Who Needs A Day Job When You've Only Got $100,000 In Debt?!

This column is part four in a series. Part 1 can be found here, Part 2 can be found here, and Part 3 can be found here. The final part will publish next weekend.

Thanks to a tip my wife received from a friend, I landed a job at the ANW Special Education Cooperative in Humboldt. It was a 20% pay cut, but it was also a ~50% commute cut, and as far as I was concerned, the then still unidentified new business would make up for the cut in pay.

ANW was amazing - I was using my IT skills, but for a cause other than just making people much farther up the corporate ladder than me more money. Everything I did was directed towards the mission of helping special needs kids. I quickly had a sense of fulfillment I had not felt since the early years at Atkinson Industries.

Even better, I was back in Humboldt! In the three years since I had last been there, the amount of progress Joe had made on the downtown square was insane. The Coop office was downtown, and more than once I would see Joe himself out there working on a building.

This also meant I got to reconnect with my friends from B&W. I would visit the office, making a point to avoid the IT department and the former HR Director, who by then appeared to have been demoted. It was the best of all worlds - I was back in Humboldt, only this time I actually had some self confidence.

As for my would-be business, within a couple of months of starting at the Coop, I settled on a business model: eCommerce. I'd discovered the Fulfillment By Amazon program, where for a sizable cut of your revenue, you could send in your inventory and Amazon would store it, fulfill your orders, and make your product available with free shipping to every Amazon Prime member in the country.

With the help of a coach, I found a unique toddler product that I knew my own two toddlers would use, so I logged onto Alibaba.com, found the factory in China that made the product, and placed my first order for $3000 on credit (with six months of 0% interest to give myself some wiggle room).

In April, several boxes of inventory arrived and....sat in my living room for months.
All that work, all that research, all that hype, but as it turns out, I was absolutely terrified of actually pulling the trigger on this would-be business.

By June, I told myself that it was time to put up or shut up. I started creating my listing for the product on Amazon, and had Kenny Felt come to the house and take pictures of my two youngest daughters using it. These pictures turned out AMAZING - I cannot overstate how critical those photos were in the early success of my business.

With my Amazon listing created using Kenny's absolutely killer lifestyle images (marketing jargon for pictures of people actually using your product), I shipped my inventory to Amazon. My product went live on July 12, 2016, which just happened to be Prime Day that year. To my shock and great surprise, sales took off immediately.

It was really happening - this thing I had been working on for months and months was bearing real fruit. I was officially a successful business owner like my father.

As the sales rolled in, the words of Luke Skywalker from Return of The Jedi echoed in my head:

"I am a Jedi, like my father before me."

Alas, while I had finally tapped into my father's work ethic, I had not yet tapped into his financial management skills. Also, I was very new to importing from China, and that was about to bite me in the rear.

My second order of inventory went without a hitch. Within a day of my third order of inventory going live, I received a dreaded one-star review on Amazon, which was one sentence:

"HORRIBLE TOXIC SMELL!"

This is not the kind of review that is good for a product made for toddlers. I quickly opened one of the cartons I had not yet shipped to Amazon, opened up one of the packages, and got hit with a gust of a, well, horrible toxic smell,

As it turns out, my product was made of silicone, and silicone has to air out after it has been molded. As such, the factory had punched airholes in the packaging of both prior shipments....just not this one.

I quickly scrambled, reached out to apologize to the customer, and put in a request to have Amazon send back ALL of my inventory. That in and of itself was not cheap, nor was all of a sudden having no inventory up for sale on Amazon.

I emailed my supplier, and was told there was nothing they could do, but they would give me a 10% discount on my next order. How kind of them. I realized then that I had just eaten $4000, and that I needed to have every order inspected before it left China from then on out.

This was not the first expensive lesson I would learn the hard way. Nevertheless, it was a mere bump in the road, and I was certain I was destined to become a multi-millionaire. I expanded the line to another product, and though it sold well, in hindsight I'm certain I lost money on every sale.

I was wracking up a LOT of debt, but I told myself once we reached a certain level of sales, I would reach out to potential investors, and all would be well. With their financial support, we could scale the business up to seven figures, and that debt would be a drop in the bucket to them.

Needless to say, I was totally delusional.

I was also very poor with managing any profits that came in. My youngest daughter's birthday is coming up, and we're not sure what to do? Let's have the whole family and my brother's family go to Build-A-Bear, all on Uncle Nick!

I never bought anything big, just burned the money on stuff like that - I have no Tesla or big screen TV to show for it. It just came into my business checking account, what didn't got to fixed costs or taxes got transferred to our personal business account, and then it was gone in no time.

This was somewhat sustainable because of how well my sales were, as well as my job at the Coop, the one I loved.

Of course, I then convinced myself I didn't need it anymore because I was Mr. Big Business Man, and put in my notice.

I had also by that point racked up about $100,000 in debt, which made it a really ideal time to leave my one reliable source of income.

Our final part, Part 5, publishes next weekend.