Hey Puzzle Bomb Family,
Today is one of those "business-of-puzzle-making" blogs. One reason I like being transparent is to inspire other folks that starting their own business and achieving financial independence is far more achievable than they might think.
I've learned the immense value of having our own provision rather than relying on an employer, and am so glad we had Puzzle Bomb when my full-time employment suddenly went away! I also think many peoples' earning potential remains highly limited when they solely rely on an employer, not to mention the lack of freedom in how they can choose to use their time.
Now, while "what it takes" can include skills, talents, creativity, and ability to self-motivate/get things done (the list will vary depending on the business), today I'm just focusing on the $$$ that it took to launch Puzzle Bomb.
Setting Up the Business Entity
There are a few things you need to simply establish yourself as a business. Here were our costs to establish a legal business entity and a tangible identity:
Business Registration - $1,365 - You could do this step for nearly free if you don't mind researching and doing the necessary paperwork. However, we had the means to pay a lawyer to do this for us, as I hate sifting through legalese, and was worried about not crossing a T or dotting an I somewhere. For me, the peace of mind was worth the spend.
In our case, we file as a single-member LLC, which gives us some degree of legal protection, but doesn't require us to file separate business taxes (our Puzzle Bomb income merely counts as personal income). We'll likely pivot here as we grow, but for now, it serves us best.
You can also simply launch a business as a sole proprietorship to start small, but it leaves you with unlimited personal liability, as that structure simply operates under your name.
Website - $4,260 - You'd likely get this done for way cheaper, as you can register a domain for tens of dollars, and if you use Shopify like us, the start-up costs are nearly nil.
So, why so expensive? I personally believe in doing things with the expectation we'll be successful, and in not skimping on areas I'll wish I had done right later.
In this case, with the name "Puzzle Bomb", I was a bit shocked to see the .com URL wasn't actively being used, but was not shocked that someone owned it. Someone had just bought it to park on it until there was a buyer, and I was that buyer. It cost me $4,000 more than if it had merely been unclaimed.
However, to do things "right", I didn't want a .net, .biz, or some other domain, and while it was a pill to swallow at the time, I'm now glad I made the spend.
As for the rest the website set-up, I had a good friend that loves entrepreneurship and was excited to see us starting a business. He's a web developer, and did the complete Shopify set-up for me. From my understanding, this is something a novice could figure out, as Shopify makes things easy in the retail space, but there was great time savings here, and peace of mind that things were all done correctly!
There were some other small costs here, but really, that domain registration was pretty much all of it.
Branding - $1,750 - Speaking of doing things right, I wanted solid branding and brand identity out of the gate, so I paid a branding company to generate logo ideas, create style guides, font usage, etc, so I would have a professional, identifiable, and consistent company presence.
Our Total Expenditure - $7,375 - I spent a lot here. With a more do-it-yourself approach, and an available domain name, you could get this all done for a couple hundred bucks.
Product #1 - The Enamel Ice Cream Puzzle
We needed some way to begin getting the word out, and my thought was offering something a bit wild, over-the-top, and eye catching could be a good start. Something that would "wow" people, and cause them to take to social media with it. Plus, I just liked the idea of bringing something to fruition that was a fairly unreasonable undertaking for the puzzling space.
Part of what I like about owning Puzzle Bomb is that sometimes I just make stuff that I like and want to own, even if it's not necessarily the most lucrative idea. Typically, this is more responsible to do after you're successful, but in this case, I decided to launch with it, as it was more about exposure and marketing than financial return. :D
Design - $465 - At this point in the journey, I didn't realize I had the ability to design and illustrate myself, so I paid a pin designer to design these 30 pins. I gave him an illustration board of the types of things I wanted, but he did the work of bringing them to life.
I personally don't think he charged enough, and if an artist were to do something this cheaply for me today, I'd offer to pay more!
Sampling, Production, and Overseas Shipping - $4,850 - This was for 200 units. A fancy box full of 30 enamel pins wasn't cheap!
Our Total Expenditure - $5,315 - This amounted to about $27/unit, which is nuts, especially since I sold them for $50 each. Even though it brought back over $9,500 in revenue, as a business model, this would be completely unsustainable to offer a product at these margins, but I knew going in this was simply to get attention and not about being highly profitable.
Really, this was a mildly profitable marketing exercise. It worked for the intended utility to start putting Puzzle Bomb on the map, and was as super fun product!
The Bread & Butter - Bumfuzzled
If you're newer to Puzzle Bomb and want to take a quick detour, I previously wrote a blog on how our main product line, Bumfuzzled, kinda sorta accidentally became a thing:
Read "The Detour that Sparked Bumfuzzled"
By the time the idea for Bumfuzzleds hit, I had already spent about $5,000 designing/developing/sampling a completely different product line according to what I thought the initial direction of Puzzle Bomb would be. However, I'm not going to count that here, as that was more my own lack of planning and knack for forging ahead without a plan. The more I write in this blog, the more I wonder if I'm writing a post about how not to launch a company. :D
Design - $0 - Finally! Technically, there's a few bucks here, as I needed pencil and paper, but by this point, I'd started building confidence as a designer, and started down the road of designing everything myself.
Sampling, Production, and Overseas Shipping - $9,000 - This was for 1,000 units. A $9 production cost per unit is incredibly more financially viable and allows for the margins a business needs!
Marketing - $11,500 - Up until this point, I had relied solely on social media, but I ran a Kickstarter campaign to launch Bumfuzzled (which brought us $40,000 of much-needed revenue!), and needed more exposure to drive sales.
Obviously, the marketing paid off with $40,000 in sales, so this could really be viewed as more of an investment than an "expense", as I just kept spending on more advertising so long as it was producing the immediate return (something I still do to this day).
Our Total Expenditure - $20,500
Total Launch Expenditure
There were odds and ends that added up to a couple hundred dollars along the way, but in total, these get-off-the-ground spends total to roughly $50,000, which resulted in about $50,000 in first-year revenue, plus some extra stock of Bumfuzzled #1. To immediately recoup all of our start-up costs while building an audience from scratch was a huge success!
Now, that's a lot of money, but keep in mind:
1) Many of our spends, like domain registration were higher than necessary. We chose to spend higher here.
2) A third of this is cost of goods, which is going to be a large part of any retail-focused business. We also spent here knowing that Kickstarter had already pre-sold the product, and would have produced fewer units without that assurance.
3) Marketing was a fifth of this, which we wouldn't have spent on had it not been working.
Is the Risk Worth It?
Of course, starting your own business comes with inherent risk. In my case, I took the risk while I had the luxury of also having full-time employment, but it was a financial risk nonetheless.
But, it's been one that was ridiculously worth it, primarily when it comes to how I can spend my time. I can help homeschool my kiddos. I can go on vacations with my wonderful wife (who does travel-hacking if you want tips!) without worrying about keeping up on work. I can take my son to the gym for 1-2 hours a day as I help him get ready for a competitive basketball league. I can play Roblox, and do art, puzzles, and board games with my daughters. I can serve in ministry watching Jesus heal the hurt, afflicted, and broken-hearted.
And I can do all of these things pretty much however much and whenever I want! While a business that supports us is nice, this is the true treasure!
Blessings,
Chad aka The Puzzle Bomb Designer and Other Stuff Guy
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