How to beat the competition by hiring them and other ways to grow a business with entrepreneur and The Startup Squad author Brian Weisfeld
The Startup Club author Brian Weisfeld joins Bobbi to share the story of how he beat the competition- by hiring them while he grew his first business in elementary school. He also shares an every day money tip about lowering your subscription bills, even if the initial phone calls threatening to cancel fail.
Brian's money story
It definitely was my first business, and I think I was in sixth grade at the time. I've somehow managed to buy a hundred pounds of gummy bears in bulk. And I hired my friends to sell them. And we sold them in our elementary school. My father was an accountant and I recently found the paper ledger that I kept with the sales of all my different friends. And I'm proud to say I was the highest sales person as well as the founder of the company.
Bobbi Rebell:
Where did you get the idea to sell gummy bears and how did this business actually function? Where did you get the capital to start it?
Brian Weisfeld:
I was always interested in business, and took birthday money and allowance money and pulled it together to buy these gummy bears. And I knew that my best bet was to get my friends and as many people to sell them as possible, because as soon as I started selling them, everyone else is going to have a great idea to sell gummy bears or some other kind of candy. And so I hired most of my friends, and I had almost all the other entrepreneurs essentially working for me, taking them out of the market before they can even do it themselves.
Bobbi Rebell:
So you basically hired the potential competition to make sure they didn't start competing businesses.
Brian Weisfeld:
Exactly.
Bobbi Rebell:
Do you remember why you chose gummy bears? What was it about that product that appealed to you? Did you think about better profit margins for example? What was it about gummy bears?
Brian Weisfeld:
I liked gummy bears. That was it. And I do school visits now, and I tell the kids that I sold a hundred pounds of gummy bears. And then I tell them, well actually I ate two pounds of the gummy bears, so I really only sold 98 pounds.
Bobbi Rebell:
How business savvy were you at the time? So your book goes into things like pricing strategy, profit margin, marketing and so on. And also by the way, dealing with competition and what's fair competition and what's not fair competition. How much of that did you use when you were building your gummy bear business?
Brian Weisfeld:
I definitely had a sense of profit margins. I knew exactly what I was paying for the gummy bears. I knew how much I wanted to essentially sell them to my sales team. And the ones that I sold for myself, I definitely had a higher profit margin on. But I didn't want to get stuck with a hundred pound of gummy bears. And so having my friends essentially selling it wholesale to them, allowed me to make some profit and also to take some risk off the table as well.
Bobbi Rebell:
And what was the biggest challenge at the time?
Brian Weisfeld:
Not getting caught.
Bobbi Rebell:
Oh, it wasn't above board? What was going on there?
Brian Weisfeld:
Well we were not really allowed to sell candy in schools. And so...
Bobbi Rebell:
Oh you were selling it in school. Okay. Because the lemonade stand is actually a school sanctioned project. This was not officially above board.
Brian Weisfeld:
Yeah. So hopefully my old principal is not listening right now.
Brian’s money lesson
Brian Weisfeld:
So I would say two things. One is to think like an entrepreneur, even if you don't want to start your own business. The value of that entrepreneurial mindset, to see opportunities where other people see problems, and to get comfortable with risks. And to realize that failure is only what happens when you don't try. It's not what happens if you don't succeed. That mindset can make you more successful, regardless of what you want to do in life. And then the other thing I would say is the value of the team. I hired, the friends of mine, these were my friends. They were all smart people. I knew they were aggressive. And these were people I knew I wanted to work with, and I would be successful working with, even in sixth grade.
Bobbi Rebell:
So you vetted the team. But sometimes people say, oh, it's not good to have friends work for you. Maybe work as equals, but working for you can often really strain a friendship.
Brian Weisfeld:
I completely agree. It's a very high risk, high reward strategy. Certainly there's a trust factor that happens with friendship, but it is clearly a challenge. In this case it was pretty easy because they were almost subcontractors. I was selling them gummy bears at wholesale, and they were then going and reselling.
Bobbi Rebell:
Yeah well it sounds like you also knew their character. And because they were effectively independent contractors, the risk was on them, and the reward was on them in terms of they were basically running their own mini businesses, and you are effectively providing the merchandise, but you weren't necessarily controlling how much they made. Or was it up to them?
Brian Weisfeld:
Totally agree. I wasn't working with them on their sales pitch or their marketing or those sorts of things. They were just buying the gummy bears from me in bulk, and going off and doing it.
Bobbi Rebell:
And you never got caught.
Brian Weisfeld:
I never got caught.
Brian's everyday money tip
Brian Weisfeld:
Yeah, this is always a personal favorite. I've been doing this for a few years. I probably started it when things were just looking to save some money. Essentially every subscription you have, it's a newspaper, it's a cable provider, it's a entertainment, it's satellite radio, whatever it is, call them and cancel. Just tell them you want to cancel because it's too expensive. They'll put someone on the phone with you and you will get a much, much better price. I've had price savings of probably 50 to 70% in some of my subscription just by calling and saying, I want to cancel.
Bobbi Rebell:
And what if they won't budge and you still do want the service?
Brian Weisfeld:
Well, that hasn't happened to me yet. I'm usually pretty careful about saying, it's too expensive. What can you do? And if they say, hey there's nothing I can do, I'll say, well, are there promotions or other things, is it worth calling back? And a lot of times they will tell you, well the year end or the quarter end, we'll run something, so maybe check back with us then.
Bobbi Rebell:
Can you give us a specific story that illustrates how you do this?
Brian Weisfeld:
Yeah, so the one... I hope this doesn't cancel my satellite radio subscription. I have satellite radio in one of my cars, and I think they charge $15 a month or something like that. And I called to cancel and I got a six month subscription for like $30. [crosstalk 00:10:38] Instead of $15 a month and you just... I leave myself a little calendar invite at the end of six months, call them back and cancel it again, and extend that same program.
Bobbi Rebell:
I think that calendar invite is the key thing because a lot of these companies, and look, they're trying to do business, so more power to them. But they count on the fact that you will forget, that it's only a temporary break on the pricing. And that you'll forget and then they'll bump you back up. So you put the calendar invite in, so you know when you need to cycle back, and go back and ask for that discount again.
Bobbi’s Financial grownup tips:
1. Let's talk about the concept of frenemies, because it speaks to being practical about people that aren't really your friends, but you don't want to be your enemies. So you make them allies, carefully. Although I have no doubt Brian's friends were genuine in that case. He did recognize that if he didn't get them on his team, they could create another team that would compete with him. If you have a goal and there was someone that could potentially become a stumbling block, think of a way to get them on your side, instead of fighting them for a bigger slice of the pie. Find a way to work with others to grow the pie.
2. Don't buy too much stuff. I admit this is only tangentially related to this story, but I can't help but think about it. In this age of going to Costco, and the economies of buying in bulk, and all the mistakes that I have made and my family has made. I couldn't help but notice that he did mention that at least a part of the reason that he outsourced some selling, was that he simply bought so much. It was fine for his business. It all worked out, but in our lives, unless you have a huge need and a lot of storage space, it's okay to buy small. Even if it seems like a bargain, buying more than you need rarely rarely gets you ahead. Especially if you don't have a need for it, and you're not going to use it anytime soon.
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7 Books for Parents and Kids to Read Together to Learn About Money
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