Categorized | Shoestring Startup – A start-up that keeps on growing no matter what the economy is doing

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Crash! Bang! Boom! That was the sound of the economy landing at the bottom of a really big cliff in Q3 2008, at least that’s what it sounded like to me at my post at a well-known social media start-up. I could hear, see and smell trouble brewing and I was not particularly surprised when I was laid off in February of 2009. I had already decided to go back to school for a 4-year program in Landscape Architecture, so being free of a J-O-B was an opportunity to focus on my new career field and maybe mess around with a start-up website or two.

Rather than get stuck in the mud, I had lunch with a friend the day I was laid off from that other start-up. Opportunities are everywhere and my friend told me about this wine company he knew of–let’s call it Wine Club X–that wanted to sell more wine club memberships. He didn’t have the skills to build a website from scratch or handle the online marketing, but I did, so we partnered up to pilot a test website with one goal in mind, sell wine club subscriptions. Our start-up costs were pretty minimal–the cost of a couple of domain names, basic website hosting, and a few books about wine tasting so we could learn the right way to communicate our knowledge about wine clubs. - A start-up that keeps on growing no matter what the economy is doingOur combined Internet experience was a beacon pointing at a reviews site as the best way to sell wine clubs. When we launched there were one or two (sort of) decent wine club review sites that we found (now there are probably 20). In order to make Wine Club X shine, we created a single landing page comparing Wine Club X to other wine clubs which at the time weren’t as sexy.

After we launched it on March 15, 2009 we kind of just dipped along for a while, putting little effort into the business beyond launching a more content-driven website to support a larger number of wine club reviews and sales. After all, the economy wasn’t exactly helping us in the luxury-item sales department.

As with most successful experiments, the outcome we expected was not the outcome we achieved. We didn’t sell many subscriptions for Wine Club X … but we sold a surprising number of the other wine clubs! After several months of watching our organic search traffic build slowly, we fired up an AdWords account on November 1, 2009 and waited to see what would happen. – A start-up that keeps on growing no matter what the economy is doingWhat we didn’t see coming, but really should have, was a huge surge in traffic and a substantial increase in conversion around Christmas. Every day was profitable, so we kept pouring the revenue back into advertising. We experimented with several different advertising sources including PPC engines, CPM ads at wine-related sites, and Facebook. We finished our first year with over $40,000 in revenue. Not bad for an experiment!

With some proof in the pudding, we set out to grow the business and see how far we could take it. My friend was on to bigger and better projects by then, so it really became a solo activity for me. Around the same time, many more retail wine clubs started using affiliate marketing as a traffic source, and I was able to expand the content on the website dramatically. To date I’ve published wine club reviews for 33 companies and over 130 unique wine clubs.

As 2010 began, I started daydreaming about a much better and more robust website and had written up a full site specification document to get it built. It was beyond my own programming skills and I needed outside help. Eventually I found the right contractor to get the job done and I made a sizable investment in the new site, which included opening up new business models to get an edge over the competition. The developer and I built in a lot of extra bells and whistles and set up a decked-out Wine Club Gifts section in preparation for my second holiday gift-giving season. Another successful holiday season led to continued growth creating $80,000 in top-line revenue.

In 2011 the Google Gods continue to increase my organic traffic, despite my discomfort with growth that’s beyond my control. But when it keeps growing, I don’t complain. I’ve found a couple of ways to expand my traffic from Google which have helped drive up the profitability of the site and I continue to tinker with page layouts and functionality. Also, my strong relationships with some of my affiliate advertisers has really helped bolster my business. This year I’m on track to push revenue to over $120,000 with a better profit margin than ever before. With the success of the last few months I can’t help but wish the 2011 holiday season would start tomorrow!

Biggest accomplishment: I’m very proud of having driven more than $1M in wine club sales in the 2 years I’ve been running this website, and I love how deep my knowledge of the wine business has become. Wine industry folks are fun and add a unexpected dimension to my life.

Biggest mistake: One thing I’ve learned is to stop making predictions about what will happen. There are so many variables that affect my business that are beyond my control, or even knowledge, that it’s foolish to try… – A start-up that keeps on growing no matter what the economy is doingWhat I could do better: For any entrepreneur with a part-time venture, focus is always an issue. The website and advertising pretty much run themselves so there isn’t much I have to do on a daily basis. I’m completely addicted to checking the intra-day numbers and I’m always thinking about the next projects, but how much time or cash I’m willing to put in varies wildly from month to month. If I focused less on checking the numbers and more on expanding the functionality of the website, I’d be better off.

Exit strategy: Of all the things I’ve contemplated extensively (expanding into new markets, hiring a sales person, taking on a partner who can do the heavy tech lifting, etc.), an exit strategy isn’t one of them. It’s taken a lot of work to get to where I am and my 2-3 hour per week business earns me more than half of my last full-time salary. In light of this, someone would have to offer me a lot of cash to sell it . My plan is to keep running the site, incrementally improve it, ride the economy back up, and then not worry about money when I find a job as a Landscape Architect.

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