Why Buying a Business May Be Better Than Starting From Scratch
May 10, 2022
In episode 110 of the Customers Who Click podcast I spoke with Ramon Van Meer, the owner of Alpha Paw, a pet company who specialised in dog ramps, but now offer a variety of pet based products. In this episode we’ll be talking through Ramon’s background, how he came to identify and purchase Alpha Paw, and how hes turned it into a multi million dollar business in such a short space of time.
If I had to built that from scratch, it would have taken me 12 months to get it to the same level as when I bought it.
The key thing really is to focus on what you’re good at. If you’re not good at getting a business started, buy one that has a decent base, and then put your skills to use growing it.
Ramon is the Founder of Alpha Paw, a brand selling vet recommended pet products. You can connect with him on LinkedIn or head over to https://www.alphapaw.com/
In episode 110 of the Customers Who Click podcast I spoke with Ramon Van Meer, the owner of Alpha Paw, a pet company who specialised in dog ramps, but now offer a variety of pet based products. In this episode we’ll be talking through Ramon’s background, how he came to identify and purchase Alpha Paw, and how hes turned it into a multi million dollar business in such a short space of time.
If I had to built that from scratch, it would have taken me 12 months to get it to the same level as when I bought it.
The key thing really is to focus on what you’re good at. If you’re not good at getting a business started, buy one that has a decent base, and then put your skills to use growing it.
Ramon is the Founder of Alpha Paw, a brand selling vet recommended pet products. You can connect with him on LinkedIn or head over to https://www.alphapaw.com/
Key highlights:
01:05 - 10:33 - Why Buy Instead of Build? - Speed is the key thing really. If you start from scratch it could take a year before you’ve got anything decent in place, and thats going to be one tough year. But if you buy, you can find a business that has a base but isnt meeting its potential, acquire that company and turn it into something amazing so much quicker. If you want a house you don’t go and build one yourself, you’ve got no idea what you’re doing at that stage. You buy one, and then you turn it into your dream home.
10:35 - 22:40 - What Were the Biggest Contributors to Growth? - Paid acquisition. It was the main driver behind going from $700,000 to over $18 million in annual revenue. Everything trickles down. The more traffic you get, the more emails you get in your lists, in your abandoned cart emails, the more newsletters etc. Facebook was crucial, but is getting a lot harder. He used to be able to target specific dogs, it’s just not possible now. But UGC content still works fantastically.
Other channels have been tougher. Snapchat, Pinterest, Influencers haven’t worked. One of the problems is that its a very instagrammable, fun product, which means you can get loads of engagement but no sales. It’s not an impulse purchase they’re reasonably expensive products, and its also not for all dog owners.
SEO drives a lot of traffic but not a lot of revenue, its a long term game.
22:52 - 27:10 - Alpha Paws Biggest Challenges - Supply chain issues are a nightmare. The cost of containers went through the roof. Across the board margins got crushed, so actually for a little while they were unprofitable. Things have been getting better, but nowhere near back to where they were. And Facebook/iOS hasnt helped that.
27:25 - 39:07 - How to Ensure You Have Happy Customers - Tested increasing returns up to 365 days, but it had very little impact on CRO, and returns didnt change anyway, so 30 days has come back. The key focus for them has been on education, and working to reduce returns in the first place. Like with anything else, dogs don’t just do things instinctively, you have to train them a bit. You have to train them to use the ramp and show them its a good thing. If you do that, if you educate your customers on how to use your products properly and see the value from them, then you’ll reduce returns.
39:20 - 44:14 - Work on Your Margins - By renegotiating his 3PL and shipping contracts he managed to knock $20 off the costs per ramp which is amazing. Every 10,000 ramps is $200,000 more gross profit in the business. With another product he managed to knock $2 off, and knocked his payment processing costs down from 3% to 2%. Some of these might sound like small gains at first, but they end up generating you tens if not hundreds of thousands in extra revenue.
44:26 - Who Would Ramon Like to Take For Lunch in the D2C Marketing World?
The guys from Manscaped are doing some amazing things.
58:15 - Ramon’s Must-Have Ecommerce Tools:
- Shopify
- Slack
If you’d like to hear more from Ramon, you can connect with him on LinkedIn or head over to https://www.alphapaw.com/.