When Jason Smith was in sixth grade, he bought bags of Jolly Rancher candies, resold individual pieces to classmates and made a $10 profit...
When Jason Smith was in sixth grade, he bought bags of Jolly Rancher candies, resold individual pieces to classmates and made a $10 profit per bag.
That was his introduction to entrepreneurship, and he hasn’t stopped since.
Now 24, Smith owns GoSMG.com (SMG stands for Specialty Marketing Group), a Brea, Calif., company that helps schools and nonprofit organizations nationwide maximize their fund raising.
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Age is perhaps the least important element of small-business success.
Young entrepreneurs such as Smith have discovered that as long as they provide value, service and success to their customers, no one checks their ID card.
Smith has learned six vital lessons that have built GoSMG.com into a nationwide company with six-figure revenue.
Test the waters.
Jolly Ranchers whetted Smith’s entrepreneurial appetite.
By high school, he was experimenting with eBay, selling Beanie Babies and other items.
“From an early age, I became fascinated with buying and selling and the concept of profit,” he said. “My parents were very supportive.”
After graduating from Kennedy High School in La Palma, Calif., in 1999, Smith discovered the small-business-management program at nearby Cypress College and earned an associate’s degree in marketing.
“I don’t know about other college instruction, but this was a fantastic program,” he said.
Find a passion.
At Cypress College, Smith was always on the lookout for business opportunities.
He spotted one when he saw Yo-Yo Balloons at swap meets. He set up a Web site offering bags of the heavy latex toys to people who wanted to inflate and sell them for $1 to $3 apiece.
It was a nationally known product that people were using search engines to find. Smith shipped more than 1 million Yo-Yo Balloons.
Smith soon discovered that many of his online customers were teachers buying the balloons for school fund-raisers.
“That clicked with me,” he said. “Both my parents are schoolteachers, so I know how they’re always trying to raise money. The fund-raising business is something I could be proud to be a part of. I should offer more products.”
Do your research.
Smith spent 2001 and 2002 researching wholesale distribution for the fund-raising industry.
“I picked people’s brains. I contacted manufacturers. I figured out pricing,” Smith said.
“I saw a business that was done haphazardly. Some of the schools were only getting 20 percent profits for their efforts. I thought I could be competitive and still offer them more than 45 percent [of the revenue].”
Smith wrote a business plan and set up the Web site www.GoSMG.com.
Customers found him when they searched online for school or nonprofit fund raising, so most of the 95,000 unique visitors last year were qualified prospects.
Smith also developed a catalog of hundreds of products, such as M&M’s candies and Oberto meat sticks, that were specially packaged and priced for fund raising.
Define a niche.
Smith carefully monitors his customer base and has discovered that 75 percent of his customers are affiliated with schools. Many of them are in small towns that have not had many choices when buying products for fund-raisers, he said.
“The Internet is changing that,” he said.
Smith’s five-year goal is to penetrate the small-town market to make them aware of higher-profit options they have in their fund raising.
GoSMG.com cannot survive on good intentions and niche marketing. Smith tries to differentiate not just by low price but by high value to customers.
“I really stress guaranteed low prices and that I make certain that schools retain the most profit possible from their fund-raising efforts,” he said.
He provides name-brand products, which sell better than generics. He offers free shipping and specials such as a free case of candy bars or extra $500 profit for meeting certain ordering minimums.
“A well-executed fund-raiser can gross more than $25,000,” Smith said. “I work with the schools so they keep more than half that money.”