Brandon Schoessler

Creative Partner at Transport

15

2

The Runner's Tea

In ten sentences or less, write down your business model:

The Runner's Tea is an all-natural performance tea for athletes, made with 100% organic herbs and matcha green tea. Our custom blend has been designed to increase endurance, be gentle on the stomach, and stimulate athletic performance.

List the assets you have or will acquire:

Currently, we have some basic relationships with organic herb and tea suppliers, but need to increase the buying power we have with them to make product ingredient acquisition cheaper.

Our next planned investment is to work with a spice/tea blender to mix, package, and store bulk product and develop new packaging to stand out on grocery shelves.

We already have a fully functional website and continue to make enhancements as needed.

For product offerings, we are currently developing new flavors based on customer requests and will be releasing our second flavor (ginger berry) shortly.

List the human resources you will contribute or hire:

The product development is being handled internally, and the order fulfillment is currently covered. However, if the business takes off, we will need to hire (or automate) a dedicated fulfillment role. 

Describe who your customer is and what the customer gets from doing business from you:

Our customer is someone that is an active participant in sports. We are marketing toward runners, but our product has performance benefits for anyone involved in sports.

When purchasing from us, our customer can be confident that we are providing completely certified organic ingredients that have been researched meticulously to determine the best and healthiest ways to boost athletic performance.

Additionally, we are the only company currenty selling a product that is directly marketed toward runners with the athletic and health benefits we offer.

What part of this is hard, which part is unique, and how you're going to repeat it again and again:

The hard part, for me, is taking the concept and blowing it up into a fullscale business and not having it be relagated to a side project. How do we get the word out? How do we take this idea to the next level?

Our product is unique, so that's the easy part. No one else is offering a performance boosting tea product that is organic and easy on the body.

To repeat, we need orders that pay for us to buy more product so we can offer more flavors to sell so that we make more money to buy more product...etc. :)

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If I determine that I am a freelancer:

How will I ensure a steady stream of work:

The more orders I get, the more I will work. In order to get more orders, I need to get the word out and promote the tea. I will target specialty athletic stores and running events to generate awareness.

How will I create an environment where I don't go crazy and melt:

The best part of this product is that it is an extension of something I love. And it allows me to be involved in that same thing in a different capacity. Creating this company doesn't remove me from anything I love. The only way, forseeable anyway, that I could start to go crazy is that I have too many orders to fill...in which case I would not hesitate to hire on help to fullfill orders.

How will I consistently raise my prices, increase the quality of my work and generate a waiting list for my time (at the same time):

It's not directly raising my prices, but once the business generates enough buying power, my bulk ordering becomes easier to negotiate deals, thereby raising my profit margin on an order.

The quality of my product will never be sub par. We are already only sourcing 100% organic ingredients and ceremonial grade matcha tea. Our standards will never drop below that.

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If I determine that I am an entrepreneur:

How will I relentlessly hire people to delegate work to:

When the time it takes to fullfill orders begins to be more than one person can handle, I will hire two people to do the task...one to replace myself and the other to begin to deal with the overflow.

When the time I spend meeting with, and selling to, specialty stores and groceries begins to be more than one person can handle, I will hire a sales person to handle the deals.

How will I give myself a promotion so I am constantly doing work I'm unable to hire anyone else to do:

My job will always be directly involved in new product development.

How will I build an organization that has the cash flow to permit me to do those two things:

Strategic growth. When it comes a time that I can't do it alone, I will not be afraid (or too cheap) to hire help. If there is a task that I can have someone else do, I should hire them to do that.

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Funding

Do you need money for this business?

yes. money allows me to purchase ingredients in order to sell my product. it also allows me to advertise to my demographic and reach customers in a specific niche that I am marketing toward. it also allows me to purchase time with food scientist to develop additional products.

Does more money increase the chances you will reach positive cash flow? Profitability?

tricky question. if more money = more awareness = more orders, then yes. if more money = more product variations (more ingredients purchased) + more awareness, then yes.

What are the assets the money will go to pay for?

advertising, ingredients, packaging.

How long before the money invested starts turning into money returned?

doing some (very) basic math, after the first 60 orders I will have broken even on my initial investment of ingredients, business license, web development. At which point I will have enough cash on hand to buy ingredients for an additional 45 orders, of which the first 20 will reimburse me on the purchase cost. the remaining 25 orders are then, essentially, profit with which to experiment on new offerings.

Do you hope to sell this company?

no.

What is the gross margin of what you'll be selling?

I have about $10 - $13 worth of ingredients/packaging/expense per 4oz. package of tea that I sell for $32 (includes shipping of about $5)

How long will it take you to reach scale?

I'm having a hard time understanding this question, but I'll make a base assumption: when I achieve about 250 orders per month (roughly $6000 in sales). I will have spent approximately $2000 - $2500 in ingredients/packaging/misc with a profit of around $4000. That would be enough to make a living out of this business. After that point, the scale becomes leverage, where my buying power allows a larger profit margin per order.

Given all this, and what you learned in the video, what sort of funding are you seeking? Why would this investor choose your offering over all the others available?

To Seth’s point in a different thread, I don’t need funding...I need sales.

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Hiring

Who are the first employees you need?

First, I need some evangelists. I was going to say a sales team, but the more I thought about it, the more I want people that believe in the product as much as I do to be out there talking about it at every opportunity. That will begin to drive sales, and then when some buzz has started, putting a sales/promotion team in place to service requests and get the product into stores, at events, and in the hands of runners is the next step.

Where will you find them?

At first, to find the evangelists, I will target social influencers in the running market (bloggers, reviewers, etc) to get them talking about it. Then when requests begin to come in I will find a promotion team. I have a couple friends in that world that I will lean on for help at first before I commit to hiring someone full time.

Why would they join you?

I want this job to be as much about doing something they love as they are good at...and reward them for performing. If my staff are runners, and they get to go to running events (maybe even entries paid for by the company) and promote the tea, and shine at what they do, then I would think that they would be happy to join me. especially if they are compensated fairly.

How will you tell the good ones apart from the convenient ones?

Honesty, it will probably be a little trial and error at the onset. then the sales figures applied to the individuals will be a good barometer of performance.

What's your funnel?

I'm not sure what this means.

After hiring people, how will you evaluate them?

I'm not afraid of just being open and talking directly. my evaluation will be an equal part of performance review and assessment of the person fitting in and encouraging the culture of the company.

How long after starting will you give people a formal review?

3 months, 6 months, 1 year. then yearly after that.

What's your approach for talking about the uncomfortable?

I am not averse to having a frank discussion with someone. I think honesty and transparency are key in the workplace.

Are you asking people to do work that's been done before, or to explore the edges of a new universe?

since our product is unique, i think that it is applying previous techniques in a new universe. at the end of the day, we are trying to sell a product to a niche group of individuals. the steps to get the niche on your side are the same no matter what you are selling...you just have to find the trigger to get them to buy in and then buy the product.

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Naming

The Runner's Tea

(i had already done this same exercise before starting this class...and went with a very straightforward and clear name)

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