Get Innovative Investment For Your Amazon Seller E-com Business With Don Henig - Part 1
Get Innovative Investment For Your Amazon Seller E-com Business With Don Henig - Part 1
Things we mention in this session of Seller Round Table:
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[00:00:01] spk_1: Welcome to the seller, roundtable e commerce coaching and business strategies with and er not and amy Wiis. Mm [00:00:13] spk_2: Hey what's up everybody? This is Andy or not with and this is still a round table number 91. And we have Don heading on today. Thanks for being on Don [00:00:23] spk_1: my pleasure. Thanks Andy hopefully [00:00:25] spk_2: I stumbled over that last your last name there a little bit but I think I got it. I [00:00:31] spk_1: think you did good. [00:00:32] spk_2: Thanks. So don we always like to give people a little bit of background, uh, kind of leading up to where you are today. So as little or as much as you like, but we love to hear, you know, where you grew up, where you were born and raised, you know, all that kind of fun stuff college, any school and he work uh, just your journey till today. [00:00:50] spk_1: Oh man, I'll try to keep it short. But you opened up a lot there, you know I was I was born in Brooklyn new york and you know Brooklyn, everybody knows Brooklyn. But I was born in a little area called, not a little area big, big part of Brooklyn called Bensonhurst. And in a little section of Bensonhurst called Gravesen Bay. So at the end of my street is where the the Verrazano bridge was. So the end of our street was the Verrazano narrows. And you're looking at the bridge being built. And when the, when the Verizon a opened up the first night, just a little side point, the whole the whole two blocks that we were together, everybody got in the car, it was free to go over everybody. We all had a big party went over the Verrazano and just loved it. Uh and we were the last block before coney Island. So I went to school in coney Island and which again, everybody knows about coney Island. But here's an interesting thing I just thought of today my block in Brooklyn. As crazy as this is going to sound was the last block to be paved. We actually lived on a dirt road in Brooklyn in the 60s. That's not that long ago. It was crazy. Anyway, a lot of fun. Did that moved out to long island? Uh, started different businesses as kids as a kid, you know, uh, always made a lot of money. Always did well, became a financial planner. You know, my own business, built it very well, bought my first house and you know, all that with as a financial planner, learned about the mortgage industry. I started a mortgage company within two years. I was one of the largest in new york state. After 10 years I sold the mortgage company. Uh, I started a mortgage broker franchise three years later, sold that I had 7 760 franchises nationwide. Uh started a soccer publication looked like, you know, kind of like your situation. What do you do when you sell your businesses and your, you know, you're sitting on the sideline. What do you, what do I love to do? I love to be on the field with the kids. So I started a soccer publication. Never did anything like it. Uh, 24 full newspaper pages. I was the only employee, did the whole thing very profitable from month one on and sold that I got into technology and did a bunch of technology things back into the mortgage business. Built one of the largest mortgage companies in the country. We were the fifth largest direct to consumer. So basically an Internet based lender in the nation. Uh, quicken loans was my number one competitor back then. Uh, and I also ran the 6th largest wholesale lender in the nation. I After that, you know, and that was a publicly held company. 7000 employees built. I just went out on my own again and did some house flipping 300 houses in 18 months all along. That time I started an entertainment company on the side and from scratch, we did eight feature length films with all the biggest names from Tom Cruise to Mark Ruffalo to Natalie Portman on and on and on. Uh, and a broadway show called Rock of Ages, Which ended up I think is the 26th longest running play of all time Anyway. Long story short, I've done a bunch of things. I retired three times in my career. This last time I retired, I took five years and I thought I was done. And I met up with an old friend of mine from the mortgage industry for many years ago and we started talking about different things and I kept telling him no, I'm not doing it, my life is too good. I'm I'm completely done. And well he ended up bringing up amazon and amazon sellers and that catches my interest because I love helping people grow businesses and I particularly love helping young people whether it be in business or in life in general, so I don't need to be paid to do those things. I love doing those things. So he caught my interest and we looked at, you know, amazon sellers, we went out and talked to a few And found that even the smallest ones that I talked to and I spoke to them personally. I remember the first one had like, you know, less than $3,000 of inventory And before you know it I was, you know my accountants were putting me in touch with these guys and women and uh the next one, you know was like $100,000 and the next one was over a million. So all of them had one thing in common. They all needed money to grow. So we said all right, perfect. So we looked at the lending options. We didn't like anything from a growth standpoint. The lending options out there are fine for people that are need to, you know the working capital to get by week to week and such or a month to month. But to really grow the business, they didn't work once you run the numbers. So we came up with this unique idea of instead of lending money to sellers, we will actually invest in the cellar and here's the deal. And it sounds crazy. It sounds too good to be true, but this is the deal. We will double your capital with no interest, no required monthly payments, no loss of ownership and no personal guarantee. So it's kind of like the anti loan loan and all we do is we take a small percentage of profits as a percentage of how much money we have in business. So that's what we did. And we went out, we raised $100 million dollars to invest in cellars. So the systems are all built, everything is rolling where busy as could be as you can imagine. Uh, and it's a lot of fun. It's really, it's very unique and a lot of fun. So that's, that's my story [00:06:38] spk_2: awesome. I love it. So, uh, I haven't been to new york in a long, long time, but I had cousins who lived in Livingston New Jersey. So we would take trips to the city. I need to know if your Yankees or Mets fan that's very important to me or [00:06:51] spk_1: nets fan. [00:06:52] spk_2: Okay. All right. All right, so that's interesting because um it seems like um I don't want to say old school, but you know the old school new Yorkers are mets fans and the Yankees are kind of for the for the whipper snappers. Right? So [00:07:07] spk_1: they're the they're the followers, you know? [00:07:09] spk_2: Yeah, I love that. I love that. I love I love the underdog team, I I love them. We went to go see the Yankees, that was my cousins, you know that that they were fans of the Yankees but you know, it was still always fun to to go out yankee Stadium. I think they had built the new stadium back when I went. I don't know if it's another new stadium after that, but it's just one after that. Yeah, so it was in the two of the late nineties I think our nineties somewhere around there. Um And we had a blast and uh yeah, so you know I'm a san Francisco Giants fan but watching the Yankees, it's the energy in that in that stadium is unbelievable. Wait till you [00:07:44] spk_1: see this year for the Mets, my friend. [00:07:46] spk_2: All right, I'm I'm rooting for him. Um And [00:07:49] spk_1: just to stay with that for one more second please with the Giants. You know, as a kid, you know, we would always go to the game when the Giants came into town because my father was a new york Giants fan. My mother was a Dodgers fan but the Dodgers with you know juan marshall and Willie McCovey and uh Willie Mays, I mean we went and saw them live all the time. It was magnificent. [00:08:14] spk_2: Yeah, the modern rivalry between the Dodgers and the Giants is a lot of fun, you know, and and here in Idaho there's such an influx of people from California. So I'm seeing tons of L. A. Hats and tons of Seattle Seahawks because I'm also a 49 ers fan growing up in Hawaii, you had limited options in terms of what was public, uh you know, what was on tv. So so that that's what I was uh you know fans of so that's a lot of fun but something else really interesting. We'll have to go back to this because because I know Amy wants to talk some amazon but my wife and I have done a bunch of living flips, she got a real estate license recently and we're starting to do some investments and stuff like that. So and she actually just told me the other day like, hey, why don't we start a mortgage company? So, [00:08:58] spk_1: so Donna [00:08:59] spk_2: might be emailing you for for advice and since you're deep in that in that world, [00:09:03] spk_1: tell her not to do it. [00:09:05] spk_2: Really. Huh? [00:09:06] spk_1: Lots of money but lots of risk and you need tons of money to start that. [00:09:10] spk_2: Yeah. And the other thing too is, is just with the way the world is right now that, you know, in the real estate side of things. It's, yeah, it's, it's so up in the air. Everything is really, but I mean it's, uh, it's interesting, but we're also in Idaho, which I mean it's such a huge influx here. It's, it's unbelievable. Uh, so anyway, those are things we might have to come back to if we have time. I can, I can, [00:09:33] spk_1: I just stay with that for one more second because there's tons of people in the same boat as you are. Such a great market. If you just think about this, this is one bit of advice that I would give you and anybody else by one house as an investment, just one, you know, a single family to family, whatever it is, the cheapest thing you can get if, if that's all it is and then two or three years later by another And three or four or so years by another and then all of a sudden by the time you're ready to retire, you're going to have 20 houses throwing off income and you've built your retirement. It's done. You never have to think about it again. [00:10:11] spk_2: Yeah, well that's the cool thing coming from California. As you know, our house price that we sold there was so we, we actually down kind of Downgraded when we came here we went from 11 acres in California to one acre and now we're on 1/4 of an acre in a in a neighborhood but our mortgages is nothing. And then we took all pretty much every penny that we got from the sale of our California house and we just we have an offer out for something cash. Like you said it's a it's a it's a multi unit you know house, we're going to do that and then we're going to re fight out because we're buying it cash, we'll fix it up, we find out and then we're gonna do it all over again. So um yeah we're excited to do that. [00:10:48] spk_1: If you finance it within a short period of time, whether it be 90 or 120 days it counts as a purchase so you can take out more money than if you refinance. [00:10:57] spk_2: That's interesting. Very cool. All right great advice amy I'm sorry that was all selfish stuff [00:11:02] spk_1: there. I [00:11:05] spk_0: sent Andy a message and I was like you're going to like him. That's great, that's great. So you know it's all good Don and I have had the pleasure of talking previously and just you know he's just a wealth of knowledge about so many things and you know don when you're telling your story, I just wanted to pop in and be like so in other words you're seeing that basically you've never done anything in business right? Never built anything. So really cool your background and a really interesting way of how you got into helping e commerce based businesses. So let's talk a little bit about what you guys actually do. So this is new. You know there's a lot of funding companies out there you can take, so if we're just talking about how we get money for our business for inventory, stuff like that, you can take a loan from amazon. I know right now mine is like it says something like here we've got $15,000 you're preapproved, click here, you know, you've got that, you've got credit cards, we use credit cards sometimes to fund our inventory. If you're really good, you can get a bank loan, but that's usually out of the reach of a lot of new sellers because they don't have any business credit yet. There's a few other like capital companies that are like first in first out type of capital. So there's all kinds of different [00:12:32] spk_1: factors. [00:12:34] spk_0: Yeah, there's factors, factors are for those of you never heard of a factor that's um, if you have a purchase order already, you can go and get that inventory paid for ahead of time by using what's called a factor. So but we amazon sellers, we e commerce businesses, we get kind of stuff. We get wrapped up in our capital, sometimes capital gets tied up in inventory. So you guys saw this issue, you saw this problem and talk a little bit more about that, about how, not necessarily what a creamy does yet because we're going to get there. But what problems were you seeing in the traditional lemme because you could have offered that, you've got all kinds of experience. What were you seeing with that? [00:13:20] spk_1: Well I think there's a couple of things there first what we saw with the sellers looking to grow. And and again I I remember talking to one that had under $3,000 of inventory and the second one had just like $5,000. And the second one was a woman. And I asked her, well what are your goals? And I swear to God, she said to me, well I want to, I want to make a million dollars. And I said wow, that's great. She said actually I want to sell a million dollars first, then I want to make a million dollars. I said okay, that's getting a little bit more realistic. And I said, so how long do you think it's going to take you? And she said a year. And I'm thinking that this is not a young person either by the way. And she was very knowledgeable, this is a uh technology engineer, okay, very very smart person. So I'm looking at this and I'm saying you're starting with $5000 you're never gonna get to a million dollars. It's not never, it's gonna take time, it's gonna take a good amount of time and if you need money to live what she did, you're never going to get there because if you're making even 20% net profit, so you're gonna get $1000 what's your rent? You know, you're not going to get there, it's tough. But if you could, if that $1000 paid for everything And we were able to give you another $5,000 and now that $1,000 could stay in your business, you know, another 5000 to match you and that 1000 stays in the business now month number two instead of you starting with 5000 now you have 5000 from us. So 10 plus $1000 of profit that you kept in the business Boom in in a month, you have $11,000 to grow. You're on your way, you're going to get there a lot faster if you have 11,000 and 5000 and so forth. So, you know, that's what made us think about it, like there was some unrealistic dreams and we felt we could help make some of these dreams really happen. And so when we ran the numbers on this, it's unbelievable how good our program works for a seller who really wants to grow. You know, for a similar that just wants to move along and is happy with everything. And you know, there's there's other options. But for somebody who really wants to grow, there's nothing better because think about it, if you're not taking money out every month to make a monthly payment, you can grow. If you're taking money out to make a monthly payment, it's very hard to grow. So that's what we saw. We just wanted to help people. Uh and we so I again I did the spreadsheet and I said I called my partner, I said oh my God this is ridiculous for the seller, this is unbelievable. And that's it's interesting because that's where we looked at it first, we wanted to make sure that whatever we do is great for the seller, so then we did it and I did the spreadsheet for us, and I called them again and I said oh my god this is great for us too. So if the seller does really well, we do really well, if the seller does poorly, we do poorly. If the seller doesn't make any money, we make no money, you know, so we've taken all the risk. Yes, we did. [00:16:28] spk_0: So I think it's so interesting and we're going to get into exactly what that means, you know? And I love how your [00:16:38] spk_1: example [00:16:40] spk_0: was somebody who just had $1,000 in inventory because that is 99.9 of new sellers. These are the people that are trying to get their businesses going and they have the dream of being able to leave their job. But it's hard. Often we tell them if you're starting a private label that's going to be tough to leave your job, you're not going to get that money back right away because you need to reinvest, you're going to make mistakes, you're going to break even in the beginning when you're launching because you need to pay for advertising stuff like that to get your products going. You might have made a mistake in the choice of product or something like that. Or the market could have changed like who could have thought of covid all these people in the travel industry. Right. So I love that your example was a cellar with $1,000 and she actually [00:17:31] spk_2: had 5005 [00:17:32] spk_0: $005,000 in inventory. Which I mean that most people start with under $10,000 and they are trying to scale from there. So I love that you guys are in that market where you're not only helping bigger sellers scale, but you're also helping smaller sellers scale. So [00:17:52] spk_1: we do that on purpose in me. You know that was a discussion because you know the the Wall Street partners that we have that gave us $100 million. You know, they said to us, you know, why are you going so low? You know, you should make your minimum maybe $100,000. It's going to be so much more efficient and they're right, 100 right. And we actually said to them, we want to go low because we want to help the smaller guy grow, not just the big guy grow, we want to help them all. And if we can get 10,000 small guys, I'm happy with that too. And no lender in a million years is going to come do what we're gonna do because you have to have systems and it's a pain in the neck. But To see somebody like our first client, they had like $20,000, a retired couple who just lost their retirement, you know, without getting into their story and you know about a year with our money, they increased their uh their sales sixfold and their profit eightfold. It was unbelievable. But they literally said this is life changing and we never could have done it without it because that's all the money they had. [00:19:01] spk_0: But done it takes more than to just give somebody some money because, you know, if you give somebody money and they, let's say, I mean, it it seems like a big risk to start with newer sellers, right? That might not know what they're doing or know how to run a business. Um so how do you guys help them be more successful? Like what are some of the fundamentals you're hoping are in place before you give them money? Right? [00:19:32] spk_1: Yeah. You know, it's a few different things going back to that one that had like $20,000. They were again, an older couple couple who were retired and uh, they had run their own businesses. So they understood business, they understood finance, they just didn't have money and they had, they were doing wholesale, so they had some great products, really terrific products, They just needed more money to grow. So that was, that was pretty simple. Uh for others, it's a lot of other things. I'll give an example, a younger guy, really a wonderful guy who also was trying to grow but couldn't get out of his own way. If you will like, you know, you have to get up and go to work, you have to get up and make it happen, you have to really have a plan and sometimes people come into the amazon world and think, you know, this is a gimme, you know, I put some money down, I make a bunch of money and I'm done and that's not the way it is. So literally every friday he and I would have a call and it was a motivational type of call and it was an ass kicked call and you know, because I really care, you know, that's really what it comes down to. So it's things like that. Um we talk about the businesses, we talk about you know what's going on in the cellars world, what their uh how their current products are look are doing, we review their inventory in our own way different from anything else and we explain to them why this is better than that. We talked to them about turn times and how they can actually turn a profit, you know as opposed to buying you know two years worth of inventory. You know turn your inventory as fast as you can, you're going to make more money and you know most people don't understand that but you know when you come from a business background as you know we do it becomes very clear so we built spreadsheets to show them exactly how quickly they can make money and how they can make more money by turning it faster even by getting rid of you know, old products. So you know, one guy, literally, he had some I remember they were headsets and they just weren't selling for anything. So we said to why don't you get rid of these? You know, just dump them. He goes well I'm going to take a loss on those. And we said, ok, so take a loss. He said, well I'm worried about what you guys are gonna do, meaning a crew. Me, what do you mean? Are you gonna shut me down because I'm gonna lose money? I said this is one product. So we built a spreadsheet to show him and you can literally plug in the numbers however you want. And if I remember correctly, it was basically how much the product cost, what percentage you were going to lose and how long at that new price would it take to sell those uh that that inventory and then put your R. O. I. In your monthly ri for your other products. So if you were to take that money out and redeploy it, how long would it take you to return the money that you lost? And in his case, in that specific example, He was going to sell it over three months and it was all together going to take I think from day one to breaking even to having all his money back was either six or seven months. And then it's then you're golden. It's [00:22:49] spk_0: like it's like paying interest on a credit card and you don't realize that your interest payments are going to be more than whatever that thing that you bought with that credit card is worth. So I love that you have processes to kind of help on board sellers. If somebody is looking to get into your program where you're going to help them, what are you hoping that they have in place? So these new sellers, especially if they're new seller or if they're maybe have a couple of products but some of them might be does whatever right? And they're wondering like should I even bother calling don up and having a conversation? What are you hoping they're coming to you with when they are looking for [00:23:34] spk_1: help? The one main thing that we're hoping for and looking for is that they have a plan for growth. So they may come to us and say, you know, yeah, I've got these four products, this one you know no good at all and I know that and I made this mistake and you know, I bought this color, I never should have bought that or I made it in polyester instead of cotton. But now this one's in cotton and you can see how it's selling and they know their business, they understand their business. So we we've done the research and now I need money to build this product out and get these variations off the products off of that product. And uh beautiful. Now that cellar we you know, look, we're taking the risk. We don't know that they're going to be very successful. But we we make that assumption and like everything, I mean, you know the deal, I don't care what business you're in pretty much anything you ever do. Whatever you think is gonna happen, it's not gonna happen. You're gonna start down that path and when you're starting down that path, you don't know what's gonna be in front of you. You don't see the bumps in the road, you just can't you don't see the windows that are going to open the doors that are gonna open, that you're gonna maneuver down that path called the business and you're gonna figure it out and that's what people do and so you know that's that's what we look for. We love having these conversations and we learn an awful lot about you know, their businesses and about them as individuals and then truthfully we root for them, you know, we we give them money and we're like cheering, you know, we just can't wait to see them succeed. Thanks for tuning in to part one of this episode, join us every Tuesday at one PM pacific standard time for live Q. And A. And bonus content after the recording at cellar round table dot com, sponsored by the ultimate software tool for amazon sales and growth seller S. C. O dot com and amazing at home dot com.