To make money fast- recognize opportunity and execute with massive action
Someone once said that success occurs when opportunity and preparedness meet. There is much truth to this statement as Sheri and Rich Schmelzer of Boulder Colorado can attest. But first one has to recognize opportunity. And to do this, I believe you must be consciously looking for opportunity all the time.
But then you have to be prepared to take massive action and execute your idea! Everyone wants to know “how to make money fast”, but Sheri and Rich have already shown us. They started a small company from scratch in their basement and in one year sold it for $20 Million. While others were still trying to figure out how to make money fast, the Schmelzer’s did it. Here is their story.
Recognizing money making ideas & opportunity
To hear Sheri Schmelzer tell the story all three of her children loved their Crocs shoes and each child had several pair. One day while the stay at home mom was doing arts & crafts with the kids she picked up a Croc and stuck a silk flower through one of the holes. Before you know it all of the kids were finding decorative items to stick into the holes in their shoes. Sheri got a bright Idea and grabbed a sewing kit and began sewing colorful buttons into the holes of the crocs.
Later in the day her husband Rich came home and saw the whole family decorating their shoes with various items. That’s when the money making idea hit him. With just a little research Rich was able to determine that there were millions (about 26 million) pairs of Crocs in the world and most of them had holes in them. Rich and Sheri immediately saw the potential of creating a million dollar income by making and marketing cute and colorful accessories for Crocs.
Rich and Sheri had a lot of confidence there new idea would be a success. After all, if their kids enjoyed decorating their shoes, why wouldn’t other kids.
From that point the business took off very quickly. Sheri set up shop in the basement of their home. She began buying things like happy faces, hearts and rhinestones at various craft stores and gluing them to cufflinks. She would then stick the cuff links into the holes in her children’s crocs.
The children were eager to wear their shoes to school and any other place the family went. Within just a few weeks Sheri was overwhelmed with request and orders. It was not long before retailers came calling, wanting to stock the items in their stores.
So just what is a Jibbitz and how did they come up with this crazy name?
A Jibbitz is a colorful accessory that snaps into the holes on the top side of the Crocs shoe.
The name is actually a derivative of the nickname “flibbertyjibbit” given to Sheri by her husband. He borrowed the name from a movie.
Jibbitz would eventually retail for about $2.50 each. But every Croc shoe had multiple holes in them so if you tried to customize each one, it would cost you about $65.00, twice as much as the Crocs themselves cost.
The Jibbitz line of accessories would see about seven different designs before they got the right shape and the decorative items would stay snuggly fit in the Crocs holes.
Putting their money making idea into action- Fast!
Now that they were completely convinced they had a unique business opportunity, and orders were already coming in, Sheri and Rich took out a home-equity line of credit for around $200,000 to get the business off of the ground.
Rich Schmelzer was concerned about growing the company too fast, and not getting the product or business model just right. From past experience he knew that “calculated growth” was the best approach. Their first goal was to take the company from start to $20,000 a month in sales, but stay out of stores initially and keep getting feedback from customers. This way any problems with their products could be worked out before the company got too big.
[Looking for creative ways to make money - read about the $100 million stick figure]
Once they were convinced that their product was good, they ramped up sales from $20,000 a month to $200,000 a month. They already had stores calling them wanting to carry their products so it was easy to get on the shelves and make the jump in sales happen.
Within just a few months the Schmelzer’s were doing $2 Million a month in overall sales and by the one year mark their products were in over 3,000 stores. The operation was now out of the basement and in a local warehouse.
The $20 Million exit strategy- they had not yet considered
Sheri and Rich were still growing their business and had not yet considered an exit strategy. They didn’t have to wait long however.
One day one of their children was at a local pool when a man approached and asked the young girl about the decorations on her shoes. Sheri’s daughter, Lexie, proudly told him that her mother made them. The man handed the young girl a business card and told her to have her mother call him. He was none other than Duke Hanson, the founder of Crocs.
The company, Jibbitz LLC, was barely a year old when Sheri and Rich had a buyer for $10 Million outright, with another $10 Million option as long as the product continued to do well.
Ways to make money- Talking points
One of the things that made Jibbitz so successful so quickly, was they piggybacked their business onto an already existing business, which was extremely successful.
When looking for opportunity, look at what is already successful in the marketplace. Can you create a product that enhances an existing product? Or can you create a product that works better than the existing product?
Rich Schmelzer stated in an interview that he always keeps is eyes open for different ideas, and he studies trends to try to discover opportunities a year or two down the road. If he can match up an idea with a future opportunity, he can be prepared and have an impact on the market.