Young and ready to go with this idea,

[Zodcole]

Well I am only 17 years old. I want to start a small business for many reasons, the biggest being I believe it's the greatest thing America has, is it's small business men and women workers.


What i plan to do now:

Since i'm only 17, i figured i would work for a year or two at a random minimum wage teenage job, you know the usual type stuff. So i can put money away into the bank for lease and the whole, "Getting Started" era.


The product:

The thing i wish to sell is, cigarettes. Not what you might think tho, hand rolled no filter cigarettes. The main selling point i believe this will ahve is price. I've done a little bit of math on this and the price for one pack of my own cigarettes would be around $1.75 - $1.90. (thats about 20 cigarettes per pack)(this could deffinatly change by the time my plans go into action)
Another thing i am aiming for is "Classic".
In the Great Depression times, and after (also before) for a while the cigarettes people smoke today were primarily marketed towards women. (It had to do with lipstick and that the filter wouldnt leave pieces of paper on your lips.)
So I'm expecting to have far more male buyers. But with the American economy as bad as it is, everyone is looking to save.


How to sell:

Now I dont plan on buying a building within a year just to sell cigarettes, that would be dumb of me to think that. I figure I'll start out on foot, door to door sales! Honestly I love doing that type stuff. If this whole thing ever takes off, and i have enough money saved who knows i could mabey have that small building for my small business! Isn't that how Ray Kroc started out? I predict that word of mouth will play a big role in my sales, when people talk, things happen. (this is all happening while holding down another job to make sure i can survive.)



If you've made it this far, thanks for reading and feel free to post any helpful tips or suggestions. :)

(If you are going to say somthing dumb like, "dont smoke" or "this is bad for you", just do yourself a favour and don't comment, because first of all I'm not the one smoking and it's not bad for me to profit off somthing legal.)

[SCUBA9097]

A little constructive criticism here, but you might want to rethink your door-to-door idea. Being a smoker, I don't think I'd be comfortable purchasing hand rolled cigarettes from a complete stranger. You just never know what "may" have found their way into them. I'm not saying your entire idea is bad, but you might want to rethink the delivery a little. Best of luck to you and it's great seeing someone your age wanting to start their own business!

[Steve B]

Why don't you try going into a business that isn't associated with one of the leading causes of preventable deaths? You might feel better about what you're doing and still make a nice profit.

I also agree that it would be quite a leap of faith for people to buy a product like that that from a stranger that knocks on the door. You would probably have to sell to people that already know you. Then, they could refer their friends and family to you.

[greenoak]

the main hurdle i see is no regulation....how would folks know what was in the cigs?
how would you know? thinking pot here...o r worse....
you would get great feedback if you could get a spot or booth at a huge event with lots of people and see what t he response would be....

[Zodcole]

Thanks for all the feedback. Most of the points raised I've thought about, the whole door to door thing is solved by everyone in my neighborhood at least knows me, i've lived here for 15 years and my dad is involved with lots of community work.

But I do LOVE the set up a booth at a big event idea, I'm thinking at a carnival or parade! Like the one we just had for winning the world series, root beer started that way but with the WW1 parade.

[nealrm]

I am going to put the product aside and address this from the business aspect.

First, you start a business because you are passionate about the product or service. Your last statement indicates you are more interested in the profit from making the cigarettes than the cigarettes themselves. (You even state that you don't even use the product) This leads to one of two outcomes. The most likely is that without your passion for the product the business flounders and eventually fails. The second is that you work through the lack of passion and end up owning a job and not a business. In other words the business is working you not you working the business.
Second, you are entering a product market that is in steady decline and is very likely to be at the end of its life. Think of it this way, you are getting into the buggy whip market 10 years after Ford started mass producing cars.
Third, you are entering into a market where the competition is well establish and brand loyalty is extreme. For an unfunded start-up that is a very, very, very big obstacle.
Forth, this product has a great many government regulations, that covers everything from how the product can be marketed, to who can buy it, to product labeling, to what goes in it. The fines for even small infractions are steep. Make sure you know every regulation before you start. I would also check to see if it is even legal to sell tobacco products door to door.
I want to encourage your pursuit of starting a small business. But you need to enter the market for the right reasons. Dave Ramsey has a great podcast and book out under the EntreLeadership title. I suggest you read the book and listen to the podcast. Also, find out where you passion is, then determine how to turn that into a business. The money will follow.

Ok - I put the product aside of the business idea analysis, now it is time for the moral lesson. You are planning on selling a product that causes a slow and painful death to almost everyone that uses it. How would you feel about someone making money off the pain and death of the ones you love? As a 17 year old that maybe easy to brush off as "it's their chose to smoke" or that is in the future and doesn't effect today or other sudo logic. But the fact is that by selling the product you will be responsible for causing someone else pain, suffering and death. In time you may regret your decision to sell this product.

[glenneena]

I own C-Stores within the gas stations. The state has to license each location and its owners as a tobaccoo retailer. There are compliance checks and spot audits throughout the year. They are very strict about where we buy from, must only be from in state master tobaccoo wholesalers and those invoices must match our inventory. As well, we now have a list of out of state and forbidden brands not allowed to be sold within each state due to their non tax complaince and tax monies owed. It is a very regaulated industry right next to beer and wine sales.

[billbenson]

I think Neal said it best above. One of his points is its a dying business. No, its not going to go away tomorrow. But you are starting this as a business that will eventually become a large business, you will be spending a lot of time building a business that will eventually have declining revenues. If you view it as something to make some extra money for a while and can comply with all the required regulation, it may work.

I'd suggest you create an excel sheet with all the costs, hours you put in, marketing, etc and look at how much you would make per hour. Then investigate at least 10 more products that you also think you could make money at and put them in that same excel sheet. Then look at the results. You aren't making a shot in the dark. Do some actual business analysis rather than go with your gut feel which I'm pretty sure is what you are doing right now.

[Spider]

Ah, to be 17 again!

[huggytree]

great job on trying a slightly different idea....its great your thinking about things at 17!!!

i would start coming up with a plan B and C though...go ahead and try your idea, but have a few backups

i feel your current idea has many flaws, but go ahead and see what happens.....

i find it easier to sell a few $100 or $1000 items than it is to sell 100,000,000 $1 items....something to think about...your going to be working very hard just to make $1 off each sale....wouldnt you rather work harder and make $1,000 from each sale???

[Business Attorney]

I hate to throw cold water on your idea but you are way off on your pricing.

First, you will have to pay federal and state excise taxes on your cigarettes or you will end up in BIG trouble. The average federal and state excise is over $2.20 per pack. In your state it could be higher or lower since that is only an average. The excise tax is the main reason that cigarettes cost so much.

So now your price is in the $4 per pack range, but you are still only getting $1.75. The rest is going to the government.

What are your costs for the papers, the tobacco and the packaging? Let's say it is 4 cents (I have no idea what the cost is; this is just an example). Since you are selling them for about 9 cents each, before excise tax, you will net about a nickel for each cigarette.

How many can you roll in an hour? If each one takes 15 seconds and you work non-stop, you can roll 240 in an hour. At 5 cents each, that would mean you get about $12 for each hour you spend hand rolling cigarettes.

But wait. The hour that you spend rolling the cigarettes is only a small portion of the time you will actually spend on the business. You have to spend time buying the raw materials (papers, tobacco and packaging materials). More important, once you make them, you have to sell them. How long does it take to sell 240 cigarettes (12 packs of 20)? An hour (one pack every 5 minutes)? Two hours (one pack every 10 minutes)? In addition to selling the product, you also need to spend time on administrative matters, such as preparing and filing the excise tax returns.

If your selling and administrative time is another 2 hours, then you are getting $12 for three hours of work, or $4 per hour.

Those numbers may be off a little, but you will find that trying to sell at a price that is below or even slightly above the mass-produced brands is a real losing proposition. They can buy the raw materials much cheaper than you ever can. They have machines that crank out millions of cigarettes faster than your eye can see.

There are markets for hand-crafted products, but to be profitable the sellers have to price them above the mass-produced products they are competing with. There has to be a perceived value in the hand crafted product that justifies the greater price.

There may be a market for premium priced hand-rolled cigarettes, but I would be surprised if it was very large. I know a few people who will pay a premium price for a cigar, but that may be once or twice a year for special events. Most cigarette smokers I know go through them fast. Cigarettes are not savored like an expensive cigar.

I think you need to take a real hard look at the numbers before you spend more time on this idea. You would be much better off finding a business with a more promising profit outlook.

[SnellExperts]

There is a lot of stuff that you could play with on a marketing angle. One of the biggy's that I was thinking about was growing your own tobacco without all of the junk that they put in them today. That would help you go with the classic approach more as well. The problem is between products, equipment, start up fees, and such, it will be difficult to save up a lot of money that will be needed by working at job like that. You will also have to worry about being approved by the FDA and such and complying with their regulations which I am sure will be a huge pain.