Sramana: Given your business model, where you do not have to deal with the logistics of the shipments, what kind of margin do you do?
Dan Dillon: We have a floor of between 8 and 9 margin points when marketing via comparison shopping engines. If people are coming in organically or directly due to our brand, then we have earned that audience and we can expect to see anywhere between 25% and 27% margin.
Sramana: What is your overall business operating margin?
Dan Dillon: At the end of the day, our company will have around 5% net profit.
Sramana: Have you built this business organically?
Dan Dillon: Yes, it has been completely bootstrapped. Each dollar invested in the business was a dollar that was earned from the business. The initial money I put into the business was used for startup expenses like purchasing a computer, desk and chair. Each dollar that has been made from that day forward has been reinvested in the business. I have never felt I was entitled to any weekly paycheck. As an entrepreneur, you are not entitled to any money until after you have earned it, and even then you have to make good decisions about when you can afford to invest in something major like hiring an employee. You have to look at it as an investment and know when your time is spent well.
Sramana: Talk to me about that. What have you done from a team perspective? How big is your team?
Dan Dillon: We are 18 people strong at the moment. They are all like family. Each individual hire was well thought out. The first hire I made was for someone to manage the phones. That person had a strong customer service skill set as well as had a strong knowledge of the product lineup, which is huge. That first hire helped me to focus on the marketing side of the business for the work that I had just cultivated. They maintained what I had sold and generated. The responsibility of each person I have hired has always been very well thought out.
Sramana: Can you walk us through that process? It is a very important step for entrepreneurs. Who was your second hire?
Dan Dillon: A delivery person. When I hired a customer service person with product knowledge, I was then able to make deliveries to my first set of clients. Getting a shipping guy on board was absolutely key because it gave me more free time. At that point, I realized I could generate more business electronically than I could organically.