Bottled Water Experiment - Part Deux
During my first bottled water experiment I learned how to setup shop and shamelessly sell a product. The next item on my agenda is to delegate that task to others while I do nothing.During the first experiment I met a homelss guy named Barry. He has a can-do attitude and also likes to make money. What he does NOT have is Capital and transportation.
Well I do.
I recently tracked Barry down and gave him a proposal. If I set him up with several cases of ice cold bottled water and a couple of ice chests, he could sell the water all day (instead of simply begging for money) and we would split the revenue down the middle. Obviously at first I get the sour end of this because I will be paying for everything.....but I also don't do a fraction of the work he will have to do.
SO LET'S GET STARTED:
The previous day I went to Walmart and loaded up my car with 5 cases of water and one ice chest.
Total Spent so Far: $40.22
Even if he sells all 120 bottles, I will barely make a $20 profit on the first run.
1 Gallon = 8 lbs.
1 Case = 24 lbs.
5 Cases = 120 lbs.
I could only fit 3 of the cases for cooling overnight. The rest would be cooled in the ice chest later.
Barry tried his best to look clean, I even brought him an old pair of shorts I no longer use.
I came back after he had been selling all day. He sold exactly 60 bottles, meaning we had 60 bottles left. The combination of cold + gloomy weather + Tuesday = not a great day to sell.
The fact that you can sell 60 bottles of water on a cold day made us look forward to the upcoming sunny, swealtering days!
We split the $60 in half.
Barry got $30.
I got $30.
So in the end I LOST MONEY. 49.44
BUT ALL HOPE IS NOT LOST. This Wednesday Barry will sell the remaining 60 bottles. It shouldn't cost me anything as the bottles are still being chilled with the same ice in the coolers.
We also want to give Barry a "brand name" by making him the "Water Guy" that everyone knows and trusts. People are more likely to give money when it looks like you are working for it.
This water experiment might actually turn out to be a decently lucrative side income for me in summer. I will be in Austin over the summer, and Barry is willing to work everyday. I will keep posting updates on the progress!
-Nev
For more in-depth discussions on this post: Bottled Water Experiment Forum
posted by Neville @ 1:02 AM
33 comments
33 Comments:
And yeah, it was strangely cold today, what the heck?
By the way, I'm following you blog closely now since I like your style and I'm trying to train myself to manage money. I'm not so great right now, lol, and I have a lot to handle this summer.
barry's gonna break out on his own as soon as he hits a benjamin!
This is the Northbound corner of Riverside and I-35.
Mark,
It is pretty much logistically impossible for Barry to accomplish this without help:
5 cases of water = 120 lbs.
2 bags ice = 40 lbs.
2 coolers = 10 lbs
Total = 150 lbs of bulky, perishable product that needs to be obtained from different stores and storage locations.
He has nothing to lose but his time. With my know-how, we can transform him into the "Water Guy" and start making him (and me) some real money!
-Nev
I think most of it is a convenience factor. Whats that particular location like? I'm sure u've thought about it all already Nev, but just wondering. cuz i'm sure the location plays a big part.
great job, even a $20 profit will set u up nicely for future sales. I think for now, splitting it 50/50 is a good idea, gives Barry more incentive to sell and work.
Cap@stopbuyingcrap.com
Canadian Capitalist
You're on the right track. Getting others to do the labor is the way to go. Once you get all the kinks worked out (which days work best, optimal weather conditions, etc.), you can multiply this idea all over the city. Who knows -- you could even then extend into other cities in Texas. If you end with 1,000 people selling water across the country and you make $30 on each per day, that's pretty good. ;-)
FMF
Some ideas to promote and increase profits:
-- more signs pointing to your location (advantage notice also allows people to prepare money)
-- on hot days you can raise price to like $2 (rather emotionless but corporate-like)
-- or stay on the same price and maintain a good name and recognition
-- start a chain: hire another bum in another location and so forth... (like FightClub) you job becomes basically running around collecting money
-- when business takes off, buy wholesale water (reduce costs)
At any rate, good job. Keep us updated.
Can you tell us a little more about the market price/competition in the area? How much are other stores nearby selling their water?
Not only are you learning about business, but you are also helping out the less fortunate.
Another idea would be to raise the price to $1.50. In some cases, you'll find that people will tell Barry to keep the change as a tip. This will let Barry earn a little more dough for good work done.
Lastly, I like your idea about turning Barry into a local celebrity.
Finally, this also reflects how important it is to be in the right place at the right time. Look at it from Barry's perspective. If I remember correctly, Barry was your second choice "employee." He was only picked because your first choice never showed up.
But anyways, I'm rambling on. Keep up the good work.
Some background on where I'm coming from: age: upper 30's; engineering undergrad, MBA, Sales Management. Automotive industry. Spent last 2 years working in Europe - currently in the Motor City.
Keep up the good work. I find it to be can't miss reading
I realize it is an experiment and all but what you are doing is illegal and promotes pan handling and just like the squeegee guys can lead to aggressive behavior for the motorists just wanting to get where they need to get.
G
The people who regularly pass by this corner always see bums, and they LOVE it when they see a bum working and not simply "bumming". I personally never give money to a bum just sitting there with a sign.
Anonymous,
I do have a job. Like I said before, making money in creative ways is 10 times more rewarding than making it through a job.
Arbee,
Thanks :-)
FMF,
Yes, I am trying to think a little bigger with this idea. First I will try to focus on making Barry "The Water Guy" and possibly get some press and a legal permit for him to sell. Thanks for reading!
Flexo,
I agree, it will probably get more difficult to do crazy stunts like this out of college, but I don't think I'll ever stop doing them. I'm just wierd like that :-)
Smarty,
40 lbs. of ice is hard to make! Its easier to just buy it, and takes less of my time (one major part of this process is to reduce the time I have to do work). Good ideas for a more efficient business.
Johnie,
Yes, Barry was a second choice, but a much better find (And not a crack fiend like the first one). He loves making money and he has the most outgoing personality out of any bum on Riverside....and so far he hasn't gone back on any promises.
Oldbull,
I am very aware that most people fail 10 times more than they succeed. I've already experienced failure (or mediocre results) in businesses I've persured.....but like you said, failing is part of the whole process. Hope you continue to bring your experience to the table in the form of comments!
Anonymous,
I don't care. I'm making money. I am currently looking to get Barry a permit so he can legally sell without worry of being hassled. There are bums all over this corner 24 hours a day, at least Barry is working and not begging. People often don't want the water, but will give him money because they appreciate his effort.
-Nev
Re: Going legit
I stole your idea and spent some time on a lazy weekend afternoon looking into what it would take to go legit.
It's almost graduation time again and that means lots of (thirsty?) people in a concentrated area (hopefully on a hot day). Figuring there will be little brothers and sisters, I even considered selling cans of Coke.
I live in Princeton, NJ but I went to school in Philadelphia, PA. There are a LOT more schools in Philly than there is in Princeton. Knowing this, I looked up what it would take to get a permit to sell at graduation.
Maybe it's different where you are, but in Philly, you need to pay a one time $250 "business privilege" tax/fee/whatever to the city. Then you need to get a business license from the city Dept of Licenses and Inspection. Offhand I forget the number there, but let's assume it's another $100/year. Since I would be selling consumables, I would also need to get inspected by the Dept. of Health (or some such organization). Again, assume $100/year.
On top of that I would have to pay taxes on my sales and if I hired anyone to help me, I'd have to put away unemployment and various other related taxes. On top of that, there are restrictions on where and when I can sell. Since I'd have to pay the Universities for a permit to vend on campus, it would be better to do it from the sidewalk.
Last, but not least, you've got legitimate food trucks (if you've never been to Philly, you wouldn't understand) who are trying to make a living vending. They have a wider selection and will reduce your margins (damn competition!). Not to mention that they will probably call the cops on you. Since you've got the legit paperwork, you probably won't go to jail, but this will take time to prove (time is money - esp. when your competitors are stealing your sales) and your potential customers will probably see this.
If there was one lesson I learned, it's this: don't do business in Philadelphia. I'm still looking into this for Princeton - since we're a much smaller city, it's more difficult to get the paperwork and city code online.
Good luck, but I doubt you'll find this is cost effective!
Very interesting experiments and still better postings with pictures and all!
I agree with mdunn! He has done far more homework but I basically think of three costs that you are able to avoid - as of now - rent, cost of doing business (license, permit, inspection, etc.) and Taxes. - But for how long can you do that and if it becomes more permanent business, these issues will come up in most of the places.
--
fivecentnickel.com
I would love to see someone else try this out and publish their results!
-Nev
A lot of numbnuts don't really get this one. The difference between legal and unenforced.
You also learned how to figure out profits vs. costs. I mean, everyone is so critical yet I know a lot of companies that need this sort of experiment yet they're playing with millions.
Cheers, MikeKing.
Cheers, Neville from Malta
Good experiment. The pictures you manage to take with CEOs is probably the most memorable part of your website apart from this water experiment. Send me an email from the contact form on my website about your San Francisco plans and we could meet up and talk about investing.
Asif
If you research the legal requirements and costs, how does the profit get hit! How about a totally legal experiment 3 to try the concept, but this time have it legal and give a valid comparison to regular stores.
I'd be interested to know if you need to increase your prices to make it worth while!
Adrian
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