Aidan

Welcome to episode number 80 of The Growth Booth, where today I'm joined by a good friend of mine, Scott Ferrigan. He's someone who I've known for about five, six years maybe online now. This is the third in a series of decoding success episodes that I'm filming here at The Growth Booth. In episode number 76, I was joined by Ricardo in Portugal, who is crushing it online. In episode number 78, a couple of episodes ago, we had Vaughan in Australia who's crushing it, and today Scott is coming in from Michigan in the United States. 

Now, Scott joined a training program that I put out around about five or six years ago. We were teaching in that program how to leverage Amazon and in particular Amazon Wholesale. Scott was the guy that came in, he just grabbed the bull by the horns and he nailed it, so much so that he's built a business over the past five years that earned him six figures a month at this point. So I'm really excited to have Scott here today. Scott, thanks for taking some time and welcome to the call. 

Scott

Not a problem, Aidan. Glad to be here. 

Aidan

So maybe you could start out just by sharing a little bit about your background, your journey, and how you wound up building an online business. 

Scott

Sure. It seems like it ends up that it was kind of an evolution where I had kind of always known I wanted to be in business for myself. I had gotten a materials management degree from Michigan State in purchasing and operations and spent about ten years in corporate purchasing. Just knew I wanted to do something on my own. Had kind of been keeping an eye out. Eventually I settled on an ink refill franchise, so I jumped into that in the end of 2004. Beginning of 2005, started with one. By 2008, I opened a second one up and things were growing. Everything was great outside of the fact that I was working 70, 80 hours a week and I was looking for something with a better work-life balance.

I ended up selling that business and found myself after that in the ATM business. So I owned ATMs and it was another franchise. Mainly, we had stuff in high end hotels. When I bought that, I started with eight machines. I bought an existing route, if you will, is what they called them. Built that up to 24 machines. The time commitment in general wasn't a lot, but it would seem that it was a hard time again with the complete work-life balance where I could just have the geographic freedom to do what I wanted to do. The business in general was really easy because you only have one job, just make sure it doesn't run out of money. 

But a lot of times the locations would have special events on weekends, so I find myself running to do extra little fills on the weekends, which didn't take a whole bunch of time, but still you couldn't up and say, “Hey, I'm going to go on vacation for three weeks” just because it would almost tether you. I guess that was kind of how I felt. I felt like I was tethered to everything. So I was looking around at different things. I ended up finding some information on a drop ship business, and I was in the midst of building a drop ship business and trying to figure out how to dial in my Facebook ads to get the drop ship business really up and going. 

The philosophy I have is that there's always people out there that know how to do whatever your struggles are, and rather than try and reinvent the wheel, let's try and find someone who knows who can show me how to do this. I stumbled upon one of your older courses where you were showing people how to do white label, and there was this program that was up and coming that had to do with Amazon and listened to the presentation and said, “Yeah, that sounds good,” so jumped into that. We bought that. I spent probably four or five months figuring out going through the course, going through everything, finding some suppliers, buying products, sending it into Amazon, and seeing essentially, proof of concept.  

Once I had that, then I started moving forward.  I believe that if you really want to be successful, you need to focus your efforts, and you can't really focus your efforts and have four or five different things that you're trying to do, or it seems like, at least for me, it seems like none of them actually end up going to fruition. I decided I was going to cash out of the ATM business, sell that franchise. My brother and I were talking at the same time, and I could tell, he had been a snap on franchisee for like, ten years, and I could tell he wanted to do something different. I told him what I was looking at doing, and he asked me if I wanted a business partner. I said, sure.

So he cashed out of his, I cashed out of mine. We just jumped in and, like you said, took the bull by the horns and this is what we're going to do. Failure wasn't an option because we both had families to feed and let's go find suppliers, let's go find products, send it in, and let's make it work. We already had the proof of concept from the course to show that it worked, and all we had to do was scale it up, roll up your sleeves, get in there, and do that.

Aidan

Man. Full credit to you and Brian, your brother, because this is not some overnight success. This is not like you got lucky. This is clearly a case of making your own luck. You tried a couple of different franchises. You never quite cracked that code of lifestyle business that you were trying to get. But you didn't give up. You just kept trying different things until eventually you found something which worked for you and ticked all the boxes and you doubled down on it. And how long did it take you when you were starting your Amazon wholesale business until you were actually able to start making money? I mean, are we talking weeks here? Does it take you months? Just to give people some more context around the journey that you went through? 

Scott

We were profitable by month two, and then to build it to a point where it was a decent salary, it probably took, I would say six months. It would have been quicker than that. But part of that we throttled ourselves back and we capped how much we were going to spend and how much product we were going to send in because we were trying to watch everything as it went through the process with Amazon so that we understood where all the costs were and how the money flowed from when we were purchasing the product to when we would get the money back type of thing. 

I really think if you understood all of that, if I had had someone that had the experience that I had that could have said, “Hey, this is the way this works,” then we would have grown quicker than that. We started out the first month with like 2000 in sales. The second month was 10,000, then 15,000, and we held it at 15,000 for three months. And then three months after that, we were over 50,000, 60,000. And after we held that, seven months from there, we hit 100,000 for the first time. 

Aidan

It's kind of nice though, that you could dip your toes in the water and you were sort of testing out the water, seeing what it was like, how does this work, are there any hidden obstacles or anything here, pitfalls that we can fall into, and then once you got comfortable, you just started scaling. I remember one of the things you did was you stopped relying on just you and your brother and you hired some help.

Scott

Yeah, we hired four VAs. Actually, it was by your recommendation, Aidan, when we sat down, when we first joined one of the groups there, and we sat down one to one. That was an area that we were struggling with. If it's an area that you're struggling with or an area that you don't care to do, then the best thing to do is to just outsource it. We outsourced the suppliers, which is one of the bigger challenges when you're getting the business up and running is to have enough suppliers to find enough products. We went from 40 suppliers and like five weeks later, we had like 110, 112 suppliers. 

Aidan

That's awesome. 

Scott

Yes, it was really exciting because then you were able to grow and like I said, you were able to farm out an area of the business that we really didn't care to do. My brother's kind of the sales guy and I'm more like the spreadsheet guy and stuff like that, and the numbers guy behind the scenes, so everything just worked. 

Aidan

You mentioned one other thing, just to give some people some more context and to fill in the gaps there. Scott is a member of our Blueprint Academy mastermind group. He has been for about five or six years now. And I can still remember when we would get on a one on one call and we were talking about what could you do, and just saying, “Look, you guys are in a strong position. You could be in a much stronger position if you could pass some of this on to other people.” What does it look like now? Do you still have the four people with you? 

Scott

Actually, as we built up, we ended up, I like to call it, kind of turning left. So we had built the business up and the business was very wide in the breadth of products that we offered. Through path of least resistance, I guess, is the easiest way to say it, we kind of shifted our focus and went laser thin on a particular niche instead of going out to a whole bunch of different categories and selling anything from, I don't know, fishing lures to some UV clothing to hunting sites, to all sorts of things. At one point, we were selling a walking stick that would measure distances. 

Aidan

Oh my God. 

Scott

Oh, we were selling hot sauce at one point for bars. It was very wide in what we were selling. We ended up focusing lasers that are very focused in the niche that we're in and leveraged a lot of my brother's knowledge from what he had, from what he had been doing in relationships with suppliers. And so we focus now on three different brands, is what we sell. They're all established brands. We focus and we stay right in those brands and we'll branch out by rolling another brand in. We're also really excited. We are starting our first white label product. It is on its way to Amazon right now. Got a couple of products in that product line that we're getting ready to launch, hopefully by the end of this month. They shipped about six weeks ago.

Aidan

That's awesome. 

Scott

I don't know exactly how long it takes to get here and everything.

Aidan

Has that focusing in laser focusing in on a few different brands or a few different sort of sets of products. Has that meant that you've been able to use fewer virtual assistants and have less support there? 

Scott

Yes, it leverages a couple of different things by having fewer VAs. It being primarily just us, we're able to focus in on, instead of dealing with 100 suppliers, we deal with a lot smaller base of suppliers. As a result, we are a more important customer to each of those suppliers, to the point that they'll reach out to us because of the volume that we buy from them and say, “Hey, we notice you haven't bought as much. We're going to put this package of stuff together for you and how does this look?” And they're coming to us saying, “Hey, is something going on?” if we haven't placed enough because their growth, it's all based on all of that. One of the sales guys, all of his bonuses are based on what he's been doing over the years. 

Aidan

He's like an employee for you, basically.

Scott

Yeah. 

Aidan

He's like your man now. 

You know, one thing that comes to mind when you're talking about laser focusing in is first of all, the 80/20 rule where if you imagine you have 100 suppliers to begin with, or 100 products, whatever it might be, 20 of them make up 80% of the revenue, but you can dial that down even more, and there's the 64/4 rule where four of the 100 products make 64% or 2/3 of the amount of profits or revenue that's coming in. I think that's what you've applied to your business. 

I was just going to say something that I should have had us touch on right at the beginning here, but it's sort of like second nature to us, so I didn't go there. Maybe you could give a very high level overview of what we mean when we're talking about Amazon Wholesale because there might be someone listening to this who sounds really interested in what we're saying, but they haven't quite got that dialed in. When you're explaining Amazon Wholesale to someone who doesn't know what it is, how do you explain that at a very high level? 

Scott

Okay, so if you're going to sell on Amazon, you can sell a variety of ways. Either you can do what would be called either online or retail arbitrage, which is where you would be either via online or maybe going to your local, we'll just pick Walmart for like Walmart or Costco, looking for their clearance items and then looking to see if they're selling for more on Amazon. And then you could turn around and send them in and you can kind of build a business that way, or you can create your own brand and sell basically private label. So if you wanted to sell…

Aidan

You want to sell a drink bottle, and we also refer to this as white label, white label or private label, it's the same thing. 

Scott

You can do that, and the upfront cost with white label are a little more because you're going to invest in quite a bit of inventory to get it launched. And then the final way is what we do which is Amazon Wholesale which is selling branded products through official distributors.

We're an official retailer for the products that I have. We buy from Master Distributors. And the advantage with that is that there are a lot of metrics and things available through Amazon, so you know when you're getting ready to buy a product, you can look it up prior. A) you can look up to see, you know, what your cost is, you know what the Amazon fees are, because there's calculators that Amazon provides so you know if you're going to be making money, and then B) also there are other metrics that will explain to you how quickly it sells. So you know if it sells 100 a month or if it sells 1000 a month. If it sells 50 or 100 a month, then maybe you're going to send in ten or 15 units. If it sells 50 a month, you're not going to send 200 in because you don't want to be sitting on inventory for four months. If it sells 5000 a month, then yeah. 

It might not be that big of a deal after you've tested it. Maybe you send ten or 15 in, make sure that everything's selling the way you want and then it's not that big of a deal that you want to grab two or 300 sales out of something that sells 5000 a month. You don't have that with the white label where you're creating your own brand. I mean you can come in and kind of see the metrics of your competitors so you know what the sales potential is. 

It's a little different when it's the exact product. You're selling a swing line stapler and you know that the blue and white swing line staplers sell 1000 a month. So you can send 200 in and you're fairly confident that at the price that it's been selling at and you've got metrics so you can see selling history of how much it has been selling for. And if everything makes sense, as long as you're competitively priced, you're going to be able to sell the product, make profit, turn around, buy more product and send it in. 

Aidan

The thing that I've always loved about the Amazon Wholesale model is you can come in and piggyback on what someone else is doing. There's already a listing on Amazon. You don't have to create your own listing. You can get started for very small inventory purchase relative to what you would need to do for Amazon White Label. You don't need to mess around with going into Walmart and trying to buy the things that are on sale and send them in. It's much more streamlined and sort of almost like serious business than that. 

Scott

It is, and when you're going to Walmart and stuff like that, you run into the issue that you buy a Disney product or maybe a Barbie product, and all of a sudden you go to send it in, and they're like, “Yeah, are you authorized to sell Disney? Well, give us a receipt.” A Walmart receipt isn't going to cut the mustard, but if you have a receipt from a toy distributor, because we sold all that kind of stuff too. I mean, we sold Teenage Mutant Ninja Turtle stuff, Barbie stuff, Hot Wheels stuff, all kinds of things like that, and when you're dealing with an actual manufacturer's rep or wholesaler, then everything just flies through, and then you're approved. Someone else who isn't is trying to now figure out, are they going to take that product that they bought at Walmart and sell it on eBay? Or what are they going to do? 

Aidan

Exactly. Yeah. Can you remember a moment when you realized you and your brother realized, “Wow, this is actually going to work. We're going to be able to build a big business out of this.” Is there a moment that you've got burned into your memory there? 

Scott

I would say that it was fairly early on when we were looking at things. I mean, you get excited when you're seeing some of the metrics and everything, but when they come in there, I'm going to say it was the second month and we were at a family gathering together, and both of us have our phone because you can log into your Amazon on your phone. It was the first day that we cleared $1,000 in sales, and we were both just on cloud nine, and that was kind of the moment that you knew. 

We both did have the advantage that we had built up other businesses from scratch. So that first business that you build up as soon as you get to the point that you have that AHA moment, then building the second and the third and the fourth is a lot easier because you end up having the confidence in yourself. Because a lot of times I think that's where people's biggest barrier is not having the confidence in themselves. Even though you've got the system, you just have to work the system and do everything. But, yeah, I remember us being just over the moon that we had our first $1,000 day. Obviously, it just grows. 

Aidan

Everyone in the party, everyone in the family gathering would have been like, “What are Scott and Brian got? Give me some of that good stuff that they've got going on there. They're looking pretty happy with it.”

Scott

It’s funny when you go back and look at it too, because I'd be like, “Man, what a crappy day in sales today,” if we had $1,000 in sales.

Aidan

Right. 

Scott

It's funny. 

Aidan

Perspective changes everything. Changes everything. And also with that, to your point, it changes your mindset because I know that if something happened and you had to start this business again, there'll be no shadow of doubt in your mind that you'd just be getting into it and you'd probably be saying, “Look, okay, here's a twelve month plan. In six months I want to be doing this. In nine months I want to be doing this,” and you'd just make it happen because you've been there and done that. And the only real difference, I mean, experience is a big one, but it's also the mindset you're not haggling over “Is this going to work?” You know it's going to work. You're just getting in there and doing it. 

Scott

We ran into that at the beginning of COVID because the beginning of COVID Amazon, at one point, if you weren't sending in toilet paper or hand sanitizer or anything that was like that, they didn't want you to send anything in. At one point, we had products sitting at our warehouse and now it didn't last that long, it was only six or seven weeks, but Amazon wouldn't let us send it in. So we shifted gears with actually another course that you had out to the public and it was a drop shipping course. And so we developed a website and we sold exercise equipment and forehead thermometers is what we were selling also in addition to that. You just shift gears and say, “All right, this isn't going to work for right now. Let's just jump into that. We'll do that,” and that was good for a holdover. 

Another thing that really reduces I think a lot of stress and a lot of headaches with an Amazon Wholesale business, as long as you're selling Prime, when you're doing that, which is what we are, we're Amazon Prime sellers, and that means that Amazon, you're able to piggyback on their shipping, so that reduces your inbound shipping costs. They take care of all the customer service, all of the returns and everything. You touch the product very little because it goes to your warehouse and then they take care of it and send it in, and you have very little interaction with any of the customers too because Amazon handles all the customer service. 

It's rare that you touch a product, rare that you talk to the customers. The drop ship business, that was one of the things that we didn't care for as much because you'd have customers asking you questions. You can't ignore them because you need to make the sale and you need to do all of that, but that was an advantage through the Amazon Wholesale, was not having that side of things that you have to concern yourself with. 

Aidan

Do you remember what you paid for your franchise businesses, like ballpark? I don't know what an ATM franchise business would cost. 

Scott

The franchise fee was like $38,000-$40,000. The ATM franchise fee was like $26,000. But then in addition to that, for just eight ATMs, and this is back almost ten years ago, almost a decade, I needed to have the cash to put in there, which was another $40,000 to put in there to be able to cycle through the machines because the bank won't loan you money if you're going to be putting in an ATM. 

Aidan

The reason I ask that is because for me, it's kind of mind boggling when I think about the cost of setting up an offline business as opposed to an online business. An online business like this. I mean, you can get started for hundreds of dollars at the most, maybe a couple of $1,000 kind of thing. And then you start thinking about the return on investment and the scalability.

Scott

And scale so quickly too. Scalability is just off the charts. How quickly you can scale. It's hard. If you have a brick and mortar business, you're constrained by the space. When I had the ink franchise, it was a 1500 square foot space. We can only produce and refill so many ink cartridges and laser cartridges and stuff like that. And then with the ATM business, it was getting the contracts and everything. And then you ultimately were hindered by having enough cash to be able to put in the machines, whereas with an online business, it's almost limitless. You can just scale and just go and go and go. And then it becomes at what point are you comfortable with your lifestyle that you put effort into growing it, but maybe you're not working 50, 60, 70 hours a week trying to grow it because you want the balance of spending the time with your family and being able to do the things that you want to do. 

Having the geographic freedom is amazing. A couple of years ago, I decided I wanted to go try living in Texas. So I sold my house, unplugged my computer, took all my stuff down to Texas, plugged it in, and then I was back in business. And you just run the business from there. And it wasn't like you had to go buy another business. It wasn't like you had to do anything. 

Aidan

And all that stuff's getting easier. All the stuff and the technological advancements and the technology and tools that we've got, it just keeps getting easier and easier and easier. And now we've got a workforce of people who have traditionally worked in offices and these people are now working from home. So there's also this incredible resource pool of talent if we ever need to hire someone as well who can just slot right in, so it's really exciting. I'm conscious of the time here I'm keen to find out a little bit about what your typical day looks like. Now that you've built a business which does six figures a month and you've been through the cycle of ironing out, what's your day look like? 

Scott

Well, we will spend a portion of our day on growth. I work four days a week. We work Monday, Tuesday, Wednesday, and Friday so that we can set everything up for the weekend, make sure that we're competitive with everything. We start work about 7:30, and I'm typically done before noon. So it's a semi-retired lifestyle where I'm working 15, 16 hours a week and we still have enough time to like I said, we're launching a white label product. It's en route right now and we've had enough time to research that and get that going. 

It's a really nice balance where I can spend a lot of time with family and do a lot of the things that I want to do. I want to go to the gym, I go to the gym. Little things even, like going to the grocery store on Thursday at 10:00 in the morning instead of when everyone else is there. You do kind of get spoiled with being able to have that type of freedom, which is what I was looking for. 

Aidan

That's awesome, man. Well, this has been incredible just hearing your story, and congratulations to you and your brother. I mean, like I said earlier, this has not been like you guys got lucky. You guys kept trying things until you found something that worked and you've just taken the bull by the horns and really built something amazing. I know that over the next twelve months you're going to be doing some really interesting things as well with your Amazon white label brand, but a diversification there, so I'd love to get you back on in the future and talk about that and talk about the different growth strategies that you're doing and also dive deeper into some of the tactics with Amazon Wholesale and share more about that. 

So Scott, thank you once again for just taking some time here today and being so generous with your story. 

Scott

All right. Thanks, Aidan. Great talking to you. 

Aidan

All right, guys, that's a wrap for this episode. As always, you can see show notes and everything else over at thegrowthbooth.com, episode number 80. I'll see you on the next episode of The Growth Booth. Bye for now.