Why an $88M Business Can Still Run on 3% Margin — Transcript

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1. 0:00I sell luxury watches to other watch
2. 0:04dealers.
3. 0:04>> All revenue
4. 0:06>> B2B, yes.
5. 0:06>> Got it.
6. 0:07>> Our revenue last year was 88 million.
7. 0:09>> Mhm.
8. 0:10>> And our margin is 3%. So
9. 0:12>> Okay.
10. 0:13>> I would like to It's It's a It's the
11. 0:15>> Jewelry, I get it. I get
12. 0:16>> It's the type of the business.
13. 0:16>> Yeah.
14. 0:17>> So, I would like to double our revenue.
15. 0:20Um and obviously, you just need to sell
16. 0:22double the inventories, uh double the
17. 0:24watches. And right now we are capped
18. 0:27because I'm am actually um I'm actually
19. 0:30the person who get the leads. Because in
20. 0:33order to make money, you need to buy
21. 0:34cheap and sell either high or uh
22. 0:38I Okay. All right. So, I'm not able to
23. 0:42give up my proprietary deal flow.
24. 0:46Um because somebody can just take it and
25. 0:49do themselves. Because in this industry
26. 0:51pricing is
27. 0:53price is most of the um compa- compa-
28. 0:56competitive advantage. Uh branding is
29. 0:59not that much. So,
30. 1:00>> Well, the watches are the ones that are
31. 1:02carrying the price, but your specific
32. 1:04price is
33. 1:04>> Right. Right. So, I'm able to get
34. 1:07good price and sell reasonably. But
35. 1:10right now my time is pretty capped. And
36. 1:12we are trying to double it. I'm trying
37. 1:13to figure out what's the best way to do
38. 1:14it.
39. 1:15>> So, I think is there a way that we can
40. 1:16chop it into pieces?
41. 1:17>> Yeah.
42. 1:18>> Meaning
43. 1:20you have your proprietary lead flow,
44. 1:22right?
45. 1:22>> Right.
46. 1:23>> You cannot share where the leads are
47. 1:24coming from and then share the leads
48. 1:25with someone.
49. 1:27And have someone else work the leads.
50. 1:29>> That's what I That's what being trying
51. 1:31to do. Um but I would My time will be
52. 1:33capped of these proprietary leads
53. 1:36because I want I want to double my
54. 1:37proprietary leads, but I'm
55. 1:39>> want to double your lead flow.
56. 1:40>> Right.
57. 1:40>> Right.
58. 1:41>> Right.
59. 1:41>> And I'm guessing this has to do some
60. 1:43sort of outbound method that you're
61. 1:44doing.
62. 1:45>> Correct. Yeah.
63. 1:45>> Okay.
64. 1:46So, I would probably look at like VAs in
65. 1:50like offshore that don't know anything
66. 1:52about the space. So, I think it's like
67. 1:53So, if you look at the keys of the
68. 1:54kingdom, it's It's what you don't want
69. 1:55to have is somebody who understands how
70. 1:57to get the deals, gets the cash to buy
71. 1:59it, and then find sellers, right? You
72. 2:00have all three of those, which is why
73. 2:01you have a money flow, right? And so, if
74. 2:03we got, let's say, somebody who is a VA
75. 2:05who could work some of the outbound
76. 2:06stuff,
77. 2:07and do more of that work for you, they
78. 2:09don't know any of the buyers. And they
79. 2:11probably don't have the cash to buy
80. 2:12something like that. And so, I think you
81. 2:14could pretty easily get someone to
82. 2:15duplicate the effort that you're doing
83. 2:16on the outbound lead generation side
84. 2:18doing that, and just keep it controlled
85. 2:19there.
86. 2:20Does that make sense?
87. 2:21>> Yeah.
88. 2:22Um another business model we've been
89. 2:23doing, we've been trying for the last
90. 2:25year, is we partner with other people
91. 2:27who get leads, but they don't have
92. 2:28money, and we just partner on deals.
93. 2:30>> Okay.
94. 2:31>> These are doing pretty well, but the
95. 2:33caveat is that they will over-declare
96. 2:36their cost, or if they will
97. 2:38under-declare their price for deals. So,
98. 2:40they will they will undercut you. They
99. 2:41will give you a fair cut, but they won't
100. 2:43give you everything.
101. 2:45Is
102. 2:46Is this just
103. 2:47the the the a feature, or it's a bug?
104. 2:50>> It's a feature.
105. 2:50>> It's a feature.
106. 2:51>> So, I'll say something that
107. 2:53uh it Layla taught me this one early on
108. 2:56in our relationship.
109. 2:56>> Yeah.
110. 2:57>> She said, "Never count the other guy's
111. 2:58money."
112. 3:01If the deal works for you, the deal
113. 3:02works for you.
114. 3:03>> Okay.
115. 3:03>> If the deal doesn't work for you, it
116. 3:04doesn't work for you. If the other guy
117. 3:06makes more money, he'll do more deals
118. 3:07with you.
119. 3:08>> Got it. So, right now I have two
120. 3:10options, right? One is partnership, one
121. 3:11is VA.
122. 3:13There's If I have to prioritize one,
123. 3:15what should I do with?
124. 3:17>> Which one do you like better? Which one
125. 3:18scales faster given your skill set?
126. 3:20>> Uh
127. 3:21>> [sighs]
128. 3:22>> partnership.
129. 3:23>> Then do partners. I don't think there's
130. 3:24any issue with that.
131. 3:25>> Got it.
132. 3:26>> Build a big I mean, if you think about
133. 3:27it from a business perspective, I I
134. 3:28personally do like the partnership
135. 3:30thing.
136. 3:30If you have a reliable way of getting
137. 3:32getting them kind of in, I'd say the
138. 3:34only
139. 3:35you know, problem with that particular
140. 3:36angle is that if they make enough money
141. 3:38doing the deals with you, they
142. 3:39eventually just stop doing this.
143. 3:41>> Yeah, it's a it's a short-term
144. 3:42relationship.
145. 3:43>> Right. So,
146. 3:44>> them poor.
147. 3:45>> Yeah, keep them
148. 3:45>> [laughter]
149. 3:46>> Sell them a watch.
150. 3:51So, um
151. 3:52they returned to me in the US, get
152. 3:54taxed. Anyways,
153. 3:55um
154. 3:56quite big. Uh I think long-term the VA
155. 3:59thing is nice because of the issue that
156. 4:01we were just talking about. Because if
157. 4:02you only get like eight eight deals done
158. 4:05with somebody before they make enough
159. 4:06money to buy their own, you know,
160. 4:09I was I was trying to think of a auto
161. 4:11AP, there you go. That's That's I can
162. 4:13show you my luxury watch collection. Um
163. 4:15then
164. 4:17I just don't think the VA thing's going
165. 4:18to be that hard for you to do.
166. 4:20>> Um
167. 4:21can you elaborate more or can you can
168. 4:23you
169. 4:23>> So, you you document, demonstrate,
170. 4:25duplicate. So, what do you do? What's
171. 4:26your process? You find somebody like a
172. 4:28VA is going to have a very hard time
173. 4:30making the amount of money to do one
174. 4:31deal. You're going to pay them $5 to $10
175. 4:33an hour. It's not going to be a lot.
176. 4:35>> Right.
177. 4:35>> And so, it's going to take a lot of
178. 4:36hours for them to buy an $80,000 or
179. 4:37$240,000 watch.
180. 4:39>> Mhm.
181. 4:39>> Right?
182. 4:40>> So, they're basically just talking to
183. 4:41other wholesalers and bringing me deals?
184. 4:43>> Yeah.
185. 4:44They're just going to do what you do.
186. 4:45>> Okay, but then I'm still the person who
187. 4:47is evaluating the deals, right? At the
188. 4:49end of the day, my time was still
189. 4:51>> Realistically, you just have a rubric.
190. 4:53>> Mhm.
191. 4:53>> Like, you know all the brands of all the
192. 4:55watches. I know that you probably in
193. 4:56your head have an idea of what's hot
194. 4:57right now and what prices you're willing
195. 4:59to buy at. So, you just have a decision
196. 5:01tree that's in your head that you run
197. 5:02every time. You just need to document it
198. 5:04so that you can say, "Hey, if you find
199. 5:05anything that's like this or they have
200. 5:07any of these products, like let me
201. 5:08know."
202. 5:09>> Okay, the tricky part is that the price
203. 5:11fluctuate day by day.
204. 5:13>> Mhm.
205. 5:13>> And somebody has to be in the business
206. 5:16to understand what's the what's the
207. 5:17reasonable price to buy.
208. 5:19>> Yeah.
209. 5:22>> So,
210. 5:22>> Feature.
211. 5:23>> Feature.
212. 5:24>> You're I mean, you're you're in the
213. 5:25commodities business. Price is the game.
214. 5:28So, you having real-time metrics on
215. 5:29pricing is what allows you to scale and
216. 5:32go from being a one-man shop to somebody
217. 5:34who can get more to build a to building
218. 5:36a busi- The fundamentally, you build a
219. 5:37business around buying and selling. So,
220. 5:38price is the is is the exchange. And so,
221. 5:42that's probably just going to like every
222. 5:43morning, you update the pricing sheet
223. 5:44and and they can go out and hunt.
224. 5:46>> Mhm.
225. 5:47I see.
226. 5:48>> Does that make sense though?
227. 5:48>> Yeah, that makes sense. Yeah, thank you.
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