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"I'm going to quit work, and build fly rods and fish for
a living." Don't you wish it were that easy? If it was,
that's exactly what I would be doing right now. I even
know a person who is contemplating borrowing a lot of
money to start just that type of business. I wish him
well, but I also wonder how he will survive the process.
Let's look at this game for a minute. First, who are
your customers, and what do they want to buy? Do you
already have a list of customers who are ready to buy
your rods when you build them? What price are they
willing to pay for your rods? What brands of rods do
they use now, and what will you do to draw them away
from their favorite rod brands?
Let's tackle that first question. If you plan to build
fly rods for a living, you need to have customers who will
buy those rods before you make the big plunge. Most of us
already have our favorite brands, so what will you offer
that will draw me away from my favorite brand? It takes
about 10 years to establish yourself as a worthy custom
rod builder and get the kind of referrals needed to
sustain your business. What will you do to speed up
that process?
What is your strategy to attract customers to your product?
Will you sell your rods for a lower price? That doesn't
promote company growth in a highly competitive market
where profit margins are already somewhat slim with
the proliferation of imported fly rods with bulletproof
warranties.
Are you going to use nicer components than those typically
found on factory rods? That will produce a nicer looking
fly rod. It will also increase the cost of each rod and
reduce your profit percentages, but it will likely result
in a higher dollar-per-rod profit. However, increasing
your rod prices will limit your potential customer base
to a very narrow field that is already heavily targeted
by most of the custom rod builders out there.
It's going to cost you roughly 3/5th of your selling price
to produce your average fly rod. You'll also be required
to pay a 10% excise tax on the sale price of each rod.
If your quality is excellent, and you manage to find
enough customers to buy all the rods you can build,
then the limiting factor will be production time.
How many rods can you build in a day?
Let's put a dollar value on your finished fly rod. Assuming
you took the middle of the field and decided to build fly
rods with a final price of $350, that rod will profit you
about $105 after materials and excise taxes if you have
the lowest costs from the blank and component manufacturers.
Let's also assume you can build two fly rods in a ten-hour
day. That means you will make $210 per day before the costs
of product liability insurance, breakage, warranty service
and customer returns are factored in. Since you'll be
dealing directly with the customer, you'll also have a
percentage of refusals after you build the rod because
something just wasn't right in the customer's eye. From
experience, I know 20% is an extremely low number for
these additional costs, but we'll be optimistic and call
it 20% anyway. That means you will make $168 per day,
$1008 per six-day week, and $52,416 per year before the
costs of loan payments, building rent, health insurance,
advertising, etc. are factored in.
That doesn't sound too bad on the surface. Remember, we
are assuming you can find 624 paying customers per year
willing to shell out $350 of their hard-earned dollars
for one of your fly rods. That's roughly 6 times the
number of customers who shell out that kind of cash for
a fly rod in an average fly shop in an average year.
Maybe you should spend a little more money on advertising?
It also means you'll only have 52 days per year or about
four days per month off to fish or do anything else you
want or need to do that isn't rod building.
You could always do it on a part-time basis at first;
investing your own money to start, leaning the tricks
of the trade, and rolling the profits over to expand
your business. That would give you time to establish
your customer base and work out a line of suppliers.
It would also give you time to build an inventory and
equipment base. More important, it would give you the
stable income you already have to sustain you while you
build your business. However, it won't give you any
more free time and you won't get rich quick. You'll
just have less of your anatomy hanging out on that
proverbial financial limb.
It's your choice. Are you ready to take big risks?
Big risks sometimes yield big rewards. More often
though, they yield big disappointments and uncomfortable
financial situations. Some folks have literally lost
their homes and all their possessions to risks like
these.
I'll ask you; is this a realistic way to get rich quick?
~ AC
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