Editor's Note: Sorry for the week-long delay on this. I've genuinely enjoyed telling this story, but when it came time to saddle up and write the ending...man, it's not exactly a pleasant stroll down memory lane, as you'll find out.
This is the final part in a five-part series. The previous installments can be found here: Part 1, Part 2, Part 3, Part 4
"The greatest teacher, failure is." - Yoda
The Rat Race
Successfully running a business in which you sell products requires two primary things: inventory and cashflow. What they don't tell you when you start out is that those two things are in a constant battle with each other.
Unless you can sell a product for 4-5 times what it costs you to buy it, you are immediately thrust into a rat race of trying to keep inventory in stock while at the same time trying not completely bury yourself in debt.
While my first order of inventory was small enough that I could finance it interest-free, success meant each subsequent order needed to be bigger, and at sizes where interest-free financing just wasn't an option. A business in which there is no real collateral is a business that traditional banks can't lend to, so that leads to more...alternative means of funding
When I launched the business, there were several "working capital" lenders who operated with business owners like me in mind. If your credit score was solid, you could get inventory loans pretty easily, but at credit-card like interest rates.
My product was selling so fast I figured I still had to be eking out some profit, and any time I sold out, Amazon's algorithm penalized me, so I started taking bigger and bigger loans.
But what harm was a little interest and a little debt? After all, I was a big success, and all of that debt would be a drop in the bucket to the magical investors who I knew would be falling over themselves to fund me as soon as they saw my pitch deck.
Nevermind the fact that I somehow kept procrastinating finishing that pitch deck...or the fact that I was living in total delusion. So long as the sales kept rolling in, nothing was going to knock me off track - I had finally proven that I wasn't the failure I always thought I was.
In June 2018 - the 18th of June, to be exact - I left my IT job at the special education coop in Humboldt. It was both the worst and best decision I have ever made in my adult life.
The worst because it was moronic and irresponsible to leave an easy job and fulfilling job that provided my household of five reliable income. The best because in hindsight, I realize I probably would have kept up the delusion for a few more years if I had kept it. Leaving that job forced me to fail, and fail hard, which ended up being the greatest thing that could have happened to me.
In 2018, the business racked up nearly $240,000 in sales - just shy of a quarter of a million dollars. Now, did the business make a profit that year? No, but most startups don't make profit for the first few years, right? My benevolent future investors were going to see those sales numbers and line up to hand me a blank check!
The inventory debt was a growing problem, and my continued attempts to expand my product line while having no zero long-term plans for success outside of "miracle investors" made things even worse.
The Placemat aka "The No-Brainer"
In early 2019, I received a call from a mom named Amy in California who had invented a placemat with a trough at the end that hung off the edge of the table and collected the food particles babies and toddlers inevitably drop on the floor.
She had developed it with help from PRG Prototyping in Pittsburg, and despite some early promise (including interest from the "As Seen On TV" people), she had been strung along for over three years and $15,000 by a crooked "patent attorney" and was looking to sell. PRG had told her I was in the baby and toddler product market and had given her my email address.
The placemat itself was actually brilliant and at the time totally unique - you can watch the promotional video I had made for it here (how it randomly ended up on YouTube, I'm not sure). She sent me some samples, they worked great, and I thought I had my next home run.
She wanted $20,000 for everything - the mold, the inventory, the rights to the entire product. I showed it to a couple of my mentors, and they agreed it had a lot of potential, especially if I could patent it.
If you can patent a product like that, you can then license the product to other manufacturers. Then they are the ones stuck dealing with production and inventory costs, and you just get a license fee and a cut of the proceeds.
It was a no-brainer, or so I thought.
With no traditional funding available, I went to the man who had become one of my biggest supporters - my dad. He lent me the $20,000, the deal was done, and the inventory was shipped to Fort Scott.
I then bought up the inventory from the 3-4 Amazon sellers Amy had wholesaled the placemat to, racking up several thousand more dollars on this "investment". With that done, I had sole control over the Amazon listing. I added that killer video to the listing, sent some inventory in to Amazon, and.....crickets.
In hindsight, things might have gone completely differently if I had just created a new Amazon page for it from scratch and started advertising it. By advertising, I mean this: say you want to show up on page one of Amazon for all the moms who search for "baby placemats" - well, for the right price, Amazon will put an ad for you there.
But, I didn't. I didn't do anything. There are a million different things I could have done, but I did absolutely nothing.
When the placemats didn't start selling immediately like my first and second products did, I just lost all confidence and threw in the towel on my $20,000+ "investment"...correction, on my father's $20,000+ investment.
Making things worse, my dreams of patenting the placemat went up in smoke. A friend and patent attorney in Lawrence explained to me that if I tried to patent the placemat, the patent office would point to Amy's abandoned application as "prior art".
By abandoning her patent application for the placemat, Amy had inadvertently made it to where nobody could patent it.
My friend told me that unless I could make a substantial change to the form or function of the placemat (not just the look of it), I had just purchased something that was un-patentable.
So much for my "no-brainer".
Because it couldn't be patented, someone came along and did what I had done with my first product - they took a good idea, made a couple of small but noticeable improvements, and then made bank on it. They even made a video for their version of the placemat that bore more than a passing resemblance to the one I had made.
For quite some time after, I watched that company move over 1000 of those placemats a month (equaling over $30,000 a month in sales) while I sat on my pile of debt that was growing by the day.
I harbored no ill will towards them - they saw an opportunity and took action. I even bought a couple of their placemats, and I had to admit the quality was good.
Four weeks to find a new day job...or file for bankruptcy
Meanwhile, things were about to go from bad to worse. Back then, once you sold on Amazon long enough, they would offer to lend you money to buy inventory, and would just take the payments out of their payments to you.
The interest rates were generally not terrible, and with my sales going strong, I took out a loan from them for $50,000 and placed my biggest inventory order ever in the spring of 2019.
In early June, I noticed something funny happening - my sales were dropping. By this point, I was back to only selling my first product - the golden goose. I had no capital for anything else. Shoot, I had no capital period.
The problem with putting all of your eggs in one basket is that anyone can come along and sell a version of that same basket for less than you can. In my case, several different Chinese sellers started selling an inferior version of my golden goose.
I was still by far the number 1 selling version of the product on Amazon, but the arrival of five or six competitors selling theirs for much less was enough to take a consistent bite out of my sales...sales that Amazon was taking their payments for that $50,000 loan out of. You can probably see where this is going.
After doing some quick number crunching, I realized that my outgoing cash was about to eclipse my incoming cash. A thought quickly ran across my brain:
"You either need to find a new day job by the end of the month, or you're going to have to file for bankruptcy."
The carefully crafted illusion I had been living in for the previous year shattered in an instant. My first panicked thought once reality hit was this: "Had any of this actually been real?"
I rushed over to the house of someone who had become one of my biggest mentors in the eCommerce world, on the verge of tears. We sat down and crunched the numbers, and the good news was that yes, take my income out of the equation, and my business was profitable.
The only question was...how in the heck was I going to find a day job in less than a month's time? IT gigs didn't pop up that frequently, and that was pretty much my only bet for something that would allow me to make ends meet for my family of five.
I then went to the bank to speak to another business mentor, Gregg Motley.
"Bankruptcy isn't fatal." he said. I knew this was true - I had even had a good friend go through it several years earlier - but it felt fatal.
How could I have done this to my wife and three girls?
How could I have quit the job at the co-op?
How could I have done this to my dad?! He had genuinely, truly believed in me, and at that point I owed him nearly $60,000.
My wife took the news better than just about anyone. She reacted with empathy in a situation where most sane women would have lost it. She tried to comfort me, and told me we would get through this storm like we had all the previous ones.
I have never felt more like a failure in my entire life.
Picking up the pieces
Without me even knowing it, one of my eCommerce mentors had started talking with a friend of his who was also a local business owner, and they literally conjured a job for me out of thin air. If we're being honest, I spent most of my time on the clock either having panic attacks or going to my car and crying over what I had done.
They never said a word. Why God has seen fit to put some of these people into my life, I'll never know, but I'll always be grateful. Their kindness is the sole reason I was able to avoid bankruptcy.
Several months later COVID hit, bringing most business operations in the country to a halt. I was able to ride it out thanks to the substantial unemployment offered at that time, and once the world settled back down I was able to land an IT job again.
Another eCommerce mentor refinanced my loan to Amazon so that I no longer had that loaded gun pointed at my head. Because of that, I was able to start the slow process of digging out from under the debt I had accumulated - counting the Amazon loan, that total reached just under $150,000.
The process of getting out of the financial hole I had dug myself took years. My father passed away from non-alcoholic cirrhosis in August of 2023. Long before that he had told me that my substantial debt to him was forgiven, but even though he had forgiven it, I had not. Still haven't.
These days the business is moving steadily, and I actually know how to manage my books now. I'm still about as far from being a millionaire as you can get, but the small income derived from that business gave me the confidence to be willing to take a small risk on this one.
The Fastlane is still out there...
As for "The Millionaire Fastlane", well...it's real. I've watched several friends/mentors (including two local ones) successfully follow exactly the process that book lays out in the ten years since I started my business. You'll read about some of them on this very site in the weeks and months ahead.
I've also met incredible men like Joe Works and Al Niece, men whose stories are a testament to the principles laid out in that book, even though their success came long before it was published. The fundamentals of entrepreneurship have been around for centuries, and they never change.
Writing this series actually got me in the mood to give that book a listen for the first time in 11 years, and it's the same potent kick in the rear end now that it was back then.
It's not always a feel-good book, but what it teaches is real - you really can accomplish just about anything you put your mind to if you're willing to put in the hard work and the discipline required to do so.
It's the discipline part I still struggle with, but I'm getting better. While I now know the ins and out of managing the finances of a business, managing my personal finances has always been another issue altogether.
That being said, Karen and I recently hired a self-described "AuDHD" financial coach, and for the first time in my adult life, I feel like I'm making progress in that area.
Why an "AuDHD" one? Well, you'll find out whenever I write "Diagnosed With ADHD at Age 45".
No, that's not a joke.
