2005 - 10-12-05original

Well, one misguided soul (who obviously has no business experience whatsoever) sent an email asking why he couldn't get all of the services my "Ray Kroc" people could provide for him... simply by hiring an $8 an hour person? This guy got an email back explaining some of the things his $8 per hour person couldn't possibly handle. Here's what I told him:

1. Provide the capital needed to test your product. This will likely require between $5,000 and $10,000.

2. If your product tests successfully, the capital to roll it out in a large scale mail program. Presumably, you wouldn't develop a product that could not support at least 100,000 mailables per month. At an average cost of $1.00 per letter including postage, layout, printing and list names, this will cost you $100,000 per month and you will need about three months of capital to do it.

3. Your business must be structured in a way to handle the potential challenges which will inevitably arise from Better Business Bureau complaints, governmental inquiries, customer complaints and potential lawsuits. This structuring and doing it the right way can cost you about $10,000. And even so, it's usually not done right as there are very few people who really know how to do it.

4. You need someone experienced in addressing the above-mentioned issues and handling them in the most damage-controlling way.

5. You need a reserve (of money) for customer returns, which average about 10%.

6. You need a merchant account that will accommodate your sales volume and not be cancelled without notice. This is ALMOST IMPOSSIBLE to find. In fact, I received a letter just a few days ago from a person who started his mail business and had $90,000 in sales in his first week... and... was then shut down by his merchant processor. Now, this guy has no merchant account, no way to sell his program, and $90,000 in funds frozen for the next nine months while he sorts it out with the all-powerful banks.