by Tom Gaylord
Writing as B.B. Pelletier
Announcement: I’m in Ohio participating in the first annual Pyramyd Air Cup. If you’re in the area, please stop by to chew the fat with airgun hunter and writer Jim Chapman, Airgun Reporter Paul Capello and me. Even if you don’t want to shoot in the silhouette, field target or other competition matches, there are plenty of guns to shoot and try at the practice range. I’ll be returning home on Monday. In my absence, my wife, Edith, will be keeping a closer eye on the blog. I’d appreciate it if our regular blog readers would step in and answer blog questions while I’m gone.
TIP #1: People will always struggle
TIP #2: It has to be good
TIP #3: You can’t make money by losing it
This is an old report I wrote for my Airgun Revue magazine in the 1990s. I’ve put it on this blog once before, but that was years ago and it has become buried. We have so many new readers and the tale is still very applicable, so I dusted it off and updated it for today.
When I worked for an engineering firm many years ago, the private dream of some of the younger engineers was to quit the firm and start their own company. A few of them actually did start up businesses, and a small percentage of those are still in operation today. Our company is one, and I know of one other out of a dozen startups I witnessed in the 1980s.
The companies that died did so for the same reason IN EVERY CASE. They didn’t have a clear idea of what they were doing or what they wanted to do. The saddest one was when my former boss quit to start his own company a year after I left the firm to join my wife’s desktop publishing business. He rented office space, had a door sign painted, got office furniture, equipment and telephones, and had stationery printed. Then he waited.
I got a call one day, and it was my former boss asking me how to get business! He had started a company without any business prospects, and had no idea of how to get any! It was a sad call, because I could tell he hadn’t the first inkling of how business works. There was nothing I could do for him except hope that he could find another job when his life’s savings and borrowed money ran out. But for some of you, maybe I can help.
You’ve decided that you want to start an airgun business. Why? Simple — you like airguns, and you’d like to work around them all day instead of…well, you fill in the blank.
It’s an old story. Somebody decides they don’t like their current job, and they want to try something different. It’s a story that knows no boundaries of age, gender, or position in life. No matter who you are, at some time in your life the grass has looked greener on the other side of the fence. So, you check things out before making your move — good idea! You learn that in the field you want to enter, some are doing well and others are struggling.
People will always struggle
No matter when you look, there will always be some folks doing well and others struggling. That’s true in any field, at any time. There were successful people doing very well during the Great Depression, but their stories never get told because they don’t fit the pattern we’ve come to expect.
Right now, I know airgun companies that tell me the market is flat, that nobody is buying. I also know other companies that can’t keep up with the demand. Just remember, it’s always possible to succeed or fail. What should you do about that?
Unfortunately, this is where many people decide to close their eyes and hope that the whole thing is a crap shoot. That their chances are as good as anyone else’s. They sink a bunch of money into inventory and “hang out their shingle,” so to speak. They take out an ad or two and wait for the world to beat a path to their door. It never happens! It’s like putting a lemonade stand at the curb in the middle of January! Inside 6 months to 2 years, their money and patience has run out, airgunners are buying their stock at fire-sale prices — and they’re looking into model trains, fly-tying or divorce proceedings.
However, a few people have sensed that the REAL pathway to success is to specialize. They will avoid the mundane airguns every store carries and go for the exotic stuff. And, folks, there will ALWAYS be exotic stuff. If you turn over enough rocks, you’ll eventually find something that looks different. Maybe people would like something different. You know — new toys?
The trouble with different is that it isn’t always good. Sometimes, different is bad. Sometimes, you rediscover something somebody else found earlier and decided to leave it alone. If you pursue it, you may learn why.
It has to be good
It isn’t enough to be different; it has to be good, too. I have an advantage on most people, because hopeful airgun inventors bring their ideas and creations to me all the time in hopes of getting a little publicity. Most of these new things are so far off-base that I never mention them unless asked. But this article is a tutorial, so here’s an example of an idea that came to me several years back. A man called and told me he had discovered a secret energy source that would increase the power of any airgun EIGHT TIMES. It was simple to use and always produced the same great results.
When I asked him whether the eight times increase was in velocity or muzzle energy, he sounded puzzled. In a brief conversation, I discovered this man didn’t have the slightest idea of how force is measured in an airgun — or anything else. He just knew he could increase airgun performance eight times. As soon as he had all his patent protections, he would get back to me with a prototype to test. It’s now 20 years later, and I’m still waiting. There are many more stories about cockamamie inventions, but you get the point.
Well, then, how about competing on price? Yeah, sure. Like THAT hasn’t ever been done! If you’re going to compete on price, first read Sam Walton’s autobiography — then visit a Walmart or a Sam’s Club and find as many things wrong with the operation as you can.
What do I mean? I mean forget about competing on price. It’s been done. I’ve actually seen a person buy guns from an online discount airgun retailer, then sell them for LESS THAN HE PAID FOR THEM! His idea was to drum up business! Like jumpstarting the market. What he’ll do is drum up business for the online guy!
The reason the casinos never close in Las Vegas is because they never lose money. Oh, be stupid enough, and you can lose money under any circumstances, but the casinos aren’t stupid. The ones that were stupid aren’t open any more.
You can’t make money by losing it
You need to sell something that rewards you either for the risk you took to buy it and hold it, or for your time — or, hopefully, for both your risk and your time. That is what business is all about. You don’t “make money by spending it,” as some have come to believe.
So, what does it cost to do business? Okay, you have found a manufacturer in far-off Pangea who will sell you a breakbarrel air rifle for $60. Hurrah! You attempt to place an order, only to discover that they want you to buy one hundred of them at that price. No hundred, no deal.
Then it isn’t $60 any more, is it? It’s really $6,000.
Okay, you expected something like that. You have some savings, and your mom gives you a loan for the rest. Or, better still, you borrow on your gold card (that’s what you got it for, wasn’t it?).
You close the deal by sending your contact, Gort, an international money order for $6,000. Oh, we both know there’s shipping, but Gort promises to bill you for that.
He does. You just got a fax that your shipment is boxed and ready to go, all you have to do is send another 12,000 Pangean Stones, and it’ll be on it’s way!
Never mind what a Pangean Stone is! You’re getting a valuable lesson in both business and world economics. Wharton and Stanford would charge you many times what you’re paying, and the lesson wouldn’t be half as intense.
Now, you DO have to borrow from mom, because your VISA is maxed out. Fortunately, you’re the apple of her eye, and she writes you a check for $735.00 — the cost of 12,000 Stones, plus a little something for the bank for the transaction.
Then, you discover that there’s more to the transaction than you thought. Your local bank — the people who you’ve been banking with for 25 years — are suddenly not your friends anymore. You’re dealing with bank employees you’ve never seen before, and nobody knows anything for certain. They can tell you the rates on a 6-month CD, but that’s not what you want, is it?
Making a long story short, you finally send a lot more money to Gort. You send $41.45 more than necessary because the Pangean Stone is on a downward slide against the dollar, but what the hey!
You wait. Two weeks go by, and you hear nothing. You fax Gort, only to find that the number doesn’t work any more. You sweat. Your VISA bill comes, and you pay the interest — but you can’t charge another thing on it until you pay some of the principal. VISA loves you! Time passes.
Then, you get a fax from Gort. He got your money order, and it was for more than he needed, so he’ll credit your next order for 179 Stones. The guns are on their way as of last Thursday.
Happy days! You place a lengthy ad on the Yellow Classifieds web page using the photo Gort sent you. No sense spending money on a print ad when you’re trying to maximize profits, is there? You’ve decided that the guns look like they’re worth $150, so you’ll sell them for $149.95, and you’ll clean up! Nobody has a breakbarrel spring gun in the same class for anywhere near that price. You’ll make the difference between the sale price and, let’s see now, $60 per gun plus $12 for shipping, and you know there will be some customs, but you don’t know for sure how much. Say $25 to be safe. You will sell a gun for $150, and it only cost you $97. That’s a profit of $53 for every sale!
You wait. Your Yellow Classified ad is up and you renew it every day to keep it on the first page — but the guns aren’t here yet. The phone begins to ring, so you begin to take orders.
“They aren’t in stock? Well, when will you get them?”
“I expect them any day!” As you say this, you hear a conversation you once had with another importer who told you the same thing. You knew he was lying, and you told him so to his face (well, over the phone, anyway).
You pray this customer won’t do the same.
He doesn’t. He places an order. So do five other people out of 13 calls.
So, the money is rolling in. Not as fast as you’d like, perhaps, but things are just getting started.
You get a call from the port. Your guns are in!
You jump in the van and drive to the port the next day. Good thing you live nearby! You could have had a port agent handle things for you, but that would have cost extra, and you didn’t want to pay for the extra freight bill, either. So, you go to the port and get to learn how the shipping business works. The bill comes to $635.15 by the time you clear customs and get all the boxes into your van. You’re wet with sweat from loading the boxes (they wanted MONEY to help you load ’em!). But you finally have your guns. You were surprised to see what flimsy cardboard boxes they came in, but you figure that’s the way it must be done everywhere.
Now, you are an importer!
No, this is NOT the way it’s done everywhere! You have 41 guns so damaged by banging into each other that they can’t be sold as new. Wonder how Air Arms does it? Air Arms pays extra to have their guns packed in special triple-strong boxes. And, they eat guns, too — just not 41 percent!
You discover that the shipping insurance is $1,000 deductible. That’s why it only cost 12,000 Stones, instead of 14,500. It will take a minimum of eight months to get anything from the insurance company, and you fall asleep just thinking about it.
Suddenly, you find yourself able to converse with people in the sales departments at Crosman and Pyramyd Air on much more familiar ground. What they say about importing guns makes much more sense than it did in the past.
On the other hand, your customers don’t know squat about the airgun business. They offer advice (like they know!), and you realize they haven’t got a clue.
The guns are pretty much as described by Gort, except they aren’t very powerful and the triggers stick a little. Still, you begin to ship them and more orders come in. Then one of your customers calls to complain. His gun isn’t chronographing as fast as he’d expected.
“Your ad said it would go 1,000 f.p.s., but I’m getting only 615. I think that’s a little low, don’t you?”
“What pellet are you using?’
“I use only Beeman Kodiak Match.”
“Well, that’s a heavy pellet. The figure was for a light pellet.” Duh, doesn’t this guy KNOW?
“I use only Kodiak Match, and my gun isn’t performing up to spec. It’s not even close.”
“What do you want me to do?”
“I’d like you to send me another gun. I’ll send this one back.”
You do, he does, and life goes on for three more days. Phone call.
“This is getting old. Don’t you test these things before you send them?”
“Hello to you, too. I’m going to guess that you’re the guy who called the other day and requested a replacement rifle. I’m further going to guess that you got it today.”
“This thing’s a piece of junk! It’s even slower than the first one. You should check these things before you send them.”
“I did! The rifle I sent you was the most powerful one I have.”
“Well, it doesn’t shoot Premier Heavies worth beans!”
“Premier Heavies? I thought you used only Beeman Kodiaks.”
“I sometimes use the Heavies, too, and this gun don’t shoot ’em at all.”
“What do you want to do?”
“Well, if this is the best you have, I don’t want it. I want my money back.”
“Okay. Send the gun back, and I’ll refund your money” (gladly!).
“I want all my shipping money back, too.” (They always do!)
“I can’t do that! I have to pay shipping, just the same as you.”
“Well, I’m not paying for two sets of shipping both ways!”
“I’ll split it with you. How’s that?”
“Well, if that’s the best you can do, I’ll take it.”
You settle this episode, as well as four other problems. And, you sold 21 rifles to people who never called back (thank God!). That leaves you with 41 broken guns, and 38 others that you could sell.
The ad on the Yellow Classifieds is still running, plus you put a small ad in Airgun Hobbyist magazine. This month, you get three calls from tire kickers — one of which you convert to a sale when you reduce the price of the gun to $125, plus free shipping. He lives in Hawaii, and the UPS bill is $41.00.
This becomes your new strategy — you’re selling ’em low to blow ’em out the door. “No tags back. All deals final! A double-dog dare that can’t be taken back. I’m rubber and you’re glue.” You revise your ad online, putting this policy in writing.
To your complete surprise, nobody wants one of your guns! Was it something you said?
Then, you get a call from Texas. Some guy asks if you want to sell the whole lot and be done with it. You wargame with him on the phone and figure you’re still down about $4,000, but even dumb old you knows that this guy is not going to give you that much for 37 Pangean breakbarrels — plus a bunch of junkers. He has to make money, too. Funny, you never thought about it this way when it was your money on the line.
He offers you $500 for the lot, and you pay the shipping. You’re insulted and hang up.
At this point, you have what we in business call “a bitter pill.” No matter what happens, you’ll have to do more work to settle it. When unknowing people ask you why you don’t just use the experience as a tax write-off, you walk away, too angry to explain that there has to be other money — real profit-type money — against which to write off something.
About this time, you get a fax from Gort. Would you like some more rifles? They are now making the new magnum model, which has even greater power and a much better trigger than the guns you bought.
Think that’s what it’s all about? Well, it isn’t.
It’s REALLY about five years later when you overhear somebody at an airgun show complaining about the Pangean rifles and what a rip-off they were. And you still have 15 good ones in your storage locker, along with a lifetime supply of spare parts.
Maybe the retail end just wasn’t for you. Now repairs — that’s where the REAL money is. Ha!