Categorized | Shoestring Startup

Building an Equipment Empire, One Sale at a Time

Name of your company and URL?
My equipment company is U.S. Equipment Sales, Inc
http://www.USEquipmentSales.com
Equipment Media is my consulting and training company
http://www.EquipmentMedia.com

Date started?
U.S. Equipment Sales went live in August of 2009 after a month or so of preparation.

What is your product or service?
We sell and export construction, recycling and demolition equipment worldwide. We have sold equipment to over 25 countries on five continents since 2009.

Why did you start your company?
Building an Equipment Empire, One Sale at a TimeI have been in the construction equipment rental and sales industry since 1997, but got into equipment sales and export in 2007 with a brief stint with a Caterpillar dealer in NY. After being laid off, I started a small online job board for the equipment industry that I really couldn’t get my head into. I lucked out a few months in and sold it to a competitor for next to nothing. The next two years didn’t go much better. I had a very tough in finding a decent job and because of some serious financial problems, starting a business was nothing more than a fading daydream. Credit and financing wasn’t an option and without it, my ideas were nothing more than notes on paper. I had immersed myself into online and email marketing learning from blogs, Twitter, Facebook and any other venue I could get my hands into but most of it seemed contrived to me. My initial perception of it was that you could make a lot of money doing it if you didn’t mind looking like a used car salesman and selling snake oil to your friends and customers. It wasn’t really something I understood enough, so I just took in what I learned and figured I would use it in another way. My perception on that has changed significantly after realizing that the better marketers are in the business to help others and the people who came off as fake or manufactured were the ones trying to force themselves into an industry they really didn’t fit in.

In 2009, after several months of trying to find a decent paying position, I decided I really didn’t have anything to lose. After some research and digging into the habits and advertising behavior of competing companies, I realized it could be done with very little money and a lot of hard work. The things that most people pay for, I did myself. Thanks to Google, it wasn’t really that hard, just very time consuming. I built the website using a drag and drop program, started looking up potential foreign buyers using as many free lead generators as possible. Initially we sold to other exporters in the US because it takes time to build up your company and get good references. Most foreign construction equipment buyers will not buy from you if you do not have someone who will vouch for your company, but if you are reasonable and fair in your equipment evaluations, it comes pretty quick.

How was it financed?
U.S. Equipment Sales was literally financed with the last of our $500 savings. I was running out of money quick and had no time to play around with the idea. The idea of not having anything in savings was a lot less scary to me than not having any prospect of employment and having to spend that $500 on bills anyway. My first sale brought in 10 times what I laid out.

Date officially launched?
My first sale came in September 2009, so that was our official launch.

What free online or offline tools do you use?
I use any and every free tool I can get. After messing around with a lot of paid advertising sites, I have found that it really doesn’t make the phone ring any more than using free ad sites such as Craigslist and others. I use sites that create free websites like Wix.com (you pay for hosting but not website building) and have used many different public sites to find my clients such as Chamber of Commerce sites and want ads online.

Do you use Social Media tools like Facebook, twitter, LinkedIn?
I am on most social media platforms, although I don’t use them nearly as much as I should. I really haven’t had a tremendous response as far as sales on these sites. Linkedin has been the best as far as networking and I have placed a tremendous professional value on that site. The others haven’t really given a tremendous response in sales or leads.

http://www.linkedin.com/profile/view?id=12776308
http://www.twitter.com/usequipment
http://www.facebook.com/usequipment
http://www.facebook.com/EquipmentMedia
http://www.youtube.com/user/USEquipment1

How many people are currently working, including employees?
Right now it is just me. I have experimented with independent contractors and even hired on one of my good friends (read below). This is industry can be very cut throat and I’ve always had a tug of war with myself about bringing anyone else on.

What is the best advice you never got?

Building an Equipment Empire, One Sale at a Time

Rob Lewis

I can’t say I never got this advice, but don’t hire friends or family. I hired a very good friend on last year and basically gave him access to my entire business and showed him first hand how the business could be built without a major cash layout. It came back to bite me when he opened his own company while still working with me and brought with him my customer lists, email lists, and the lead lists that I had purchased. It has proven to be an extremely tough situation because you get torn between bringing a lawsuit against someone who you were friends with or losing valued business you spent years building.

What almost killed your business in the start?
Not having the knowledge of when your next sale is coming in can be deflating. It is necessary to stay positive and upbeat. When you work very hard on deals that don’t go through, it can easily be discouraging. That was very challenging to get over. There were many days where I would get calls from recruiters and have to seriously think about what I wanted in my career. I would have to say the very toughest situation has been what I am going through right now. It has created a significant challenge but I will emerge with valuable lessons in how to conduct future business and how to protect certain business secrets and proprietary information.

What is the one thing that you did right?
The one thing I did right was to utilize low priced and free tools to expand our business clientele overseas. The profit can be much higher by selling to overseas customers and if you find the right buyers, they can be very loyal to you. Because we used mostly free lead generators, we have no debt and very little overhead making it easier to close sales and move onto the next one.

What was the biggest transition you had to make?
I have always been a sales person by nature, but operations and bookkeeping are something I am always working on improving. My time management and resourcefulness have been a strong point, but focusing too much time on sales can leave a mess when it comes time to organize the office. I also had to hone my negotiation skills significantly. Foreign buyers really don’t like to haggle back and forth but they do expect your “best” deal always. It can get extremely political trying to put good numbers on heavy equipment. If you put the wrong number out, you could lose their interest altogether. Put too low a price and you just cost yourself a good profit. I always try to get our buyers to put their own numbers and work from their, but that can be tricky as well. We also have to negotiate significantly with the contractors and finance companies we purchase equipment from. I have had sellers haggle over a $50 dollar difference and I have had sellers drop their prices by more than 50% just to make a sale.

Are you currently in the black or red?
Due to the recent experience with my friend opening his own competing company, I am currently seeing a small operational loss. Up until the past two quarters or so, I had been operating at a profit since day one. Working from home has given a significant advantage to not having overhead, so I anticipate I will be back in the black very quickly and continue to grow. I am always working on alternative revenue streams as well. Right now I have several projects in the works through my other company such as ebooks about the equipment business, a course to help others start an equipment brokerage, and I am also working on a special app to help the equipment industry while in the field. It’s amazing to see the opportunities that open up once you start your own business.

What type of marketing or advertising do you do?
I have tried many different advertising venues. Most are very costly and resulted in very little gains after taking costs into consideration. I have since cut back to one single international advertising site, Mascus.com and use any and all free sites I can find. I have an email list I mail machinery out to when I get them and also use Facebook to an extent. It hasn’t yet paid off, but it’s free and takes minimal time, so if I get one sale from Facebook it was worth it. I am also working on some Facebook ad content right now that I anticipate will be a good venue.

What would make your business more “Successful”?
Having access to capital to buy equipment outright would give us a significant boost. Most of the deals I do are brokered deals that I don’t own. This can cause profit levels to be lower because you are in a pinch to close deals faster to avoid competition coming in behind you and buying the machine. I have had even large Cat dealers come in behind me and purchase machines that we were marketing because we could not buy them outright. Having cash available allows for negotiation of better deals, faster closing, and you can sit on machines slightly longer to ensure you will get your expected profit. For example, a recent machine we brokered cost $90,000. I sold the machine for just over $100,000. Had I purchased the machine outright and done the necessary repairs, the same machine would have sold for a profit of $25k-$30k after repairs, nearly three times the achieved profit. I often have to pass up on deals of 50-100% profit because of lack of access to funding. It can be frustrating, but that is one drawback to starting a company with little money, it can be hard to build up a cash reserve.

Would you want to be acquired by a bigger company, run it yourself or sell in a couple of years?
Ideally being acquired would be the goal so I can partner with another strong company, but given the changing landscape of the equipment industry, I see myself evolving back into construction equipment rental where the real growth will be. Equipment sales will always be a focus, but I see the rental industry picking up steam this year and next and think that overlooking that could prove to be a poor decision.

What do you think your projected annual revenue will be?
2011 started out extremely strong, but due to the above circumstances, kinda fizzled out from June to December. I finished the year just over $1,000,000 in revenue but I see 2012 breaking $2,000,000 thanks to a strong start and an aggressive refocus on sales.

How long do you think it will take you to get to your projected annual revenue?
My goal is to cross over $3,000,000 by 2013 without having to bring on more than a couple of independent contractors. If I do integrate equipment rental into the business by 2013, I would expect no less than $5,000,000 in revenue with less than 10 employees.

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