Ryan Squared - What I've Learned So Far
August 9, 2018 | 4:31 PM | Personal Story
When I grew up, I learned to be a handyman because my that’s what my Dad did. For instance, when our Ping-Pong table broke, it was obvious that instead of throwing it away, you just grab a couple hose clamps and some nuts and bolts. This kind of logic led me to becoming a Do-It-Yourselfer just like him.
When I moved into college, I’d brought a bunch of tools with me, just in case someone needed help with something. I liked to be the guy that helped out. Sure enough I ended up loaning my drill out to the school for some student activities, I took apart Mike’s car door because his window was stuck down, and even had emergency lights for when the power went out for a day. All this to say, I had the tools to do quite a lot.
One night I was talking with a friend, Ryan Jack, and we both wanted to come up with a table that was right next to our bed. (At my college all the beds in the dorms were pretty much the same and had a lip running alongside them to hold the mattress in. There was also no room for nightstands or something similar.) Lo and behold we came up with an idea to build a side table that would sit atop the lip beside the bed. I threw some wood together and we made a Lowe’s run for a Whitewood board that became the tabletop. Our first prototype was very scrappy, but to this day I still use the table myself. In fact it was strong enough that I stood on it and it didn’t break. (Please do not stand on yours if you have one.)
To sum up how the business was formed, Ryan and I had an idea to build a side table for our own rooms. A couple people said they’d want one and our business minds said let’s turn this idea into a business. Now let’s talk about what I learned.
The first step I would take when considering selling anything is to see what the profit margin would be. A profit margin is the money left over after calculating expenses. For instance, a study by Reuters calculated that the entry level iPhone X costs around $357.00 to make. With a retail price of $999, the profit margin for the phone was 64%. The first product that we intended to sell at Ryan Squared was the Custom Side Table and I calculated the cost of materials to be $4.32. Originally, I decided to sell them priced at $15. This put the profit margin at 71% and it seemed like a great idea because college students are broke. But I made a mistake. I didn’t factor in the time that it took Ryan and I to cut, sand, assemble, and stain the tables. For every table we sold, we would each get $5. That was not quite enough for the time and effort that we put into it. The price was raised to $20 and now we were taking $7.50. Once more, the price was raised to $25 to pay for the time that it took us to create the tables. When calculating margins, make sure you look at all your expenses, including what you pay yourself to do the work.
Ah, this one’s fun. Because it was both Ryan and I’s idea to build the tables, it made sense to be equal business partners. We split the profits 50/50 and did equal shares of the work. Being honest, I felt that I was worth more because I had all of the equipment and I was working more when Ryan was busy. Knowing that this could lead to a problem, we discussed how to split the work and the money and we decided to take a percentage based on the work that we completed on each table. One night, Luke Abendroth became interested in our little business. Luke is a sales guy and he could talk your ear off all day long. I liked the idea of him focusing on bringing in clients and Ryan and I focusing on building the products. Unfortunately with such a low price, it was rough to bring Luke on board. Ultimately, Ryan and I decided to give a fraction of our 50% to him as well as give him commission for each sale he brought in for us. Wow! Just like a real business. Looking back, although the deal gave Luke a large percentage of sales, I would still have made the agreement because it probably brought us almost half of our sales.
Ryan Squared has been an awesome outlet for me to get creative and execute my marketing ideas while learning as well. It’s exciting to see an email notifying me about another order that I get to build. If you like how I’ve been writing or have suggestions for something I should write about, please leave them below as a comment! Otherwise I hope to have the next blog about Holey Waffles out on Saturday!
5 things I learned by running Holey Waffles (here)