Recently I’ve been running a small side project selling posters. The idea came from the University of Warwick Memes Facebook Group where me and a chap named Leigh Dawson both made images inspired by the popular “Keep Calm and Carry On” posters. A few people commented, saying they’d like the designs as a poster. Seeing an opportunity, I got in touch with Leigh and James Thake (a Warwick graduate who polished the designs), suggesting we work together to get the posters made and sold and split the proceeds.
They were favourable to the idea, and we got our first batch of posters sold earlier this week. So far we’ve made a (small) profit. Along the way, I learned a lot about the ground-level, tactical details of running a business that weren’t apparent before. I’ve spent a lot of time reading about business, both in books and online, but you know what? You can get a basic grasp of the high-level strategy that way, but you really have no idea until you actually go out and do it.
It’s like the sports fans that know exactly how the team’s manager should be doing their job. From an outsider’s perspective it all seems so easy. Why doesn’t Costa copy Starbucks and have staff write down customer’s orders? Why doesn’t Transport for London copy Hong Kong’s MTR and clean their tube stations? (And maybe make their service actually affordable and reliable while they’re at it)? But viewed from the inside, there’s a million more pressing details, any one of which could kill the whole enterprise if it went wrong.
Selling posters was a tiny venture, but it brought up a whole bunch of business issues. And this was for a project that involved a handful of people, about two weeks time and a few hundred pounds in revenue; I can’t imagine the pressures of running a billion-dollar corporation with tens of thousands of employees. Here’s a summary of what I learned.
Lesson 1: The Lean Startup Approach
I wasn’t sure where to begin at first. Was it worth paying to get posters printed without knowing if people would pay for them when they arrived? And how much could I charge? I needed to ascertain if there really was a demand.
Then I remembered the “Lean Startup” approach, which suggests making a minimum viable product to gauge demand. The MVP might be a working demo or prototype, but it can be more minimal then that. I decided to make a pre-order form for the posters, with a range of prices on offer. Although the form wouldn’t take payments, it would be a pretty strong signal of intent to purchase (or lack of it). It would also gauge how much people would be willing to pay.
It worked. I got my first pre-order about 5 minutes after setting up the form. The orders came so rapidly after that, watching them come in was addictive. The idea was validated.
Lesson 2: Manufacturing
The next step was getting the posters printed. There were lots of little issues here — tweaking the designs, getting the files in the right format — but they were mostly straightforward.
The hard problems were deciding which posters to print, how many, and from whom. The printing industry has massive economies of scale, and it works out a lot cheaper per item if you get a larger print run. That is, I would be better off getting many copies of one or two designs. On the other hand, we had five designs offered on the pre-order form, in four different sizes (big mistake there, eh?), and people had ordered a whole range of them. If I didn’t satisfy these people, would I be leaving money on the table? And some people had said they’d pay extra to get their posters early. Would it be worth using two printers, one fast and expensive, one slow and cheap?
These problems seem a lot simpler when it’s not your money at stake. In the end, we decided to order two designs in two different sizes, and use a slow-and-cheap printer. Right choice? No idea.
Lesson 3: Pricing
Students are pretty cheap, and keeping the price low would increase demand. But some pre-orders had been willing to pay £18 for their posters, and if you undercharge people who would willingly pay more, you’re leaving money on the table. It’s the classic price-demand curve. Again, it’s a much harder problem when you’re faced with the prospect of people calling YOU a rip-off and a terrible person if your prices are too high (which happened), and losing money if your prices are too low (which also happened).
What you really want is for everyone to pay what they’re willing to pay. Except that’s not feasible. Another way is to have a tiered pricing structure, like Starbucks has with their coffee. Small black coffee? £2. Want more coffee, fancier coffee, flavour shots? Price goes up. Remember how I made the big mistake of offering too many options? It’s not a mistake from this perspective. People could order an A3 poster for £5, or an A1 poster with fast delivery for £18 (people did, too), or somewhere in the middle. In the end we ended up one print run of A3 and A2 posters, so people who might have paid £18 ended up paying a maximum of £10. Mistake? Hard to say.
Another issue was whether to lower the prices from the pre-order form. After printing in bulk, the price per item turned out to be quite low, and it would have been possible to lower the prices a fair bit and still make a per-item profit. But people had been willing to pay the existing prices. It seemed people who wanted the posters felt the prices were fine, and so lowering the prices wouldn’t have attracted more customers, only left money on the table. And like most retail businesses, despite a high per-item profit margin, our overall margins were low, mostly due to unsold stock. In the end, we kept the prices the same.
(Why did I order so much stock? Because of the economies of scale, it worked out a lot better to order too many than too few posters. Again, one of those things that’s easier to appreciate when it’s you running the numbers and your money at stake.)
Lesson 4: Marketing
Marketing, I think, was the biggest weak point of the venture. Most of our traffic came from the Facebook group, but people were posting constantly to the group, meaning our advert would disappear quickly. We posted a few times but didn’t want to spam people.
We also did some offline marketing, by sticking flyers up around campus. Considering the business, getting hold of flyers wasn’t hard (we just used some of our excess posters), but sticking them up took a long time. Flyering is an effective way to get the attention of university students, but you have to be ubiquitous (we weren’t). We flyered some of the “designated flyering points” on campus, but not everyone walks past those. If you flyer other places, they might get taken down quickly, wasting your time.
There’s a few guys who occasionally hold a proper poster stall at Warwick, and they stick up proper signs all around campus, along with a notice saying the signs will be removed at the end of the day (so campus security doesn’t remove them first). Both more effective and efficient than our approach. I’m definitly going to try and market our next stall more seriously.
Lesson 5: Sales
Actually selling the posters was the biggest “grind”, though also the most rewarding part. The few hours I spent at the stall by myself, not making sales, were really tough. I just felt incredibly stupid accosting people and trying to get them buy silly posters. And the buzz when people actually turned up and began forking over their hard-earned was amazing. I also realised the benefit of having good salespeople — it’s not something that comes naturally to me, but I was doing an OK job. Then my friend Teenie showed up (she owed me a favour for helping her set up her blog) and immediately began hustling to get people to come over and buy. Impressive to watch.
I can also see why business programmes like The Apprentice make such a big deal out of selling. As well as being the business function that directly brings in cash, it’s also the best way to get a ground-level, detailed view of your market. You’re on the frontlines, seeing directly who is buying, who isn’t, and what it takes to get them to open their wallets.
Lesson 6: Legal
We didn’t break any laws selling the posters, but we did, er, stretch a few campus regulations. Warwick in general does not look too kindly on students selling things on campus, especially if it takes away profits from Warwick Retail or the Student’s Union (“UK’s most entrepreurial university”, yeah right). Aside from that, we also needed a space to set up the stall. It’s fairly cheap to rent space inside the SU, but foot traffic there is not that high. We had a hard time getting hold of clear information about where else we could sell on campus.
In the end, we took an “easier to ask forgiveness than permission” approach and used the library. I didn’t know if this was permitted or not — I found out after setting up the stall that it wasn’t — but no-one from the library said anything during the 8 hours we were there.
Lesson 7: Public Relations
People in general have funny opinions about making money. I know I used to. So I was pretty apprehensive that I’d get shit from people once I actually started making sales.
In the end, most people were supportive and approving of what we were doing. Some people said they thought it was really cool (what can I say, some Warwick students are really fond of the Koan). There were a few people who declined to purchase once they found out it wasn’t for charity — fair enough, their money. There was only one guy who gave me serious shit about it, and posted on the Facebook group that we were fraudsters, mercenaries, etc.
It was pretty hard to not react emotionally to that, though I managed not to (imo). Most people were on our side so not much damage control was required. Still, the whole thing occupied my mind for way too long.
(I calmed down when I figured out what the guy was actually complaining about. It wasn’t that we’d stolen the designs (we hadn’t), it was the fact that the original “koan” meme wasn’t our idea. Which is a pretty flimsy criticism, and I realised the guy was mostly just trolling for the hell of it.)
Lesson 8. Making money is easy
Wealth isn’t money. Wealth is matter that’s in a form favourable to humans. So if you rearrange matter into such a form, you create wealth. Sounds easy? It is, really. There’s so many opportunities to make the world slightly better or more convenient for people, and you just need to find and exploit one.
Despite the complexity detailed above, all we really had to do was make some designs, get posters printed, and sell them to people.
Lesson 9. Making money is hard
We made a few hundred pounds selling posters. It also cost a few hundred pounds to get them printed, so we were only just breaking even. That’s not factoring in our time. We have a lot of stock left over and I think we can hold another stall and get more sales, but still, we’re unlikely to make a fortune. I’d be happy if we ended up making minimum wage for the time we put in. There’s almost no chance of making what I’d earn as a professional web developer.
So although there’s a lot of opportunities out there, big opportunities, and especially big, scalable, opportunities, are scarce. That’s one reason why a lot of these same university businesses crop up year after year. Every year, students begin reselling textbooks, running events, or printing t-shirts. If they’re lucky, they make a few hundred or even a few thousand pounds, but then find out they can get way more in a graduate job. So they quit, until someone else comes along and spots the same opportunity, and the cycle repeats.
The upside of this is that there’s always small opportunities out there. You could probably quantify the expected value of unexploited opportunities with a variation of the efficient market hypothesis. Obvious opportunities over a certain size will already have been gobbled up, but the small ones might still be worthwhile (And of course, there are plenty of big, but non-obvious opportunities).
Was it worth it? Yes. Although the financial rewards were miniscule, actually getting out there and hustling has taught me an incredible amount.