Business, As Usual

dcblogsdhqfran5.jpgFor anyone wondering exactly what Tasers are, you can check out their website HERE. Personally, I think they represent an excellent means of non-lethal self defense and I’m excited to be able to carry them in our store.

newstoresshqsdhq.jpgSpeaking of stores- we’re actually launching two new websites. There’s SelfDefenseHQ (which I just mentioned) and also SwordHQ which we’re hoping to get up in the next month. There’s still some design tweaking to do, but we’re getting close. I’m always floored by how much stuff there is to sell! Self defense items, emergency preparedness products, kitchen knives, multi tools, flashlights, custom knives, imports, fantasy stuff. We’ve barley scratched the surface. If only there was more time…


Jake’s Wife, Megan, asked me to answer a few questions for her business class. I thought I’d post the questions and my answers here (you know, since it’s commerce stuff!).


1. You

Name: Cameron Hughes
Age: 30
Hometown: Lehi, UT
Education: (high school and college) Meridian High School (graduated in ’96). Attended BYU- three classes short of graduating when I decided to, for lack of a better word, “bail”.

Q. What did you graduate in?
A. I would have graduated in English. My plan was to attend Law School and practice law with my father. During my first pre law course I realized my plan wasn’t going to work out (I hated law).

Q. Did this major have anything to do with starting a business? Was it helpful and in what ways?
A. Not really- English and knife retail share very few commonalities. But yes, the English background was very helpful. Website content is extremely important and the English background gave me an edge in regard to what was readable, clear and engaging.

Q. Do you have any relatives who are entrepreneurs, and did they have an influence on your business?
A. Not a one!

Q. Did you have any other role models or mentors?
A. A friend of my wife’s family runs a business online selling model (i.e. cars and planes). I thought to myself, “If he can do it, then I can do it.” I talk with him from time to time to get business advice. Most of my inspiration comes from INC magazine- there are some excellent contributors that I admire a great deal.

Q. Did you have any business or self-employment experiences when you were young? How important were those experiences to starting your own business?
A. I was always into something. I was always trying to start some kind of business. Mowing lawns, babysitting, painting. I used to haul my sister’s toys down to the corner by our house and sell them to the neighborhood kids. I was big into eBay too (not so much anymore). All these experiences might be classified as “cute” now, but they really drove home the idea that it’s hard to work to start and run a business.

2. Your Business

Q. How did you spot the opportunity to sell knives, and how did it develop?
A. Originally I just collected knives. I found a couple of good sources to buy them and I’d get a dozen at a time. I could sell eleven on eBay and make enough so that I could keep the last one without being out anything. Pretty soon I was making enough extra that I acquired a small inventory and decided to build a retail website.

Q. What were your goals when you started? Did you picture being where you are today?
A. Originally I was just excited by the idea of having a piece of the Internet pie. It seemed incredible that I could pop something online and someone would buy it. Selling knives online seemed like a fad that I was lucky enough to stumble on. But after awhile I realized that what we had was a viable business and my goal shifted to growth. “How big can it get?” was the question foremost on my mind. I never imagined for a moment it would be anything like the business we have today.

Q. How did you evaluate the opportunity in terms of the financial requirements and income potential?
A. It didn’t take much to officially start the company so risk wasn’t a big factor. As long as we made more than we put in things were fine by me. Initially we didn’t take anything out of the business for ourselves- any profit was put back in to facilitate growth.

Q. How much capital did it take?
A. I borrowed $2000 from myself to get “a lot” of inventory.

Q. How long did it take to reach a positive cash flow and break even sales volume?
A. Our only expenses were advertising, website hosting and growth costs (buy more than you sell). We had these costs covered a month after our website launched.

Q. How did you finance your business? Did you use your own savings, family and friends, angels, banks, bootstrapping?
A. I used our personal savings. My wife was horrified. Since then we have used the bootstrapping technique.

Q. What are some pressures or crisis your business survived in the early periods of it?
A. There was a period early on where I had hired my first three employees and I thought I could let them run the business so I didn’t pay enough attention to the day to day operations. Sales suffered, cash flow became critical and I had to lay everyone off. I ran the entire business by myself for three months. It was pure hell.

Q. What was your family situation?
A. When I started the business it was just me and my wife. By the time the business could actually support us we had our first child. The crisis happened right around the same time as our second child came (stressful!). We have a third child now and sometimes I worry I’m not spending enough time with everyone. The business often demands more of me than I’d like to give.

Q. Did you find or have partners? Are there any attributes among partners or advisers that you would definitely try to avoid?
A. Originally I had a partner. Everything was supposed to be shared 50/50, but I ended up doing most of the work and eventually bought out his half of the company. As much as I hate to say it, try and avoid a partner if you can. If you are going to have a partner make sure it’s someone you can trust the way you would trust yourself. Advisors are fine, as long as they have your interest in mind. Too many of them, in my experience, have hidden agendas.

Q. Did you have a start-up business plan? If so, what were the basics of it?
A. Originally no. But once we realized we had a “real” business we did map out a basic strategy. It went something like, “Be the best, offer the most comprehensive product selection, offer the lowest price, offer the best service, provide the most enjoyable website shopping experience possible. Always buy products we think we can sell, always sell more more than we get them, take into account hidden expenses, do what’s best for the business.”

Q. What was your most triumphant/exciting moment? Your worst moment?
A.The most exiting thing that I can remember was the first time we broke a million in sales in one year (I think it was 2005). I think it will actually be more exiting to launch our physical retail store (next month) but I don’t know yet. The worst moment was working by myself (a long three month moment) and wondering if things were going to get better.

Q. What were the most difficult gaps to fill and problems to solve as you began to grow?
A. Order fulfillment was the biggest problem initially. Getting the product from our shop to the customer was an epic uphill battle. Hiring employees was pretty difficult (and we’ve hired some bad ones in our day) as well. The bigger we got the harder it became to assign roles to and manage everything (I’m a bit of a micro manager). The biggest problem we have right now is stock- we don’t have an effective enough way to manage inventory reordering.

Q. What are your plans for the future? Expand, Maintain, Harvest?
A. For the time being the focus in on getting thing running smoothly and continued expansion (like our retail store- into the local market we go!). My feeling is that if you’re not moving forward you’re moving backward. We have a slew of new websites we want to launch and the future looks bright.

Q. Have your goals for the business changed? How?
A. I have higher expectations for it than I did in the past. I think it’s capable of more so my goals are a little more ambitious in regard to growth, sales and product selection.

Q. Have your personal goals in life changed? How?
A. I don’t think my personal goals have really changed.

A. What do you consider your most valuable asset(s)–the things that enabled you to succeed?
Q. Relentless determination, hard work and a little bit of hardheaded ego get the business off the ground. But ultimately it’s having the right people by your side that determines if you’re going to succeed or not. A business operation is seldom a one man show.

Q. If you had to do it over again, would you do it again in the same way?
A. I honestly don’t know. Everything we did – good and bad- got us to this point. If I could go back in time and just do the good stuff I suppose I would, but ultimately (and I know this is a big cliché) the mistakes I’ve made have been a valuable help.

Q. What do you feel are the most critical concepts, skills, attitudes, and know-how you needed to get your company started and grow to where it is today? What will be needed in the next 5 years?
A. Well, the things I mentioned above. Also making sure everyone in a business is getting along is very important. We had one employee awhile back and he infected everyone with his depressive attitude- if the people in the business aren’t happy then the business isn’t happy. When it comes to business I get most of my know how from business books and magazines. Also, I reply heavily on the input of everyone here at work- if we make decisions as a group they are generally better (two heads are better than one). I’m not thinking five years ahead yet…

Q. What things do you find personally rewarding and satisfying as an entrepreneur? What have been the rewards, risks, and tradeoffs?
A. When I sit in the store look around it’s exciting to see my vision coming to life. It’s very rewarding when customers are happy or compliment the store, selection, service and staff. Building a business is kind of like playing with big Lego blocks. But not a day goes by without thoughts like, “What am I doing?” or “Is this really going to work?” There’s a lot of responsibility that rests on my shoulders and I’m not always comfortable with that. As I mentioned earlier sometimes I wonder if I’m home enough- I don’t want to sacrifice my family for the sake of “success.”

Q. Who should try to be an entrepreneur? And who should not?
A. I used to think anyone could do it. I don’t want to sound egotistical, but I don’t believe that anymore. If someone has a passion for something, if they are dedicated to it and have the means to make it in to a business they should give it a shot. But they need to be honest with themselves- if they can’t do it they should call it quits before it becomes a financial liability or an emotional black hole. There aren’t any rules about who should be and who shouldn’t be and entrepreneur.

Q. What advice would you give an aspiring entrepreneur? Could you suggest the three most important lessons you have learned?
A. Do something you like. If you enjoy your work you’re much more likely to success. Also surround yourself with the right people.
Lessons learned:
1) Work hard (and work smart).
2) Do what’s best for the business, not yourself (if everyone takes care of the business then the business can take care of everyone).
3) Hire people who are better than you. Put your ego aside and get the right people for the job.

Q. Would you be willing to be on an advisory committee for my business?
A. But of course. Make sure I don’t have a hidden agenda though!

A Brief Overview and Welcome

This is my first post! It’s actually just the content from the “About Cam” page but I’ve ingeniously used it again here as a blog entry. Allow me to welcome you to my newest blogging venture: Cam on Commerce. I’m your host, Cam. I’ll be talking about- you guessed it (and if you didn’t then you may want to bail here)- Commerce!

I’m using this website as a venue to collect innformation I hope to use in a book one day.  At this point the book doesn’t have a name or anything fancy like that. I’ll frequently make references to the “book” so you have to pretend that what you’re reading is printed material (and you you want to print out this blog you have my blessing).

Feel free to send me questions about ecommerce subjects- I’ll do a Q&A section for some posts (and then cleverly work the into my book to create the illusion of substance!). So, without further ado, let the “book” begin.

First things first: I want everyone to know who this book is for. Far too often people pick up a book and they scan page after page desperately hoping the book can help them. They buy the book, they read it, and discover that they are not the book’s intended audience (It turns out “Asymmetric Cellular Division” wasn’t about why AT&T and Cingular sucked).

This book is for anyone who has any interest in ecommerce (specifically geared toward smaller private endeavors- not things like Amazon). You may be curious about what running an ecommerce website entails. It may be your first time setting up a commerce oriented website or it may be your second or third (indicating you need this book). You may already be successfully running an ecommerce website (you still need this book, dammit). You may have a brick and mortar store and be considering and Internet presence. Again, it’s for anyone with any type of entrepreneurial ecommerce itch (not to be confused with a tick bite).

I try to cover anything relevant to small scale ecommerce. I start at the beginning with “the urge” (which is the initial idea that eats at you until you do something about it). We move onto product or service selection and competitive advantage. We work through creating an identity, building a website, creating a fulfillment framework and then cover advertising and website traffic. Finally we talk about what to do if success hits, what to do if success is MIA and touch on growth strategies and exit strategies. If this sounds dull go find yourself a comic with some pictures.

So what makes me qualified to talk about any of this? I have a computer, some spare time and can type pretty darn fast with only two fingers. Also, for the last five years I’ve been involved with the development of ecommerce software and I’ve started several websites (using that software) that are now multimillion dollar companies. I don’t mean to toot my own horn but if my claim to fame was that I’d spent the last five years eating oatmeal in a sensory deprivation chamber to achieve inner peace I might be the wrong guy to listen to. Toot toot.

About Me:

My name is on the front of this book. I’m not so self centered that it needs to be repeated here (after all it’s on the front cover of this book! Just getting myself psyched up- remember I said this was going to be a book). I’ve been programming since I was fourteen. Unfortunately I can’t program any better now. Luckily this book isn’t about programming, it’s about commerce, specifically ecommerce. I’ve been involved in commerce since I was seven years old. How about that?

My grandmother used to operate a health food store. For some reason I thought if I drew pictures of Grimace, the purple McDonald’s character of years past, hiding in the forest people would want to buy them. I put them for sale in the health food store. No takers. Not much later I got a copy of Print Shop for the Apple IIe and tried my hand at designing birthday cards. Nope. So I began printing out signs advertising my willingness to mow lawns for spare change. Nothing. Weeding? No. Babysitting? Nada. It wasn’t until I began hauling my sister’s toys down to the street corner and selling them to kids who were coming back from school that I found my calling. Retail.

EBay was thrilling for me. From the moment I learned of its existence I was an avid user and proponent. This was my first real experience with ecommerce. I sold anything I could get my hands on and became quite obsessed with the whole idea of Internet retailing. I decided at the early age of fifteen that my destiny involved some type of ecommerce retail business. I used eBay for years until one day I read something about webstore technology. How wonderful! I could bypass eBay, the seller fees, the non-paying bidders, the lack of control in my listings. I enlisted the help of a good friend and we created our first website for selling pocket knives (sell what you know).

Our original website was incredibly basic- we could showcase items and people could add them to a cart a checkout. We kept track of orders on a spread sheet and everything was a wonderful mess. We spent a considerable amount of time looking for more powerful ecommerce software but really didn’t have any luck. And then it hit us! We would build our own ecommerce solution and our website could be the perfect testing ground. People who actually used the ecommerce software they designed to run a retail Internet store! What a novel idea.

Watch Out. Dangers of Business Diversification.

 I thought it might be interesting to talk about a business puzzle I’m facing. I’m going to map out a bit of my business theory (and I have no illusion that what I’m going to write will be unique, per se) and apply it to a situation I’m dealing with at work. To be very specific we’ve started adding some watches to our store and I’m trying to decide if it’s a good idea, a bad idea or neither. Hang on while I launch into some background business blabbering (this will probably end up boring everyone).

What follows is not a mathematical formula, merely an relationship. Desire fulfillment (DF)= revenue acquisition (RA). If you can fulfill a/the desire of an individual by selling him/her a product/service then you can acquire revenue from that transaction. Example: Company “A” sells food. Individual  “B” desires food so they purchase it from Company “A.” Very simple.  Things to keep in mind: 1) Desire fulfillment could be considered “utility” for those who are more familiar with that term. 2) The differentiation between needs and wants is irrelevant to this particular thought process so it will not be discussed. 3) Granted, some desire fulfillment does not result in positive revenue, but we’re discussing transactions/resolutions which do.

So then, it’s a pretty easy jump to the idea that More (M)(DF) = More(M)(RA). Company “A” sell sells food and clothing. Individual “B” purchases food AND clothing from company “A.” Consumers, in general, have a budget (whether self imposed, or created by financial limitations). Shoppers are going to spend “X” amount of money. “X” amount may include funds for clothes, food, books, hobbies, recreation and so fourth. The more needs you (as a provider of goods/services) can fill the more of the consumer budget you can expropriate. This is a generalization, of course. To reiterate: the higher the frequency of DF you can successfully convert, then more RA potential you have.

Real World Application (RWA): My company sells Knives. I don’t carry just one line. We have knife brand “1” and “2” and “3” and so on. If I only carried brand “1” people would only be able to purchase brand “1.” This is not in my best interest. We stock as many products as our Niche (more on this in a second) allows. Subsequently people often simultaneously purchase selections from numerous brands, thus increasing our revenue. Our current “M” factor isn’t too bad.  A big “whoohoo!” to us for our ability to fulfill multiple consumer desires (sarcasm is lost in text so I will state its application). However, we have what I call “Niche Syndrome” (NicSyn- like the president… good thing, bad thing) which will be discussed later.

An important tangent: One thing a company must have in order to be successful (and I use this term loosely) is a perceived advantage (ADV). It’s as simple as that- there must be something that your company appears to do better than another company or people will not purchase products/services from you. The perceived advantage can be almost anything: lowest price, best looking pictures, largest selection, most intriguing product descriptions. It doesn’t matter- it just has to be an advantage. There are two polar types of retail/service outlets. The  “megastore” and the “niche store”. Both of these business models serve as a type of advantage.

Walmart is the classic megastore. Their DF level is through the roof. A consumer can get nearly anything from a Walmart store. Their RA is phenomenal. And their ADV is size, selection and price. It’s a hard combo to beat. The good news is that there’s no reason to fight it. The niche store exists solely because consumers DF requirements are not limited solely to one ADV. Other advantages incorporated by niche establishments can create plenty of DF.  Niche stores offer things like “specialization,” “customer service” and “trust” to offset their limited (in comparison to a megastore) inventory (a DF component). A store’s RA can be impacted significantly by their ADV. So ADV(NF) = ADV(RA) is also true.

 Megastores have a huge advantage over niche stores in one area in particular. That area is diversification (DIV). The NicSyn mentioned before stems from the limited inventory potential of the Niche Store. If you sell kitchen items, you probably shouldn’t sell engine oil. In theory the same person who might need a set of kitchen knives does drive a car and may need the oil you sell, but this kind of retail mismatch tends to make people uncomfortable. NicSyn does not allow for extreme diversification and so the product potential is somewhat limited. The question becomes how much diversification can a niche store have before it impacts sales? How will the sales be impacted (positive, negative, no change)?  Not discussed here is the Meganiche store and the myriad of other hybrids that exist- once more, not relevant in this instance.  We’re now heading back from the tangent to deal to deal with my RWA.

We sell a diverse selection of knives on BladeHQ. But we are, ultimately, a niche store. Our DF level is probably very high in regard to people who have budgeted for that we sell. We have some significant advantages (bear with me folks- what follows is not supposed to be a gloat fest, I’m merely trying to illustrate one of my earlier points): A comprehensive selection, a visually appealing website, nice pictures, fair prices and good customer service. So for us the result so far has been that M[ADV(DF)] = M[ADV(RA)] .

The questions are: Will (M)(DIV)[ADV(DF)] = More revenue for us, where DIV= Watches. Can we acquire more of a customer’s budget and raise our DF level by diversifying our selection? Do knives and watches go together well enough to help our RA rise or will it have a negative impact? Will people buy watches instead of knives (this would create a neutral effect)? Maybe that’s a lot of unnecessary discussion to arrive at such simple questions…

We’ve actually added some watches to the website already, but have not actively promoted them to date. I’m somewhat apprehensive about this new project. Eventually the plan is to create a whole new niche store that sell watches exclusively, but in the meantime I’m hoping for a positive result with this experiment. We’ve had some luck with out other website (BladePlay) branching out into self defense products.  Somehow lower end knives and personal security seem to have a tighter relationship then high end knives and watches. Still, my hope is that people who buy high end knives also buy watches and we can fulfill some of their watch DF in addition to their knife DF. Fingers crossed. 

Our plan is to try and make the watch section of BladeHQ unobstructive. It will, in effect, be it’s own watch store embedded within our knife store. We don’t want want to affect the knife shopping experience, we want to enhance it. Off we go, fingers crossed, time will tell.