Words by Wes O’Donnell (AKA: The Veteran Entrepreneur), Professor of Leadership at Baker College, Army & Air Force Veteran, Host of the upcoming “Our American Legacy” TV Show, motivational speaker and Founder & Creative Director of Warrior Lodge Media Group. American Military University MBA Graduate and Managing Editor of InMilitaryEducation.com.
Part 1: Business is War
“Entrepreneurship is jumping out of an airplane, and assembling your parachute on the way down.”
You know what it takes to fight and win. As a military veteran, you’re disciplined, focused and have a killer instinct that your civilian counterparts lack.
It’s as simple as this… wildly successful entrepreneurs do not possess some special gift that makes them wildly successful. What they do have is the ability to get themselves to take action. The military personality type is, in my estimation, light years ahead of their non-military counterparts when it comes to being a successful entrepreneur. If you’ve served in the military then you already have the ability to deal with uncertainty, have the stomach to take risks, and have a high tolerance for ambiguity. In addition, you likely have a high degree of self-confidence, tend to be over-optimistic, and rely extensively on your own intuition. These military qualities also happen to be the textbook definition of a successful entrepreneur.
My philosophy is that, unless you have an idea for “the next big thing” or world changing invention (if you do we’ll cover that as well) then starting an ecommerce store is the most cost-effective way to get into business and learn how to keep a company profitable. I sincerely consider ecommerce “entrepreneur boot camp”. In my experience, after the first 12 months of making money with your online store, you’ll be prepared to graduate to running a company offline because you’ll have a solid understanding of key numbers and metrics, making partnerships, the power of social marketing and many other essential skills. Most importantly, the cost of entry is low.
Throughout this series, I’ll keep a running tally of how much money each step in the startup process costs, using my ecommerce store ModernWorkspace.net as a guide. You’ll soon discover that for a few hundred dollars, you’ll actually be owning your own company. Now, it’s important to note that this isn’t a pyramid scheme, multi-level marketing or an “independent business consultant opportunity”. Anything that requires you to “recruit” people below you in order to take a commission of their profits is to be avoided. These companies promise easy money to their distributors except that they’re exploitative to all but the highest so-called executives, men and women who don’t have the slightest understanding of supply and demand; besides, there is no such thing as easy money. Whether it’s cosmetics, vitamins or stuff that makes your house smell good, when someone approaches you with a pyramid “opportunity”, walk the other way. If you’re in one now, no worries… just cut your losses and get ready to own a real company.
This series is about actually being your own boss, starting a company from scratch, growing it to profitability and expanding to consume your competitors. It’s real work… I mean you really have to work hard to make this work. But if you’re a military veteran then you’re not afraid of hard work; better still, you’re used to the feel of competition and you have the taste for victory. Nothing in this life worth having should be easy. By its very definition, if it were easy to obtain, then it has a diminished and diluted value because anybody can achieve it.
The hard truth is that not everyone can be an entrepreneur; but if you’re a military veteran, I believe that you can. In a crazy world where the veteran unemployment rate is double that of their civilian counterparts, it’s time to employ yourself, build a business empire and show the world why the US Military is the best anvil on the planet to forge an unbreakable and lethal entrepreneur.
A New Way OF Thinking
In 2012 while driving from Oklahoma City to Michigan for summer vacation, I listened to an audiobook that completely changed my way of thinking about money. At the risk of sounding melodramatic, it actually changed the direction of my life. The book was “Rich Dad, Poor Dad: What The Rich Teach Their Kids About Money That the Poor and the Middle Class Do Not!” by Robert T. Kiyosaki.
Now it’s important to note that Kiyosaki’s book is full of factual errors and the author is mired in controversy for “fictionalizing” certain events in the book for “educational content & impact”. With that in mind, this is far from an endorsement of Mr. Kiyosaki and his book. But I will credit him with fundamentally changing the way I think about cash-flow. It’s not a get-rich-quick book or even a typical self-help book in the traditional sense. But what Mr. Kiyosaki wants his readers to do is to start thinking about money in a completely different way than we’ve been conditioned to throughout our lives, and on that task, he was successful.
One of my biggest revelations that I had while listening to this audiobook was the realization that there is no financial education in the public school system. Sure, once we reach high school we all go through a rudimentary course on economics that taught us how to balance a checkbook and gave us some pretend money to invest in stocks as a classroom exercise.
But by and large, the so-called “rules” of life are thus:
1. Graduate high school
2. Go to college (or join the military)
3. Get a good job
4. Make sound financial decisions
5. Save for retirement in some sort of 401k
6. Retire and live off of your savings and then
7. Die gracefully
This is what most people call “financial security” and just like a maximum security prison, you’re set up for life! After all, you’re clothed, fed, and housed. Unfortunately, just like a real prison, many people that possess this “financial security” have limited freedoms. They may have a beautiful house and a luxury car but if they quit working tomorrow, those things would evaporate. In his book, “The Millionaire Mind”, Doctor Thomas Stanley describes this group as the Income Statement Affluent. These people have a lot of income injected in to the household, because they have incredibly high paying jobs that puts them well above their middle-class counterparts. Actually, if you were to dig deeper into these people’s financials, you’d find that they’re actually living paycheck to paycheck, just like their middle-class friends. They might have the appearance of wealth with an enormous home and Mercedes S-Class in the garage, but they also have a ton of debt!
And that’s what brings us to something different than mere Financial Security: It’s called Financial Freedom… The idea of “wealth” means different things to different people, but for me it means feeling a sense of abundance, the feeling of being truly alive and truly grateful. I say grateful because it means making the most out of the incredible gift that America’s military service members have given me, in some cases sacrificing even their lives so that I can pursue the American Dream. I dishonor their memory and their sacrifice if I don’t give my dreams a shot and so do you; you should be living every day to the fullest. Like Captain Miller whispers to Private Ryan in the last few moments of Steven Spielberg’s Saving Private Ryan, “Earn This”.
You have to accept that the “rules” that you’ve been told all of your life can be bent and can be broken. By starting your own company, you take that crucial first step out of financial security and into financial freedom. You’ll realize that you don’t have to rely on others to pay you a paycheck to survive. Let’s be clear… I’m not telling you to quit your job to start an ecommerce store. The beauty of ecommerce is that you can continue to work while building your business online and in fact, I encourage it. The reason for this is that it typically takes 12-18 months to reach critical mass or profitability; that is, the company is making enough money to pay for itself and its overhead, pay for your salary and put a minimum 15% back into your business annually to grow it. Even the IRS doesn’t expect a startup to be profitable in its first year and that’s why, unless you receive a business loan or seed money, you need to keep your day job.
However, if you have a regular job, there will come a point when you will no longer be able to stay; the online store will take too much of your time and energy. My store Modern Workspace hit critical mass after 5 months, achieving profitability, and became so busy that it would be impossible to continue its success if I was working somewhere else. So why ecommerce? Why not open a brick & mortar “real” store somewhere? Perhaps that surf shop that you always wanted to own on the beach… There is absolutely nothing wrong with that if you have the funds.
The reason I advocate ecommerce first, is because the startup cost is so reasonable and most people can bootstrap it themselves. The day that you take investment money for your company, you give up a piece of it, usually in the form of ownership. For instance, maybe someone agrees to give you $100,000 to start your surf shop but they want 20% of your company in return. Maybe they don’t have the same vision that you do for the future of your business… Too bad, because if you give up equity in your company, they now have a legitimate say on the direction that they think is best and it may not be compatible with your vision.
If you absolutely need funding, I’m ill-equipped to help you. I’ve built everything from scratch and therefore own 100% of my brick & mortar storefront MD-Advantages and its US Patents, my ecommerce store Modern Workspace and my Warrior Lodge brand. I do not have experience seeking funds from angel investors, venture capitalists or banks other than what my mentors have taught me. I will provide resources for you in the appendices of this series from colleagues that I trust regarding seeking funding, however, that’s not what this series is about.
No, this series is about turning a personal investment of $800 into $100,000 and again into $1,000,000 without the risk and speculation of the stock market, investing in real-estate, borrowing other people’s money or the like. It’s about starting strong in ecommerce and finishing strong wherever you want, whether that’s threatening Amazon’s supremacy as an online retailer or taking your knowledge offline into the outside-sales business world. Wherever your long term goals take you, you’ll finish with real wealth and real financial freedom.
The Truth About Ecommerce
There was a time when ecommerce had a bad reputation. Even fairly recently, when I told one of my mentors, who was at the time helping me patent my OmniCart for MD-Advantages, about my online store Modern Workspace, I distinctly remember the look of disgust that flashed across his face. And this is a man with $80 million in the bank; a man who knows how to burrow into a niche market and explode it from the inside.
Ecommerce is still looked upon by many old-timers as unethical, minor-league, for lazy people, not profitable, et cetera. It runs in parallel with the older generation’s distrust of technology in general. I’ve even experienced discrimination from brick & mortar business owners because I offer products at Modern Workspace completely tax-free and with free shipping; they just can’t compete with that. The bottom line is this: We’re in the 21st Century. Amazon and eBay have proven that online retail can be a Billion (with a capital B) dollar business. Every major retailer from Wal-Mart to Best Buy to Sears has an online presence… not just a company website, but a place to sell goods online.
But what about you? How can you get online and make money? I steal sales every day that were intended for Amazon. How? I can’t beat them on price but I beat the heck out of them on Customer Service and Product Expertise. You have to set yourself up online as the Authority in your given niche. So what if you don’t know everything there is to know about fishing lures… If that’s what you decide to sell for your product niche, then you had better become the world’s foremost authority on fishing. You have to provide value on your site to give your visitors a reason to come to you and convert those visitors to customers. You can do this by filling your site with helpful how-to guides, product reviews and other high-quality original content that will set you up as the expert in your visitor’s minds.
There are several online retail models for you to examine and decide what’s best for you.
Do you have a knack for creating things? Maybe you’re an artist or, perhaps you make custom jewelry or t-shirts. Making your very own product and selling it yourself is one of the oldest forms of commerce, dating back thousands of years. You can sell your products on your own site or find someone else to sell them for you, for a fee. Wal-Mart has been doing this offline for years. Wal-Mart holds an annual conference for manufacturers and creators to pitch their product to see what will be featured on Wal-Mart shelves that year. Overnight millionaires have been created in this way. The same extends to online sales. You can sell your products yourself or set up an Amazon or eBay reseller account and get your product in front of their massive community… for a fee of course. Either way, you’re making money.
Buy a product from a manufacturer or a supplier and re-sell it on your site. Showing the supplier that you’re a legitimate dealer with a business license you get the goods for the dealer price, usually between 10%-40% below the Manufacturer’s Suggested Retail Price (MSRP). You then sell these products at or close to the retail price keeping the difference as profit. The inherent problem with this is the requirement that you keep inventory. First, you must purchase products that you must then go out and sell. What if you chose the wrong product or the wrong quantity? You’re stuck with products that you’ve already paid for but can’t sell.
In addition, you have to have somewhere to store all of this inventory. If you were like me when I started, you probably don’t have the funds to go out and rent a warehouse to store your goods. You can always use your home if the products are small, (you don’t want to be in the furniture business in this situation) but it’s worth noting that there are additional requirements for using your home to store business related products; for instance, your homeowner’s insurance or traditional renter’s insurance usually won’t cover your business related goods in the event of a tragedy… not without paying for an additional policy. You will need to check with your insurance provider for details.
There is a smarter way to execute the traditionalist model: Contact suppliers or manufacturers that have goods that you want to sell on your site and that allow Drop-Shipping. Once they verify you as a legitimate company, you place their products on your website at retail price. Once you receive an order from your customer, you then place the order with your supplier. The supplier then fulfills the order, shipping it directly to your customer (called “Drop-Shipping”) with your company name on the shipping package. You’re essentially selling the product first and then buying it.
There are several advantages at work here: No need to keep inventory. No need to get wrapped up in the fulfillment process (with the exception of forwarding your customer the FedEx or UPS tracking information that your supplier sent you). No buying a large quantity of products first and then worrying about selling them later. There is an enormous number of drop-shipping suppliers and manufacturers out there with every product niche that you can imagine. In this model, you’re essentially the middleman or dealer that connects the customer with the products that they want from the manufacturer. Your job is to manage the transaction, manage the customer service relationship and get paid. Modern Workspace uses the drop-shipping model and we will dive into the details of this throughout this series.
Let me give you a quick example of drop-shipping in action from a real transaction from Modern Workspace:
- I have a dealer account with a furniture manufacturer that allows me to order furniture at 40% off MSRP. The manufacturer supplied me multiple high-resolution photos and detailed product descriptions for me to put on all of their products on my website.
- A customer in New York performs a Google search for Home Computer Desks and is directed to Modern Workspace.
- The customer then orders a computer desk from Modern Workspace for $200, paying with their credit card through the Modern Workspace store.
- I then send an email to my furniture manufacturer with the model number of the requested desk as well as my customer’s shipping information.
- My manufacturer contacts me back with the FedEx tracking information to give to the customer and charges my company credit card number (that they already have on file from when I signed up) in the amount of $120 (40% off MSRP).
- Next, they ship the desk to my customer with Modern Workspace on the shipping label
- I keep the difference of $80 as company profit
When transactions like this happen 10 or 20 times a day, you can see how the profits quickly add up. Looking at this example it’s easy to think that you’ve made easy money here, but remember what you’ve done to achieve this sale:
- First, you’ve had to establish yourself as a legal business entity.
- Second, you had to set up relationships with all of the suppliers and manufacturers that you want to do business with. There are some really bad suppliers out there and some downright crooks; we’ll cover how to find quality suppliers later in this series.
- Next, you have to own an online store and lay it out in such a way as to turn visitors to your site into customers, also called “Conversions”. We’ll cover that as well.
- Also, you have to learn about Search Engine Optimization (SEO) or else the people searching Google for products to buy will never find your store… More on this later.
- Next, you manage the customer relationship. You’re their sole contact for all questions related to products and their recent order. And you had better be reachable! In the 21st Century, there is absolutely no excuse for not being reachable by your customers whenever they want to get in touch with you. Whether it’s through email, phone, Facebook or Twitter; modern electronic communications have made it easy for you.
- Finally, you manage the transaction itself, moving the money around. I endorse Shopify in this series because I’ve had the most success with them, but there are a number of different ecommerce services that assist you in managing the transactions and even help you build your store.
Ultimately, this series is about ecommerce. But like me, and my idea for a modular medical cart system, you may have a completely original invention or disruptive technology that you feel will sell… and sell well. Furthermore, ecommerce isn’t particularly well suited for this type of business.
So in addition to the ecommerce steps outlined in this series, we’ll also cover what it takes to get a patent for your invention and where to find manufacturers. The world of offline business is just as brutal as ecommerce, if not more so. First, it requires significantly more startup money. Second, there is a great deal of human interaction whether it’s from pitching investors on your idea and your company, to the incredibly complex off-line sales process to being the public face of your business.
It is because of this that I spend the first two parts examining some tools that have helped me in gaining the mental edge over both competitors and customers alike. These may be completely useless in an ecommerce environment, but they have helped me significantly off-line. The techniques in parts 2 and 3 of this web series have been passed down to me from numerous mentors, whom together possess a combined wealth of over $600 million. Numbers like that command my attention, so I decided to pass on these psychological techniques to you as well. Having said that, they’re not for everybody; to be honest, some of them are rather abstract concepts. You can decide for yourself if that information is relevant to you.
It’s time for a new “American” century. Military veterans today are poised to take this country by storm. Today’s veterans are tomorrow’s innovators, business leaders, and political pioneers. The last generation is retiring and you’re sure as heck not going to let the Millennials take over when they finally come of age. Stop complaining about the country’s leadership and go out there and take it. When they work together, veterans from all branches are a force of nature. You have the discipline, the laser focus, the patriotism, the intelligence and the unrelenting drive for self-improvement that will make you tomorrow’s CEO of your billion dollar tech company that you started. If your goal is to run the country, it is well within reach. Some of our finest Presidents have been veterans, including our First President.
The reality, however, is that it takes serious personal wealth to run for political office. It also takes money to build a corporation. The goal of this series is not to motivate you to better yourself… you already have that motivation; instead, this series is written with the understanding that you have to start somewhere. I joined the Army in 1997 with $5 in my pocket. This series won’t open the door for you, it shows you how to kick it down yourself, get into business and start building wealth. It’s time to show the world what a US Military Veteran can do in the 21st Century.
So… if you think you’re ready, let’s double-time!
“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” –