E133: Under the Hood with Kevin Sanderson – How to Stop Being the Bottleneck in Your Own Business

When running an ecommerce company as a side hustle, it's fine–and most of the time necessary–to wear many hats. But if you want your business to grow to more than just a side hustle, it's a different story altogether.

This week's Under the Hood call is about how to stop being the bottleneck to the growth of your own company. My guest is Kevin Sanderson, who started his ecommerce company 3 years ago selling online “just to try it”, experienced the rush of his first sale, and never looked back. Now Kevin wants to level up his business to more than just a side hustle. The problem is, as the business grows, the more things he has to do, and only so little time to do them.

So in this coaching call Kevin and I talk about how he can systematize and, more importantly, delegate low level tasks he doesn't need to be doing so he can concentrate on business strategy instead. This episode is Part 1 of our call, and we cover the following, among others:

• How he started in ecommerce
• His background as a high school football official
• Biggest contributors to his brand's success
• Why meeting other sellers is a great way to grow one's own business
• Lowest hanging fruit in terms of delegation
• Why full-time dedicated VAs are better than project-based or part-time VAs
• How to find superstar VAs

For Part 2 Kevin and I discuss how to actually delegate tasks to VAs, what to delegate, and what you must need to do yourself. Stay tuned!

Resources mentioned:

MyEcomCrew
Under the Hood
Sellers Summit

Thanks for listening! Until the next one, happy selling.

Full Audio Transcript

Mike: This is Mike, and welcome to episode number 133 of the EcomCrew Podcast. You can go to EcomCrew.com/133 to get to the show notes for this episode. And today we're back with another Under the Hood segment. Today we have Kevin on the show with us, definitely excited to break into this interview with him.

But before I do, I just want to remind people what this is all about, which is that this is listeners of the EcomCrew Podcast that are struggling with something in their business. They come on the show; we give them at least one free hour of our time. And in turn we record that and turn it into a podcast episode usually in two parts.

You can go to EcomCrew.com/UndertheHood if you’d like to be on your very own episode of the EcomCrew Podcast. We can't wait to hear from you. Again, EcomCrew.com/UndertheHood. And now on with the interview.

Hey Kevin, welcome to the EcomCrew Podcast man.

Kevin: Hey Mike, thanks for having me.

Mike: No problem. So just so everyone knows real quick what's going on here and why Kevin is joining us today, we're doing a segment called Under the Hood. And if you're interested in this, you can go to EcomCrew.com/UndertheHood to be on your very own Under the Hood segment sometime in the future.

But the whole idea here is to get podcast listeners to come on the show and talk about a struggle they might be having right now, and get some advice from either Dave or I, in this case just me today falling solo on these. But definitely looking forward to chatting with you today Kevin and definitely welcome to the show, and I hope we'll enjoy the next hour here.

Kevin: Yeah I'm looking forward to it, thanks for having me.

Mike: No problem. So the way I've been trying to start all these out and it started out because I was personally curious, but now it just seems like it's the way we start all of these. But I'm definitely curious how you got started in e-commerce.

Kevin: That's a good question. There was a longer journey than it needed to be necessarily. So I have in my garage two Nike forwards that I bought on eBay and I think 2004. And nobody actually has Nike forwards. And basically I thought I was going to resell it, and then I came to realize it wasn’t going to sell for what I thought it was going to sell for.

So I basically did nothing and I waited until a few years later that entrepreneurial itch that I had started to resurface itself. And I started looking for a few things and I ended up being I guess you could say a casualty of a corporate downsizing. And I was trying to find what is it I could do to I guess scratch that entrepreneurial itch.

And after trying a few different things, I decided I was going to get into e-commerce. It just made sense to me that you could find products and resell them, and people would buy them. So about two and a half, almost three years ago, I remember going to Walgreens when they were closing out their summer items. This is what summer of 2015, and I bought a bunch of random things.

I remember shipping them into Amazon just to try it out and see if this actually worked. And the first day the products arrived, I sold one of those blue coolers that you put into your freezer that would keep your canned school…

Mike: Right.

Kevin: And I remember getting so excited, just that rush like looking at the app. I was selling and there was a one instead of a zero. One product sold, I was like wait, this just happened. And it was just like this — I was almost dumbfounded like I've been listening to podcasts and things like that and hear people talking about selling, but to actually see that I had made a sale and I probably made like 50 cents profit but it didn't matter.

So I remember like just going running into the living room. And I was like saying to my wife, look you have to see this. And I practically threw the phone at her. At first she was like, what, I was a crazy man. And when she realized what happened, she was happy for me. So then what I did was I realized that having my own brand was going to be more the way to go than to scanning items in a store, which I think it was a good way to start.

But what I did was — I'm also a high school football referee, and the football season was starting up a couple months later. And I decided I was going to take everything I earned from being a high school football official for that season, put it off to the side and I was going to invest that into creating my own brand. And I've for the most part really just been putting the profits back into the business and growing it. And here I am two and a half years, almost three years later with the e-commerce store.

Mike: Cool, so at one point from the summer of 2015, how long did it take you before you got your own brand together and own store launched?

Kevin: Yes that's a great question. So it was during that season of football, so let's say that was fall of 2015 that I was starting to look around, trying to pick a product. And I realized at some point I just had to pick one and start doing a little research. And I finally found one that I liked though I couldn't get the numbers to work out. So I remember looking on Alibaba and seeing you might also like or suggested or whatever it was called finding another product. And it was like well that makes sense, why don't I try this.

And I was able to after the holidays get an order in and get it out the door so to speak before Chinese New Year in spring of 2016 or winter of 2016 I guess you could call it. And so it was February of 2016 was I got my first own brand sale.

Mike: Okay perfect. I was just taking some notes here. So enter in 2016 by 2017 and then what your projections are for 2018, what have your sales been?

Kevin: So for the last 12 months it's been about 250,000.

Mike: Does that include like the whole calendar year of 2017 or is that the trailing 12 months?

Kevin: This is trailing 12 months. It was about 230 something for seventeen.

Mike: Awesome, that's really good for your first full year. And then what do you think it was for 2016, do you have a rough idea for there?

Kevin: Yes it was around 90

Mike: Ninety, okay so that's awesome growth, I mean almost 3X. And what are you projecting for 2018, what do you think you're going to hit there?

Kevin: Well I'm hoping to get to about 400, but and I would say the reason I wanted to have this call is I am the bottleneck at this point.

Mike: Yeah I know how that feeling goes. I did a podcast about this a few different times. And it's hard to accept that in your business, but hopefully we can talk about ways you can improve upon that, definitely looking forward to have a nice conversation. It’s something I’m very passionate about and something that's very personal and real to me because I've been through that.

And as far as net on these numbers, on the 230 what was your take home on the 230?

Kevin: I'll say it's in the probably the 20 to 25% range. I haven't had a chance to finish my taxes yet.

Mike: Got you, and that's definitely really good margin, really good net margin. I think what you'll find is when you do get help and become less of the bottleneck, that number will go down because obviously employee cost eat into that. But somewhere around 50k net profit on that is awesome. And if you're doing that this year on 400k, it’ll be 80 to 100k which is even better. And is this a full time gig for you, or it’s just a side hustle still?

Kevin: Yeah this is a side hustle. I kind of look at it as because I work in the insurance business, so I look at it as the insurance policy of my financial future having lost a job in the past.

Mike: And I guess the long term goal is to do this full time, or do you think that this will be something that you'll continue to do a full time job and then have someone else kind of run this for you?

Kevin: Well the way I look at it is I’d like this to be something that if the option presented itself that I could make it full time, or to your point if I just had somebody running in the background that if it had to step up and be my full time income, that would be the goal.

Mike: Okay. And what do you think you need to have in sales for you to be able to justify quitting your job and doing that?

Kevin: It's a good question. I haven't really thought down to what that magical number is because in my head it would have to be paying down some personal debts and things of that nature. So I'd like to see it closer to 500 before I was comfortable saying it was replacing.

Mike: So maybe in 2019 that’s kind of the goal by then to be able to do that?

Kevin: Right for that's at least be an option.

Mike: Yeah, okay awesome. Well, definitely we’ll talk about ways that that could potentially happen. I love seeing entrepreneurs being able to do that. And yeah so let's see what other question I had here, but going down the list what percentage of your income is coming from Amazon versus your own store?

Kevin: I would say right now it's well over 90% is coming from Amazon. I’ve got some from my own store, some from eBay and I want to start shopping in to Etsy a little bit more.

Mike: Okay perfect. So I will just say like 5% own store, 5% eBay ish. And if you kind of talk about like your three biggest challenges right now, like what do you see those being?

Kevin: Biggest challenges are I would say for the products that I have now, the margins are great on Amazon, but I'm starting to drive traffic to my own store. There's probably not enough margin using Facebook ads or Google AdWords. And then probably the biggest one is just me. It goes back to the bottleneck, so it's probably two and three.

Mike: So Kevin is a bottleneck. And conversely I'm always curious like what do you think has like led to your success, because you've obviously and I love this trajectory of the story. I mean making 50k a year as a side hustle is not a bad thing. That's obviously more than most Americans makes. So what do you think has been the thing that's been the biggest contributor to success?

Kevin: I would say the biggest contributor to the success has just been continuing to take action. I like to think of it as I like to go wide and I like to go deep to maximize the sales that I have. So I stepped into Canada fairly early on then I went to the UK. Once I was in the UK, I added on the other European marketplaces. And so I just keep looking as it's a marathon not a sprint, but just keep finding something that's going to move the ball forward every day.

Mike: Cool, and since you mention these international marketplaces on Amazon, what's like your percentage of sales USA, Canada, UK, Europe?

Kevin: Yes. So let's do a little projecting on that. So last year I want to say I did about 178 in the US.

Mike: So it’s 75% or something like that.

Kevin: Yeah so I would say it was about say 75% US, 15% in Canada because Canada I was in there for the full year, and then Europe was about 10%. But Europe is becoming a bigger force than it was last year because I didn't start until around this time in the UK and in Germany. I think actually oddly enough my first sale I was at Sellers Summit, and then the other three marketplaces I didn't get to until close to Christmas.

Mike: And we were just talking up before I hit the recording here. We actually saw each other at Sellers Summit last year I guess, but I don't remember having met you, but yeah.

Kevin: No but I want to make sure to meet you face to face this time.

Mike: I just want to get a plug in there for Steve and Sellers Summit. But I think it's already sold out so much for he needs the help, but definitely a great conference. If you can find a ticket at the last second and or get on the list for next year. I highly recommend it.

Kevin: Oh definitely, definitely. In fact going back to your other question about what has helped me in my success, I found just meeting other sellers, and Sellers Summit gives you a great opportunity to do that because you're surrounded for two and a half days by people that are all having similar goals. So it's a huge factor.

Mike: Yeah I couldn't agree more. I think that if you listen to this podcast at all, you know I'm like a big proponent of going to these things multiple times a year, getting out of the office, and being around like minded people. There's nothing else like it.

Kevin: Yes.

Mike: Cool. All right let's dig into the how can I help you phase. So I've asked you a ton of questions, let's start asking me questions and anything I could do to help. It sounds like the first thing we're going to talk about is how you're the bottleneck and how we can help with that. So I guess let me ask just one more question on that regard. I mean can you explain like in your own words what that means to you, like why do you think you're the bottleneck and what could you do to fix it, what would life be like if you weren't in that position?

Kevin: That's a great question. So I've been trying to do things, call it similar to getting things done the GTD method which I don't do the exact method at all or some other methods I've heard of. And everything is right down whatever it is that you're trying to get done. And I feel like that task list grows faster than I can keep up with it.

Mike: Yeah, yeah.

Kevin: Yeah and I keep telling myself like, oh after the holidays I'll have more time. But then I realize I just have more time to find more things that need to get done rather than the ability to finish things off the list. And then I've started hiring a couple of part time virtual assistants from a website called FreeeUp, F-R-E-E-E-U-P. And they've been really helpful the people I've hired, but the challenge I've run into is I'm kind of giving them work transactionally.

So it's basically, hey, do this task and then I check to see they did that task, and then I give them another task or give them a couple of different tasks or whatever the case is, as opposed to, okay, here's this task, do this every week or do this every month or whatever makes sense. So I would say the biggest thing for me is trying to figure out what are the low hanging fruit for someone in a similar situation to me to systematize so to speak.

Mike: Okay. How many hours a week are you working on this business right now?

Kevin: I would say probably in the 15 to 25 hours a week range.

Mike: And how many hours, I mean with these — you said you have to VAs. Are they full time, or are they part time?

Kevin: No they’re part time. So they basically clock in when they were there on working for me. They have other people they work with as well.

Mike: Okay, 15 to 20 hours okay. And I don't know, run down off the top your head ten things that you do in those 15 to 25 hours like per week. I mean let's break it into to weekly tasks and monthly tasks, what things are you doing like week in and week out, and what things are you doing like month in a month out like what are you spending your time on?

Kevin: So I would say the biggest things that I'm focusing spending my time on are launching of newer SKUs and optimizing those SKUs while at the same time doing pay per click. And then also, just trying to get a better bookkeeping system going. I've tried different things with bookkeeping in the past, but not had great success.

And then also looking for things to be potential new products, keeping tabs of inventory because essentially being international I have sent you kind of consider three different warehouses the US, Canada and Europe. And then as far as other things I'm doing on a week in week out basis you know watching pay per click, answering customer emails, and then trying to figure out what to do for driving sales off Amazon.

Mike: So that's one, two, three, four, five, six, seven, eight, let's do two more, two more. Or do you feel like that that's the bulk of what you're spending your time on really realistically?

Kevin: That's the bulk and then I just say there's always just the little things that come up here and there. And I wish I had my book or I jot down all my tasks so I probably give a better answer to that. But I don't have it with me right now. But I would say beyond that, it's also when I go back to optimizing new SKUs, it's also rolling them out in different marketplaces and making sure that the translations make sense.

And then also when we're talking about PPC, then we're putting into other countries, then we're talking about PPC which I usually just do auto campaigns. But then also just making sure I'm not losing my shot on a word that was stuck in there that I don't even know what it means so to speak.

Mike: All right I have a bunch of thoughts on this point. But then the first thing I'll say is as you embark on this process, the beginning, where you're at right now is going to be the hardest point. Because as you try to transition the stuff, I’m going to try to talk about like how you can get the bulk of this off of your plate and get someone else to help you.

The reality is it's going to take you longer like substantially longer the first time which is the hardest part is that the tendency is to want to just do it yourself because you know you can get it done quicker like today and you're just in that fire crisis mode of I got to get this done today. I don’t know if you have a family or a wife or anything, but I mean it's like I got to go do this with the kids or like I got some friends to go out with or whatever it might be like I just need to get this beep done.

And so that's the tough part and it was the hardest part for me. But once you kind of get a taste of what it can be like when someone else is doing it, it makes that ongoing process easier. So my first recommendation would be to find a full time person, you more than have the income to be able to afford this. I mean the average like high end VA in the Philippines makes $600 a month which in US terms is low.

And if you pay them that, for them they're getting paid well and they're going to be happy especially if you do all the other things that we try to do to make sure that we treat them as good as we possibly can because the salary is all relative. I mean I’ve lived in other places before, and for them that's more than a livable wage and they get to live a good life which is important to us.

But if you have a full time person, they're concentrating on you and you alone instead of like having this concept of clocking in and clocking out, and working on other people’s stuff where they're not 100% focused on you. Now you have this person that's in a chair working for you 40 hours a week and they're your employee. And they're invested in you and you alone and vice versa which I think is really important.

And what you'll find is because they have extra time on their hands, you're going to be motivated now to fill up their calendar. And I think one VA will turn to two pretty quickly. I think you can actually with the list of stuff you mention here and the revenue that you've mentioned, you can afford to hire two full time people. In fact if you want to take a major leap of faith, I would recommend hiring two at one time.

And the reasoning behind that is that just the law of average is one is going to be better than the other, one might not be around a year from now and whoever hopefully is left is a superstar. And your goal here is to find your superstar. In my world that's Mia. Back in the office, I talk about her all the time. She's my Filipino superstar that runs the whole operation, and without her there would be no Terran at this point. I mean she's just amazing.

But it took a long time to find her and train her and get her to the point where we're at. It didn’t happen overnight and that's exactly how we did it. We hired basically two people, put a lot of effort into that hiring process to make sure we did the best we could to position ourselves to find that superstar. And then we did — and actually both VAs that we hired that time were really good.

But Mia ended up winning out for two reasons. Number one, she was actually in the Philippines. The other one happened to be in Mexico which was good for us at the time, but bad just geographically for building a team around that. And then she ended up leaving because her husband was the like the system Filipino buster or something like that to Mexico from the Philippines. And like on very short notice they got more that they had to move, and she was like really rattled and was just like concerned about not being able to do a good job for us and put in her notice.

So yeah you need a superstar is what it comes down to first. So that hiring process is very tedious because it's hard to — even if you have a service like FreeeUp or we use Onlinejobs.ph or even run ads in a local paper now, there's other services like eCommerce.Expert which a friend of mine runs from Australia that lists some VAs that are looking for work. It's hard to find that person just like it is in the United States.

I mean like I look at the same, the similar job in the US is Jacqueline for us our COO. That was a six month process to find her. And during that time I was miserable because like I was doing all the things I was planning on asking her to do and not very well I might add. And trying to find somebody and stressing about making this hire. And until she was on board it was just a ton of extra work.

But the results are like I look at the before and after and our through play after getting to that point, it's just night and day. So that would be my step one would be like find your Mia, put the effort into really trying to find that superstar. Don't find someone that you feel like is a nine out of ten. Find someone you think is a ten out of ten because the long term goal is to have them managing the entire team for you over there and let them know that.

Let them know there's career opportunity. Most of these guys over there are very interested in that. Mia certainly was and she's risen to the occasion. I think that's important. And once you have that person on board, we'll talk about that here in just a second. I want to pause and just ask you some questions or ask what your thought process is on that and if you feel like you could commit to doing that.

Kevin: Yeah I would say there's definitely margin for at least one. I would have to really think about the two. But I see what you're saying because it would force me and I work with very well when forced, because if you make an order for your first product then all of a sudden you're kind of on the hook to do it. So it's kind of the same way. If you hire your first person and you're paying them every month, you want to make sure you're getting the value and they want to feel like they're contributing. So it forces me to give them something.

So it’s an interesting way to think about it. I hadn't thought of it from that vantage point because I wasn't sure I had enough to give to one person. But…

Mike: There is no doubt. I'm just going through this list, there is no doubt in my mind that there is enough here to give one if not two people and we’ll talk about that in like kind of part two of this. And I would look at it from the perspective of this person is going to cost you about $10,000 a year. You add up 12 months of salary plus the 13th month, or maybe some other benefits, and maybe you buy a computer, or whatever it might be. You're probably looking at something along the lines of let's just say $10,000 a year.

On the trajectory that you're on, you're looking at making 80,000 profit. So you're taking– what was it, like 12% of your profit and putting it towards your future. It's an investment in your future just like anything else it would be. But it would also as we go through, we’ll talk about how the bulk of what you talked about here can easily be offloaded to them.

And I think that will be the part where you will get excited because I mean the whole idea would be to get them doing most of these tasks, not so you can go lay on the beach for 15 to 25 hours, but mostly because you can be doing higher level things. And if you would assign a dollar value to each of these things, it gets down to the point where you're paying yourself like six or seven dollars an hour to do this work because you have to think of it in terms of if you could pay someone else to do this for you what would it cost? And the answer is six to seven dollars an hour or whatever. That works out to on an hourly rate to get a VA to do it.

And you should only be doing tasks that are worth 50 or $100 or $200 an hour or more, the high level thinking things that no one else can do, the things that made you successful which is why I asked the question I mean being the person that is just constantly figuring out things to get done. But if those things that get done are just the same mundane things over and over again, that doesn't add the long term value that you want to be able to get yourself doing this full time, or have the financial independence you’re really looking for.

Kevin: Great points. Yeah I think it's important to take myself out of the day to day stuff and start working more as they say on the business than in the business. So I like the way you frame that as far as thinking of the hourly rate that I am essentially giving myself for the cost benefit of doing this task versus giving it out to someone.

Mike: Yeah exactly.

And that's a wrap for now. We'll be back with part two with Kevin next week. I can't wait to dig into more of the meat and potatoes of what we have to talk about here. I love doing these Under the Hood segments. Folks, please go to EcomCrew.com/UndertheHood to sign up to be on the show today. It's just a couple of fields to fill up and Abbey our amazing assistant back in the Philippines will contact you, discuss some of the details, and we'll get you scheduled for it.

We would love to have you on the show. It's become a mainstay segment for us here on the EcomCrew Podcast, and I look forward to doing a lot more of these in 2018. Again EcomCrew.com/UndertheHood to sign up today, or go to EcomCrew.com/133 to get to the show notes. Ask us any questions that you might have about this episode. So until the next episode everybody, happy selling, and we'll talk to you then.