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Richard, When my niece asked that question I gave her the following. Hope it helps. Her questions are in Bold.

What is your business and how does it earn money?
We are a surplus store listed in the yellow pages under “Army & Navy stores” and “Surplus”. However, we are different from most 'surplus stores' in that we cater almost exclusively to soldiers and soldierets.

Whereas a 'normal' surplus store sells boots, sleeping bags and old uniforms to civilians who use the “old army stuff” for camping, hiking, hunting and construction work; we are selling to GI's who will have to wear the boots and uniforms the next day and stand inspection with the sleeping bag. The main differences between our store and a regular surplus store is that the civilian oriented surplus store sells lots of new civilian brand hiking boots, bags and camping gear. The used uniforms they carry (since the collapse of socialism – Yea Capitalism! Eat mud slimy commies!) are likely to be East German or Russian. Indeed, except for communist block war trophies, the inventory of most 'surplus stores' nowadays looks a lot like that of sporting goods stores.

How do we make all that wonderful money? The old fashioned way – we earn it! We also don't take checks (cash or credit card only) and avoid giving credit the way a dog avoids a flea circus.

The four types of sales:
Retail sales
We sell uniforms, TA-50, boots, sleeping bags, flashlights, patches, rank insignia, knives and lots of other stuff the GI's want or need. We buy most of the surplus stuff OTC (Over The Counter) from the GI's. The knives and other neat stuff I buy from importers and manufacturers. (Never buy from wholesalers if you can help it. If you do you're just paying another layer of overhead, which must be reflected in your prices.)

I've tracked down a manufacturer of sew-on rank insignia, patches and badges whose prices are way below what most surplus stores pay for them at the wholesalers. (One of my hobbies is tracking down sources.) I keep my prices competitive with my competitors while making more profit than they can. When going for government contracts I can drop my prices on these items down below what my competitors can sell for and still make a profit. But I seldom have too because we carry large inventories (I buy a thousand pairs at a time.) of the patches, badges and insignia in stock (a requirement to buy cheap from a manufacturer) so unit commanders (and individual retail customers) know they can get it from us NOW.

I always try to buy merchandise at a price so low that – if I have to – I know I can sell it at cost to customers. That way if it flops I can get rid of the turkeys and buy something that sells. That is to say if I know people will buy it at what I paid for it I'll buy it and mark it up at my regular mark up rate. Please note that if I'm buying a dozen of something to try out that wholesales at $X.xx by the dozen and $Y.yy by the gross I mark it up at the gross $Y.yy price and sell the test lot at less or no profit. That way I know how well it will sell at the regular prices.

Sewing
We sew on the nametags we make as well as the badges, patches and rank insignia we sell. I charge one dollar per item to do this. Most BDU's (Battle Dress Uniform) and DCU's (Desert Combat Uniform) need from three to five items sewn on. It adds up.

Wholesale
Because of our nearly unique buying position (buying directly from the GI's) we are in a position to sell to other surplus dealers. Most come to us and pay cash. I ship to a few. We also wholesale the nametags we make to local laundries. We can do this because the girls can enter a name and do something else while the tag is sewn on one of six computerized machines. We don't wholesale dog tags because the old fashioned machine requires the operator to sit in front of it and punch keys one at a time.

Manufacturing (Nametags, Dog tags, nameplates & Brassards)
We've got six sewing heads. At an average of three minutes per tag that's six tags every three minutes. When there's a big order we can really crank'em out.

With our own dog tag machine we don't have to send the work out and can give the customer his tags in about three minutes. (NOW!) By not sending the work out we make ALL the profit rather than sharing it with the post office and whoever embosses the tags. It's the same with the nameplate machine.

We started making our own MP brassards after our manufacturing source went out of business. We sell them at retail and wholesale locally and wholesale worldwide. I've managed to track down just about every MP unit in the world via the Internet. I've created a database and flyer for a regular mail campaign, which I initiate about every six months.

When was your business established?
1984 (That's the shortest answer you're gunn'a get out'a me.)

What are your products?
Robert A. Heinlein was right on target in “The Rolling Stones” when he asserted that statically it's the people who produce products and services who make money in gold rushes, not the prospectors. We provide the products and services GI's need at a price they're willing to pay.

Price, Quality, Service after sale (pick any two).

Who are your customers?
We have two main types of customers:

The regular soldier
Who just needs a new uniform or a tag sewn on. These constitute the majority of our customers.

And

The young rebels
These guys & gals are smarter than you and I will ever be. Us old fogies can't tell them anything 'cause they already know it all. And, for the first time in their lives they are away from the limiting influence of their parents. There's no dad to deny them the new 100+-mph racing motorcycle and no mom to tell'em they can't have the stereo with a base speaker that causes the earth to shake. There is also no dearth of sharpies willing to sell the above listed “necessities” to the GI's on credit. As a result our young know-it-alls find themselves broke between paydays.

So we find the young smarter-than-we-will-ever-be's coming in to sell us their boots, uniforms etc. to get enough cash to carry them till payday. Or to put it succinctly, we buy their gear all month and sell it back to them on payday.

Who are your competitors?
Crooks.
The second hand clothing industry here is rife with crooks operating as fences for stolen goods. Three or four (CID doesn't confide in me so I can't be sure) of my competitors have been forced out of business and/or out of town when the CID and/or FBI caught them dealing in stolen merchandise. (It's cheaper for the feds to close the crook down than to go through the expense of a trial.) I don't have to compete with those guys; I just wait for'em to take a fall.

What sets you apart from your competitors?
Honesty.
There is (as far as I know) one other honest surplus dealer here, but he's no problem because he chose a poor location (on a main street, but not directly on the route as most GI's leave a main gate), and doesn't advertise. Another competitor, in a good location outside a main gate, advertises occasionally, but has virtually no parking at his store. A third competitor, recently released from prison, is in one of my old stores – a good location – but he neither advertises nor opens before noon most days. He won't last.

I choose my locations carefully. All three locations (the first we leased, the second I had built for me and leased and the one we own and are in now) are on the RIGHT side of the street as the GI's LEAVE the base. (Even if I were willing to get up at O'dark thirty to open for them as they were racing to make morning formation they wouldn't have time to stop on the way in to work.) Likewise, during lunch hour, nobody wants to fight his or her way through a left turn to get into a store. Especially if they know they'll have to do it again to get to Burger King for lunch. By being on the RIGHT side of the street as they travel off base to home and lunch I make it easy for them to turn into the store on the way.

I choose my locations carefully. All three locations have (or had) a large parking lot. If they can't park by the door many homeward bound people will decide to shop another time.

I choose my locations carefully. All three locations are (or were) on the far side of intersections as the homeward bound GI approaches. This gives the customers more time to see my signs and decide to stop in.

I also use signage to stake out my location. All of my stores have (or had) large (three foot) black letters spelling out our store name on a solid light yellow background. The current store has four foot yellow letters on a solid green wall.

How do you promote your products?
I stopped buying ads in those base maps and base phone books they give out to newly arriving soldiers after a survey I took of my customers found not one of them had seen the ads there. I now direct the salesmen from those outfits to my competitors hoping they'll waste their money on this nonproductive medium. (You should see the look on the salesmen's faces when I tell them that.)

That same survey showed me that most of my customers first heard about our store from their friends. This proves the old ad adage that “word of mouth is the best advertising.” A small percentage of the survey said they'd seen my ads in the base newspaper so I still run ads there every week. I don't advertise in the civilian daily newspaper because it's too expensive. I'd be paying too much to reach an audience that has little interest in my products and services and, in most cases, is too far away to come see my store.

I carry an ad in the local Yellow Pages probably because someone once told me “If you aren't in the Yellow Pages you aren't in business!” (I think he might have been a salesman from the Phone Company.) At any rate I carry a small display ad under “Army & Navy stores” and a “free” listing under “Surplus” mainly because people seem to expect it. Since we aren't a traditional surplus store it brings in a lot of calls for stuff I don't carry.

Despite what the small print in the fake bills the fly by night Yellow Pages companies from around the nation tell me, I somehow doubt that the inhabitants of Timbuktu (or Timbuckthree for that matter) are willing to travel all the way to my store to buy a camouflage hat.

I do however have a listing in the Internet version of the Thomas Registry for my MP brassards because 1) it's free and 2) there may well be an MP unit in Timbucktooth who needs them and will call in an order.

Once or twice I've run ads in those free weekly ad-papers when I thought I had something civilians might be interested in. I've toyed with the idea of running radio ads in the early morning (O'dark thirty) when rates are low because GI's (and few others) are up and about, but haven't been approached by a radio ad salesman with an idea that I think would work.

Within the small business community there are two schools on the effectiveness of advertising. One school cites a famous businessman of the early 1900 (whose name you'd recognize if I could remember it) who said, “I know half of my advertising dollars are wasted, but I don't know which half.”

The other school of small businessmen and businesswomen point out that after “OK” the term “Coca-Cola” is the most recognized word on the planet. And it only took a few billion advertising dollars to do it. These guys don't tend to advertise very much if at all.

I stand somewhere between these opposing camps. I don't care if half my advertising dollars are wasted as long as the other half bring in enough customers. Unlike Coke & Pepsi (who sell there name and an emotion they hope will be linked in the potential customer's mind to the product) I advertise what the GI wants at prices s/he can afford to pay and let the association between my company name and the impression of value received for dollars expended form in their minds.

The “How To Be a Billionaire” books (particularly those written by advertising gurus) advocate coupons as a method of tracking the effectiveness of advertising. I disagree. For one thing, to rely on coupons you must assume that 1) people want what you're offering and 2) it's being offered at such a low price that they'll flock to your store to buy it. Maybe, maybe not.

I know my ads are working when customers come into my store clutching the ad. This only happens when I'm offering something people really want at a price they really want to pay. (“Razor Sharp LockBack Knives Only $2.99” is my latest hit.) The rest of the time my ads just remind the soldiers that we exist and keep in their minds the perception that we have the best stuff at the lowest prices.

What's your pricing strategy?
I keystone. That means I try to sell a product at double what I paid for it. When I was first getting started I went to see some guy at the Small Business Administration who showed me that if I buy it for a dollar and sell it for two dollars I make 10% after expenses.

If I buy at a dollar and sell at two dollars I've got to reinvest one of the dollars in more product so as to have something to sell tomorrow. That leaves one dollar. Out of that dollar I've got to pay my rent or mortgage, utilities, insurance, payroll, etc. By the time I finish paying taxes (NEVER forget taxes they are a business killer. No businessperson today can make a business decision without taking taxes into account.) I'll have about a dime of profit left.

How is your business organized?
I'm the boss; I'm in charge. Period. Kim only disputes this whenever she wants to.

What kinds of personnel do you employ?
ONLY first generation, church going, Korean women with children in school. First generation because the second generation (born and raised in the good ol' USA) just like the rest of us Americans doesn't work hard enough – we're too soft. Someone just off the boat from a country where 14-hour days are normal and expected will work eight hours and be grateful for the job. Second generation and beyond thinks they're entitled to the job and/or welfare. They loaf all day and then ask why Arbor Day isn't a paid holiday.

Korean because most all of Kim's friends are Korean and I don't know any Armenians. (As you pick up experience you'll find that people, like snails, leave a trail behind as they go through life. If you want to know what kind of person a new acquaintance is just look at the people s/he hangs out with. Talk to past and present bosses, friends, roommates, co-workers and car-poolers they'll fill you in as to what kind of trail the person is laying down.) Within the close knit Korean community, Kim is aware of all the 'dirt' stuck to the trails of the women looking for jobs.

My best friend's wife says we men are useless at evaluating women – we can't see past the makeup. This isn't always the case. G. Gordon Liddy tells the tale of how he and a bunch of other FBI agents were given offices and secretaries in Washington DC many years ago. The other agents picked the most beautiful babes they could get their hands on – figuratively speaking of course. Liddy interviewed from the same secretarial pool and picked an older woman who knew the ins and outs of DC. She'd been around and knew who to call and when to call'em to get the info Liddy needed to get his job done. He knew his boss would be evaluating his job performance, not his secretary's looks.

Church going because we need honest people we can trust working behind the counter. Not all churchgoers are honest, but I like to play the percentages.

What efforts have been made to promote quality and customer satisfaction?
The GI, like everybody else, wants it now. Not tomorrow, not latter, now, Now, NOW! By providing sewing, ID (dog) tags and nameplates while they wait we fill that need. How do I prove this? The government, in its infinite wisdom, uses my tax money and prison laborers to compete with me. A GI can take the tags I sell him and go to post laundry where the tags will be sewn on for free and returned in about a week. (Free to him he thinks: until April 15th. There is no such thing as a free lunch.) Some GI's take advantage of this 'free' service. However, I've got two girls working all day sewing on nametags 'cause they do it NOW!

When customers call I tell'em we can make a nametag in three minutes (average time to embroider an average length name) and sew it on in another three minutes. NOT “a few minutes” or “about five or six minutes” because we've all been told that and had to wait longer. Customers who hear the exact number 'three minutes' don't discount it as hype intended to get their business while disregarding their need for NOW! I actually overheard one customer tell a friend: “Wow, they really did it in three minutes!” he'd timed us.

What's your legal form of organization?
We are a sole proprietorship. I'm told by my bookkeeper, and other business people who know about such things, that if we got bigger we might want to look into incorporating. We probably won't be getting much bigger because if we get over five employees we come under another set of federal laws and Kim doesn't want the business to get any larger fearing we'd have to work even more than we are now.

How has your business developed over the years?
We started out as a table at a flea market about a year after I got out of the army in 1981. We were “Sunshine Traders” then. We went from one table to eight over the years and I was soon making more on weekends than during the workweek. So I quit my 'day' job and started setting up on the street corner where we would later open store number two. About a year after that the state (finally!) repealed the 'Blue Law' that prevented stores from selling most stuff on Sunday.

The next week we opened store #1 and I was surprised at how much difference (in volume) having a storefront made. About a year after that the company Kim worked for laid her off and I installed her in store #1 while I opened store #2 a few blocks away. (Normally this would be a bad move (competing with myself) but in my niche market you don't want to get too far away from the fort. Also, the new location covered another route from the fort for homeward bound GI's.)

I bought a HUD repossessed house for a song on the corner where store #3 now stands and, a few years later, the house next door to it. When the 10-year lease on store #2 expired we moved out of both stores after building store #3 on the corner where we'd lived. I'd had my lawyer draw up leases on both properties, which permitted us to leave anytime after a certain period without penalty. (Never move into a location on a month-to-month basis! The landlord can later raise the rent and you're faced with the trouble and expense of moving while confusing your customers or paying a rent you'd never have agreed to in the first place.)

The size and color of our stand-alone building (My original plan had been to build a large landmark of a 'castle' but that proved too costly.) set back from the street behind a large parking lot and the large letters high on the front of the building make us stand out from the competition in appearance. Once they are inside we make sure we stand out in service and quality too.

What factors do you consider most important in making your business a success?
“Press on! Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education alone will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent!” (Calvin Coolidge)

That and a little hard work will get you just about anywhere you want to go.

And ya' gott'a be there.
You can't run off and expect a business to run itself. When I was first getting started I consigned belt buckles in area stores. Once I put a buckle board into a newly opened ice cream store. About a month later I went back to collect my money and replace sold buckles. The place was closed with a landlord's “FOR RENT” sign in the window. Hopping to somehow recover my buckles and display board I entered the store next door and found the lady clerk from the ice cream store now working there. She'd saved my board of buckles (God bless her!) and told me the male half of the owners would grab all the twenties out of the register and disappear every day. You can't siphon off income like that! You've GOT to reinvest in the business! It wasn't long before ice cream wholesalers were delivering “COD Only” and the rest (and the store) is history.

Select managers carefully and always remember responsibility cannot exist without authority.

In the future, what elements can you see affecting your business, either positively or negatively?
The tendency of most people is to assume the good [or bad] times will go on forever. They won't. The only constant in nature is change. Get over it and get to work. You are truly the master of your fate if only you set obtainable goals and deadlines and strive to meet them.

Are there any special challenges which face your business in the years to come?

Here are a few answers to questions you didn't ask, but I thought you should have the answers anyway.

No matter how an experience turns out, the knowledge gained by it should be deposited into you brain's databank. Later you can draw on the knowledge bank in your brain to figure out how to handle new situations. That's why the Bible tells us to respect our elders – they have bigger bank balances than we do.

Does that mean, “Knowledge is power? Look at librarians – how much power do they have?” (Cliff Stoll). To qualify: generally speaking only FRESH knowledge has VALUE. Once it becomes old, and generally distributed, it loses much of its value but retains potential for power. See “Those who ignore history [old knowledge] are condemned to relive it.” in another volume.

People don't hire you to make you rich, they hire you to make them rich.

There are only two reasons for getting a job:
1. To stave off starvation.
2. To learn the skills, protocols & conventions you will need when you start your own business.

To get full benefit from your job, learn your boss's job.

Features and Benefits.
A feature is something your product or service has that will be of use to the client/customer. I.e. “This bike has round wheels!”
A benefit is what that feature will do for the client/customer. I.e. “You'll be able to go faster than you would on square wheels!”

Always ask for the sale.
When someone asks about something in my store I tell'em about its features, benefits and price then add: “Want'a buy a dozen.” The question gets a laugh and makes my point while giving the customer the chance to put him/herself back in control of the situation by stating s/he'll only take only one. (As opposed to controlling the situation by refusing to buy. Customer empowerment has its price – plus tax.)

I recall recently reading of a specialty soap manufacturer who learned that a national manufacturer was about to test market a competing product preparatory to a nationwide rollout which (as far as he was concerned) would be a wholesale invasion of his territory. Knowing he could never win a price war with them he immediately stopped all shipments to grocery stores in the test area. Even his loyal customers (customers are 'loyal' only as long as they PERCEIVE they are getting the best product at the lowest price.) were forced to switch to the new test product. The national brand's test product sold out. They gleefully went into production. “Today der Danube, tomorrow der world!”

While they were tooling up the specialty manufacturer flooded grocery stores with large economy sized containers of his product at rock bottom prices and two-for-one offers. When the national brand came roaring back with their new product if flopped since everyone already had a huge supply of the specialty guy's stuff. Confused and disillusioned by the now poor sales, the national brand decided to just gave up rather than try a new formula or marketing ploy.

This is from an enote to Aunt Dottie in January of 2000:
>> Confession time
I must confess I've been using your name in vain for years. I can't recall the number of times I've told someone to bear in mind the "Bar to entry" (what's to keep every Tom, Dick & Harry for doing the same thing) rule when considering going into a business venture. Most recently I mentioned it (with attribution) to Kirby who's (once again) considering starting his own business.

Other Dottieisms I've passed on include:
'When considering a business offer ask yourself "What's in it for him/her?" if, from what they are saying, you get the impression it's little or nothing you're not getting the whole story.'

And

"Buy things that appreciate rather than depreciate." I haven't been all that great at this one, buying the biggest pickup truck I could lay my hands on every ten years or so. But I contend that all that space comes in handy once or twice a year. And I've needed the 4X4 capabilities on my last two pickups at least once on each of'em. And when I needed it I really needed it.

Thinking about this, it occurs to me that the only profound principle I can recall from my mom is: "If you want to know what a girl will look like in 20 years, look at her mother." That one kept me single for years!
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