We all make mistakes, especially when we're starting out,
right? I mean, even the most successful businesses have gone
through their share of challenges. The hope though,
is that the mistakes that happen are small and inconsequential right?
Well, it doesn't always work out that way.
You know how they say that you'll end up spending
more in the first year then you actually make?
Well for many of us that is the reality. But it doesn't have to be. So today
I will let you in on the three most expensive mistakes that I
made when I started my business so you don't have to make the same ones.
Hi, my name is Mei Pak and I help makers, artists,
and designers make a living by selling their handmade products online. Today
my handmade jewelry shop makes $200,000 a year in sales
and my husband's shop that we started in 2019 made $900,000 in 2020.
It wasn't easy to learn how to run a business
and I made my fair share of mistakes that cost me a lot of money.
Thankfully each mistake was a huge learning
experience for me and that only makes everything you do later on have greater
chances of success. One of the most expensive mistakes
I made was doing trade shows. Now
it's easy to confuse trade shows with craft shows.
So let me be clear that I'm not talking about craft shows or craft fairs.
I'm just talking about trade shows. Trade shows are where makers
sell their products wholesale to shop owners.
So craft shows are where you sell individual items directly to
the end consumer whereas trade shows are where
you sell your products in bulk to shop owners where they resell your products
for a profit. Trade shows are super expensive to do. You have to
pay for money on booth rental, show services
like Wi-Fi and electricity, the design
and construction of your booth, the shipping of your booth to the location,
and travel and lodging for yourself to each show. When I've done trade shows,
I've spent between five to $10,000
each. And if you're new to doing trade shows,
you're not likely to make money
or even break even at first
because a lot of shop owners want to buy from proven shops
and proven products that they trust
and they're less likely to take a chance on a new product
or brand they've never seen before. Now
while trade shows might sound like an easy way to sell and reach a profitable market,
they're really not anymore, especially with online alternatives popping up like Faire
or Hello Abound just to name a few.
To do trade shows well, you will need to have a big cash cushion and a lot of patience.
You just can't expect to be profitable after only one show which was my expectation.
You have to be financially prepared to do at least three shows over the
next one to two years before you can see a profit.
That's three of the same show. You could spend thousands of dollars here
and not make any money back.
So you have to ask yourself if that's something you're comfortable with. When I was starting out
I really wanted to make trade shows work for me.
I did New York Now, the Atlanta Gift Show and the National Stationery Show. All together
I spent almost twenty thousand dollars between all of them before I realized
that they were hurting me more than they were helping. Plus
I just wasn't in a comfortable enough place financially to be able to swing doing each
of those shows a couple more times in order to see results.
So I had to stop doing trade shows altogether.
So instead of exhibiting at trade shows,
I recommend maybe partnering with sales reps who work with dozens of other brands.
So sales reps will take about a 15 percent commission on sales,
but they will usually pay
for the booth themselves and only charge you a small fee to have a small shared space.
They'll ask you to send them a promotional print material to display on their
booth along with like product samples, postcards, catalogs,
and anything else that will help you market your product. You will still spend some money
and you'll have to share a booth with other brands,
but you will be spending a lot less than if you did a show totally on your own.
Sales reps also help sell your products during times
when there aren't trade shows happening.
So they travel a lot and they pitch your products to stores on your behalf.
This can be a great way for you to get into selling wholesale
and establishing a new income stream for your business,
if you aren't already doing this. The second most expensive mistake
I made when starting out was hiring a lot of of ads agencies to
help me with my marketing. In the beginning,
I was convinced that experts in advertising knew more than I did
and that they could bring in better results than myself. Guys,
I spent tens of thousands of dollars working with a ton of paid ad agencies.
And guess what? I really wish I didn't.
But if I didn't I wouldn't be here to share this thing with you.
Because here's the thing. Most ad agencies will require you to commit to
a minimum of three months with them. Others will
ask for six months because results take time and of course results do take time.
So again, I trusted that they knew better than I did. Who was I to question the experts, right?
And agencies will never guarantee results
and anyone who does is lying through their teeth because no one can guarantee results,
but they will do a whole lot of over-promising to get you to sign on as a client.
So I was sucked into by all the success stories
I heard. Each of these agencies had a few booming businesses they could boast about.
But I didn't face the truth that each of these agencies also
probably had lots of failed case studies,
but it's not like they were showcasing those to the public
right? What I didn't realize then was that it's actually very easy to fudge success stories
and take screenshots of people making a ton of money
for their clients. Agencies can use inspect elements on their browser to take stats out of context.
Like for example, I've seen this before. They might show a campaign got like a
20 times return on ad spend on Facebook Ads Manager,
which basically means that you're making $20
for every $1 you spent on ads
but these agencies won't mention that that was
just for like one sale or that it was just a retargeting
campaign which cannot scale in the first place.
I know we're getting technical here,
but the bottom line is take agency success stories with a grain of salt. In 2019,
I had a terrible year in business.
I was giving other people more money than I paid myself
and even though I made six figures in sales that year I barely had any money to my name
and it was then that I decided it was time to take back the reins and do ads management myself.
I cut out the middleman and didn't have to pay those extravagant
monthly service fees that were giving me little result.
Unfortunately, we made the same mistake just a few months ago with my husband's business.
We took a chance on an agency that was very highly rated
and they seemed like a perfect fit for us because we knew that
my husband's shop has such a great foundation
and I mean to make almost a million dollars right in such a short amount of time
we thought it would be a piece of cake for any agency to produce results for us.
But unfortunately, after two months and over $10,000 in agency fees,
they just cannot beat the results we were already getting ourselves before we hired them.
So we've decided to fire them
and instead bring on an assistant that we trained to do marketing for us.
So we're going to keep everything in the house to minimize expenses
and because we're providing the training we can have more control over
how the job is done. The third most expensive mistake
I made was paying for custom web design.
I paid thousands of dollars for a web design agency to develop a custom website for my business.
This was back when I was on Prestashop,
which is a self hosted platform like WordPress and Woocommerce. Now
I'm on Shopify, but the custom site became an expensive problem really quickly.
That's because with custom themes,
you don't get free support.
So whenever anything breaks
or a plug-in or app becomes incompatible with your theme you have to pay extra just to get it fixed
so that they are compatible again.
Not only that but there is no directly associated ROI with custom designed sites.
Like yeah, it was nice to know that no one else had a site that looked like mine.
But while that thought might have been good for my ego,
it came at a heavy cost to my bank account. There are
so many amazing paid and free themes out
there and with the ability to really customize everything from the color to the
font to the logo any theme will look unique to your own brand.
Once you add in your product photos, your reviews,
and other specific features to your business, your colors, your fonts,
It will end up looking pretty unique.
You do not need a custom-made website to communicate that
you and your products are unique to your customers.
Trust me. Building a business is hard
and it takes a lot of money to do. You will undoubtedly make a ton of mistakes
along the way. I still am making mistakes to this day.
The important thing is we learn from them
and hopefully sharing my experiences with you
help you to avoid making the same mistakes as me.