Six weeks ago, my side hustle of buying and selling cell phones had accumulated tons of momentum. I had a revolving door of inventory and my snowball of liquid capital was growing larger and larger. However, the growth of my business was linearly related to the number of available hours at my disposal, and I had reached the point where I had no more hours to work. For growth to continue and become exponential, something had to change.
I had two goals for myself: 1) Find a way to reduce the number of hours committed to my side hustle, and 2) Increase the amount of money I made per hour. Several months ago, I had attempted to achieve these goals by purchasing used devices in bulk from an electronics company on the west coast. While the venture was profitable, it came with so many headaches that I chose not to continue my relationship with the company. Since then, my eyes and ears remained open and I eventually found an “opportunity” that I couldn’t pass up.
In hindsight, I can see everything that went wrong: The facts I could have checked more closely, the red flags that should not have been ignored, and the need for a second opinion. The wool was pulled over my eyes and I blindly followed that pied-piper’s song. The scam artist walked away with $6,000 and I was left standing in the dust, wondering what happened.
I found myself dumb-founded because I had never encountered a scammer of this caliber. He had provided multiple proofs of identification, a bank account linked to an incorporated business formed several years ago and nearly all of the provided facts checked out (I found some to be false after-the-fact). I was given a phone number and communicated many times via text and voice to a gentlemen who was down-to-Earth, relate-able, and polite. In other words, I was not participating in an unsolicited Nigerian lottery from my spam folder. Yet, as soon as he had his hands on my cash, his phone number was disconnected, his email became unresponsive, and the trail went cold.
There were two options before me: 1) Whine, complain, and give up the business or 2) Redouble my efforts and make it all back and more. I’d be lying if said there wasn’t a couple of weeks where I wallowed in choice number one saying “woe is me” to anyone who would listen. However, once I got over myself, I went back to reading financial literature and looking for ways to get back on my feet. One of the books I read during this time was The Millionaire Fast Lane by MJ DeMarco. While not the most well-written book, many of the concepts were pure gold and I discovered a successful community of entrepreneurs in the accompanying forums. Here were real people achieving my two business goals in a very real way. I knew that in order to grow my business, I had to think outside the box, and I soon discovered some new opportunities.
A couple of weeks ago, I was relating my scam story to a local cell-phone repair shop that I frequently do business with. They were shocked that this had happened to me, yet impressed that I was still on my feet after taking a $6,000 hit. Perceiving me to be a “high-roller” they approached me with an investment opportunity. There was a piece of repair equipment that they wanted to purchase that would increase productivity and profits, and if I financed it for them I would earn a 27% return on my investment in four months after six bi-monthly payments starting in 30 days. This is currently ongoing, and should everything go as planned, I will oblige their desire for me to invest in additional equipment in the near future.
This new branch of my business has a lot of potential. The risk is higher, but the man-hours are minimal and the returns are large. I have also brainstormed several ways to scale the resale portion of business that will result in greater profits per hour invested. All in all, I don’t think it will take much time to gain back my lost capital, and once I do, the increased profits are going to be slashing down our loans.
Without a doubt, this $6,000 mistake has reinvigorated my business, but from it I’ve also gained knowledge and experience that can only be learned the hard way. I’ve learned the importance of due-diligence when a lot is at stake, and that a person’s appearance is meaningless because only the facts matter. I’ve learned that all reward takes risk, and that the greater the potential reward, the greater the potential risk. In this case the reward probably was too good to be true, and I need to be wary of profits that seem unrealistic. Finally, I’ve learned that the road to success is wrought with potholes of failure, and that the difference between winners and losers is whether the failures cause one to quit or persevere. I’ve been set back, but my goal of being debt-free by April 2014 remains the same, and I am going to do whatever it takes to get there.