You ever do something that surprises yourself? Here I am - running a growing and profitable business, basically my life goal, and I decide to close it down.
Well, that’s the reality. It wasn’t an easy decision, but one that I believe will be proven right with time. It’s a decision I arrived at after much self-reflection and thinking about what I wanted out of life.
I have indeed always wanted to run my own company. One that would be bootstrapped and would last generations - not decades. These types of businesses usually start in niche markets and build their moats over time. MiniPrinter was in a lot of ways that ‘type’ of business. But in one crucial way it wasn’t. At least for me.
The Thought Process
As I sat down and thought about the business and where I wanted it to go - I knew I’d have to grow it to $10K in monthly revenue before I moved to work on it full-time. I also thought about the dynamics of the market I’d chosen.
MC = MR
At the end of July, I was selling only on Etsy and used a model designer partner to bootstrap my shop listings. The cost of the commercial license required to sell these models was $10. The cost of a 3D printer required to print D&D minis was $170. These are extremely low costs of entry into a market that was churning out 30%+ net profits. And the data showed it. While tracking some of my best selling models - I started to notice new shops sprouting up selling the same models, often at extremely low prices (think: 30% lower than my price points).
This was a problem I always saw coming. With low capital requirements and no differentiation besides customer service - the prices would fall to their marginal cost of production. The way out of this pricing spiral was to build a brand based on proprietary IP. This would mean I’d need to do design in-house - an expensive proposition.
Now, I could definitely outsource model production to a design shop. This would be a one-time expected cost of $100 / model. That could be funded via profits from sales of my current business. However, how could I identify the ‘winners’ and create models that fit that archetype? Is that even possible? After all, this business follows an 80/20 distribution where 80% of my revenue comes from 20% of my SKUs.
A Softer Factor
And finally: did I even want to do this? If I wanted to take the plunge and start building my own proprietary library of models - it’d likely take $100K in after-tax profits to fund a library big enough to generate $10K in monthly revenue. That could take years to do via bootstrapped profits - assuming all goes well. Which it likely won’t.
I could raise money to speed up the process, but that’s not the type of business I want to build. And so I had hit an impasse.
Although it saddens me to admit it - the best course of action might be to accept the experience for what it was and move on. It was a great foray into actually running a profitable company that exposed me to the nitty gritty details of:
- Customer Service
- Marketing & Growth
- Shipping & Fulfillment
It’s also a business that isn’t a fit for my long-term goal. And so it’s time to say good-bye.