Entrepreneurs look at the world differently. Where most people see a problem, entrepreneurs see an opportunity. The problem is that there are a lot of opportunities, which makes it hard to stay focused on one thing long enough to one into a profitable business. On top of this, you can find an opportunity in a market that you are not passionate about.
Why is this a problem?
Building a business from the ground up requires an incredible amount of work. Put simply, working 5 days a week from 9-5 simply won’t cut it. You need to live and breathe your business. Weekends and vacations don’t exist when building a new business.
The only way you can put this much work in without getting burnt out is to love what you do. When you love what you do then work is no longer work. I’m excited when I wake up every morning because I know I get to spend another day growing a business I absolutely love. The dream for every entrepreneur is to make money doing something they are truly passionate about, which is what I have with Startup Drugz.
Seriously, I get paid to design and sell sarcastic entrepreneur themed t-shirts to other incredible entrepreneurs. I’ve found an opportunity I’m passionate about. Have you?
Create An MVP
No I am not talking about creating a most valuable player. That wouldn’t make any sense! In the startup world, MVP means minimum viable product. Essentially an MVP is the most basic version of your product or service that you can use to validate a concept and learn about your potential customers.
Thanks to today’s technology you can create a prototype with a very small investment in regards to both capital and time. For Startup Drugz we spent less than $100 and 6 hours creating an MVP. Our MVP was a very basic Shopify store with 8 different t-shirt designs.
We decided to dropship our tees, which meant that we didn’t need to put up any capital for inventory. Instead we used DTG (direct to garment) printing and only printed a shirt when it was ordered. If you are thinking about launching a t-shirt business (or really any business in the printing space), then I highly recommend starting out with DTG and dropshipping.
Buying a ton of inventory before you’ve even validated the concept or generated any buyer data is crazy and completely unnecessary nowadays. Once you’ve validated the concept you can take bigger risks and hold inventory.
Test The Concept
After creating an MVP you need to see if your concept has any legs. This is where a lot of entrepreneurs make a big mistake. They can’t contain their excitement once they have their MVP and want to tell the entire world about their new business. Don’t make this mistake of going too big to early.
Before launching Startup Drugz we pitched the idea in the YEC (Young Entrepreneur Council) Facebook group along with a few other exclusive entrepreneur groups that we are members of. This instantly got our idea in front of several thousand incredibly successful entrepreneurs who were more than happy to provide feedback. We received way more feedback than expected and nearly all of it was overwhelmingly positive.
After a few days of testing our concept we knew we were on to something, so we decided to launch the store to the general public.
Find A Great Launch Platform
So you’ve launched a new business, a new ecommerce store for us, and you’re ready to make your first sale. There’s only one problem; nobody, other than some friends and family know about it. You need to find a way to get your business in front of a large audience without breaking the bank.
For Startup Drugz, we didn’t have the capital to do any paid advertising when we launched. Because of this we had to get creative and this creativity helped us have an absolutely incredible launch.
Meet Product Hunt. Product Hunt is the brainchild of entrepreneur Ryan Hoover. Every day “hunters” share awesome new products and the community upvotes their favorites. If you are fortunate enough to be one of the most upvoted products of the day, then you benefit from a massive amount of exposure and traffic.
We decided to launch Startup Drugz on Product Hunt and by the time I woke up at 8am EST on launch day we had already sold $300 worth of shirts and had 400 users live on the site (thank you Google Analytics Real Time). We were in the coveted top spot on Product Hunt by a landslide with over 100 upvotes and this was just the beginning. By the end of the second day I couldn’t believe the numbers I was seeing in either Google Analytics or Shopify. Here’s a list of the most notable and impressive stats:
- 15,222 unique users visited the store
- These users viewed 42,100 pages
- We sold $2,200 worth of shirts and posters
I always share our experience with a disclaimer. Product Hunt is incredibly competitive and 90%+ of businesses that get hunted quickly become lost in the crowd. The point of this story is that you need to think outside the box when launching your business if you want anyone to know about it.
Collect and Analyze Data
A shockingly large percentage of entrepreneurs don’t know anything about their customers. Let’s do a quick quiz. Can you answer any of the below questions?
- What’s your conversion rate?
- What’s the lifetime value of your customers?
- What’s the age, gender and location of your average customer?
- How many customers are repeat customers?
- What’s your average order value?
- On average, how long do people spend on your site and how many pages do they visit?
- What’s your best-selling product?
The most successful entrepreneurs know their customers, product and business inside and out. If you can’t answer all of these questions, then put everything on hold until you can. You don’t need fancy and expensive software to gather the data necessary to answer the above questions. You can collect a massive amount of data with Google Analytics, which is 100% free and relatively simple to install.
Thanks to Google Analytics, Shopify and several other 3rd party apps we knew which products were selling best, who our perfect customer was and which traffic sources were leading to the most conversion. Thanks to this data we were able to optimize the Startup Drugz store to increase average order values, repeat customer rates and conversion rates. After a year in business we’ve increased our customer lifetime value by 60% and our conversion rate by 250%. This is all thanks to our ability to collect and analyze critical visitor and buyer data.
Build an Email List
Don’t let anyone tell you that email is dead! I am a digital marketing consultant who is constantly testing the latest and greatest marketing software, but I still use email for marketing purposes on a daily basis. You need to be collecting emails as early as possible and building a relationship with your subscribers.
For Startup Drugz, we use a tool called SumoMe to collect emails from first time visitors to our store. We offer new visitors a special discount as an incentive for joining our email list, which is necessity. Very few people are going to give you their email address just because they like your brand and want emails from you. The incentive doesn’t have to be a discount. It can be free shipping, an exclusive piece of content or anything that provides value.
It’s pretty obvious that collecting emails is pointless unless you have a solid email marketing strategy in place. I could fill an entire book with email marketing strategies, but I will focus on just a few key points here.
It’s tempting to instantly start selling your product or service to new email subscribers, which is what a lot of businesses do. DON’T DO THIS! This is the quickest way to get unsubscribes or flagged as spam. Before you do any selling you need to build a relationship with each new subscriber.
These prospects need to go through something called an indoctrination sequence. An indoctrination sequence consists of a series of emails where you tell the prospect more about your brand, what they can expect in future emails, why they should care and lastly provide value up by sharing great content and resources. Once you’ve indoctrinated a prospect you can then begin the process of selling them as they are no longer a cold lead.
Find Customers On Facebook
Imagine a machine that you put $1 in and $2-$4 comes out. For Startup Drugz this machine exists and it’s called Facebook. During our first few months in business we tested numerous advertising channels including Google PPC, Twitter and Pinterest, but Facebook was the only one that really offered exciting returns.
Mark Zuckerberg and co. have spent the past 10+ years building the most advanced marketing platform in the world. Unfortunately, (or fortunately depending on how you look at it) most businesses don’t take full advantage of the Facebook ad platform and end up losing money. Here’s a step by step Facebook advertising guide based on what we did and continue to do at Startup Drugz.
Install Your Facebook Pixel: Before you run a single ad you need to create and install your Facebook pixel. Don’t worry if you have no idea what a pixel is because it’s actually pretty easy to install. The Facebook pixel is a small piece of code that tracks important website actions, such as purchases, add to carts, leads, registrations and key page views. Once the pixel is installed you will be able to see how many conversions a Facebook ad is responsible for.
Create Custom Audiences: The Facebook pixel allows you to create audiences of people who’ve visited your site based on the actions they completed. For example, you can create an audience of people who’ve added a product to their cart without completing a purchase in the last 10 days or people who’ve visited your site in the last 30 days. You can then create ads targeting just people who are in a respective custom audience. This allows you to create highly targeting and personalized ads that perform significantly better than general ads.
Research Your Audience: Ignoring this step is usually the primary reason why people lose money with Facebook ads. Most business owners assume that they know exactly who their ideal customer is and more times than not this assumption is incorrect. By using tools like audience insights and graph search inside of Facebook you can tap into a massive database of data. Having access to this demographic and behavioral data is critical when you actually start creating ads and deciding who and what to target.
A/B Test: Whenever we create a new campaign on Facebook we test between 8-15 different audiences and 2-6 different ad variations, which means we test between 16 and 90 different ads! We do this because most ads fail. Even if you are the greatest digital marketer in the world, the chances of you finding the perfect combination of target audience and ad copy/creative in one shot are slim to none. With A/B testing you are taking a buckshot approach. Most of the ads will fail, but a few will be real winners. You can then turn off all the losers and scale the winners.
Retarget: Here’s a quick fact for you. 98% of visitors don’t make a purchase on their first visit. Let that sink in for a second. Even if you have the most amazing product and website in the world, less than 2% of your new visitors will convert on their first visit. Most businesses that lose money with Facebook ads focus all of their time and capital on getting new visitors to their site. They allocate virtually zero resources to getting those visitors back to their site after the first visit. If you want to be successful with Facebook ads, then you need to run retargeting campaigns. Retargeting is a form of advertising where businesses serve ads to people who have previously visited their website while completing specific actions.
An incredibly effective retargeting campaign that we run at Startup Drugz is an abandoned cart campaign. When someone adds a product to their shopping cart, but doesn’t complete their purchase, we serve them an ad offering free shipping if they return and complete their order. This campaign helps us recover a significant percent of abandoned carts, which is a huge problem for ecommerce businesses.
Analyze Results and Optimize: You need to constantly be analyzing data you are collecting from Facebook and other tools like Google Analytics. I check my GA account daily to understand which demographics are responding best to my ads. Is more traffic coming from mobile or desktop? Which has higher conversion rates? What time of day are visitor more likely to buy something?
Based on these answers I am able to tweak my various Facebook ad sets and creatives, which ultimately helps improve ROI. If you think you know exactly who your best customer is, without looking at analytics, you are wrong. I assumed my best customers would be 20–25 year old males living in San Francisco or NYC, accessing our store via their iPhones. It turns out that my best customers (the ones with the highest conversion rate) are 35–44-year-old males living in cities like Tampa, Atlanta, Austin and Boulder using their laptops. Without looking at the data I would be burning money trying to target a demographic that doesn’t represent my best customer.
Build A Loyal Tribe
Creating a business for all intents and purposes is easy. Anyone can come up with a basic idea, incorporate a business on Legal Zoom and put up a basic website. On the other hand, creating a brand with a loyal customer base is incredibly difficult. Business like Snapchat, Uber, Facebook and Apple became incredibly successful because they invested in building a brand from day 1. They created an ecosystem that turned customers into passionate brand ambassadors.
At Startup Drugz, we created a brand that really resonated with entrepreneurs and members of the startup community. Everything from our branding to our marketing language was carefully crafted with the goal of generating a personal connection with any entrepreneur who visited our site. Because of this, we now have an incredibly loyal fan base with over 95% of our customers joining our affiliate/ambassador program once they complete their first purchase.
This blueprint is not a guaranteed formula for success as every business is different, but if you follow the steps above you will dramatically increase your chances of success. At the end of the day if you are passionate about your business and work harder than everyone else you will be successful!