Please welcome Eric from Simple Life Abroad who is a fellow Guatemalan expat and a serial side hustler! Let me know if you would like to guest post on RFI.
Customized Furniture Mini Case-Study
When seeking Side-Hustles, there are several key factors that guide my decision process:
- Does it require a large investment of financial resources?
- Would I pay (at a minimum) the costs associated with making this product?
- Would it be fun to do?
I am lucky enough to be married to someone who has a never-ending stream of ideas; so I am never without an idea to run though the Hustle Mill in my mind.
Some examples of bankable ideas that she has provided in the past months:
- Mobile Pizza Sales in the tourism capital of Guatemala, Antigua.
- Vehicular Protection Systems for Taxi Drivers.
- Information Aggregation Product for Credit Histories (in Developing Nations).
- Furniture Design and Customization.
Furniture, huh? Ok. Hustle Mill– start!
Let’s talk about the financial investment:
I live in Guatemala, where credit is almost unheard-of for Foreigners. However, the cost of raw materials and labor are extremely low and have a tendency to compensate for this disadvantage.
Without a doubt, I would prefer to create and market my products on a Net 30 billing basis. This simply means that the customer [me, in this case] has 30 days after delivery to make payment. This allows me to avoid any upfront financial expenditures associated with my project. It also allows for me to extend similar payment terms to my client. This can be very important, depending on the price point of your product. These terms should be one of the key concessions you seek in negotiations with your carpenter.
For this 6-person dining room table [dimensions 1.8m x 1.02m x 76cm], total investment costs for the raw materials, labor and delivery are less than US $150.
Financial Investment: Approved
Is this Potential Product Desired or Valuable?
To Me: Would I pay (at a minimum) the costs associated with making this product?
I am a value-conscious investor, in both my time and financial resources. So, I have to imagine that if a product I spend time creating and perfecting is of value to me, it will appeal to others, as well.
However, many of the products that I create- both physical and virtual- are created solely for my use, and if they satisfy a niche of the larger commercial market, I am thrilled! However, in the creation process, it is important to be constantly analyzing how the process can be improved, automated and scaled.
To Others: To get a viability gauge of the customized furniture market in Guatemala, I do the following:
1) What will my product be?
I envision my ideal final product as a collection of Customized Modern Tables/Sidetables/Chairs. I think it best to start on the ends of the price spectrum, with a top-tier dining room table and with nightstands for the bedroom, growing my brand from these price positions.
2) How will it be UNIQUE?
The collection will be a Modern take on Wooden Furniture in a country that has a very antique and colonial sensibility- is this a Weakness? Perhaps. However, with ‘Net 30’ credit terms and a Built-to-Order infrastructure, I do not have to worry about the risk of carrying or liquidating excess stock. That makes me smile.
1) Based on the UNIQUENESS of my product, determine what other products have similar characteristics.
While their products are not made of wood, Kalea is the outlet for the majority of the modern IKEA-like furniture in the country. The majority of consumers with modern sensibilities and expendable cash tend to shop there. These are the customers who I want to introduce to my product.
2) Rough estimate of all inputs (time, resources) required to produce my final product.
Dining Room Table:
Raw materials + Labor + Transportation = $150 + 7 Business days of turnaround time.
Materials and Labor for Graphic Design: $20 + 10-12 hours of labor = $35
Total Cost: $185-$203.50
While keeping costs as low as possible is always important, I believe that the final product can easily be retailed for a reasonable profit with these considered inputs.
3) Compare time/resource investment with the available information about competing products– Usually, this is the final sales price, minus negotiated discount.
One thing that you learn quickly living overseas is that everything is negotiable, and these are the well-negotiated prices for a single unit. The price for equivalent product in Kalea is $335-$399, even though it is difficult to compare wood and metal/glass construction.
1) Redesign product and/or cost structure in basis of previous data to make it an undeniable value over that of the competition.
I can’t share everything, now, can I?
Product Analysis: Approved
Would it be fun?
In reality, for something to be considered fun to me, it must involve 2 key items. It must be a learning experience and it must give me pleasure from having solved a problem or having created something beautiful.
Since this is my first experience with woodworking, I am certainly learning something; if only to be sure to wear thick gloves when using the wood chisel 🙂
And, I have pride above pride every time I sit down at my new dining room table to eat a splendid home-made meal prepared by the best chef on earth, my wife.
Author Bio: My name is Eric and I blog over at SimpleLifeAbroad.com where I discuss the importance of good hygiene. Just kidding, I write about the things that I use to make my life easier and more enjoyable. Join me?
This post was featured on the Outlier Model, thank you!