Do You Really Want All

The Business You Want?

If you don’t know the name McClung, then let me tell you a bit about the man and why you should listen to what he has to say. Jack McClung is the founder of Blue Stuff Inc., the almost magical topical analgesic that hit the market about 6 years ago. How he came up with Blue Stuff and how he parlayed that into a major fortune in record time is the subject of a new book, due out in the summer of 2005 entitled "Zero to $98 Million in 30 months."

There is an excellent reason for the rather catchy title. The simple and well-documented facts are that from the moment that Jack sold his very first bottle of Blue Stuff out of an old brick house on 23^rd Street in Oklahoma City, within 30 months he had sold $98 million worth of product. And he did it bottle by bottle to individuals, not by bulk orders or sales to huge retail chains.

So what, you say. Who cares if it’s bottle by bottle or to a retail giant, $98 million in sales is $98 million, right?! Of course. But it is interesting to note how it was done. But if you want to know more about how to make millions of dollars a month from a stand-still start and what self-respected executive doesn’t, you’ll have to wait for the book. That’s not what this article is about.

The fact that Jack accomplished such a feat and made millions of dollars is one thing. As we said, you can learn how he did it and get a good perspective on your business by reading his book. What we are concerned with here is our natural desire for growth and the inherent dangers that unprecedented uncontrolled growth can bring. After all, you cannot go from zero in sales to ninety eight million dollars in just 30 months without some major problems, or without learning some real lessons. I can tell you the book is not some simplistic cursory treatment of or a lame biography of Jack McClung’s life. This book is a hard core how-to-do-it. While the book does have some good very insightful and sometimes funny episodes of his life, it is also one of the best examples of how to and how not to build a business. To give you an idea of how the writing of this book was approached, let us give you an excerpt from the introduction.

"If you have read some of the ‘how to make a million,’ books out there, as I have, then you know there is usually one critical thing lacking in most of them, and that is the ‘how to do it!’ This is especially true of the biographies of successful people. The story usually starts with something like: ‘Fred opened his first store in Smallville in 1967, with dreams of greatness and becoming the best shoemaker in the state.’ The next sentence is similar to: ‘In the next five years Fred had opened 15 shoe stores in 3 states with annual sales of over $5 million.’

That kind of in-depth and hard core reporting just makes you want to run screaming from your over worked, understaffed, low sales, debt ridden office and demand your money back for the book, doesn’t it? I know it always did me. When I run across this kind of book or even magazine or newspaper article, I just wanted to find the writer and clutch him around the throat and say, ‘Good for Fred.... Now how the heck did he go from one store to fifteen?’ After all, that’s why you bought the book isn’t it, to learn how it is done and what you can do to start and or grow your business? That is why I always bought them. And I have to admit I am continually disappointed with the lack of detail and the way the writer handled the road to success. So, you have my promise I will not to do that to you in this book."

Now that you have a little bit better idea of what to expect in the book, let’s get back to the main reason for this article. Let’s start with a simple yet real example of what we are talking about here. Jack had a small business. He had his doors open for about three months and is selling about ten to fifteen bottles of product a day. Enough sales to pay the bills, but that’s about all. But today is different. Today he decides to do some advertising. Again, the kind of advertising and how he came up with the ideas are in the book, but you might imagine that it was creative and different.

The advertising idea worked and the next day he sold thirty bottles. Pleased with the results, he decides to do it again. Again the ad scheme works and the following day he sells fifty bottles. Keep in mind this is a true story. So far so good, right? Jack thought so too. So he decides that the advertising is working well, and he orders double the amount of product from his supplier and increases exposure in the ad. Again it works well and within ten days, he is up to nearly two hundred bottles a day. Now some problems start. First his supplier. He calls and asks them about their capacity. "Not a problem," he is told. "We can make as much as you want." said the supplier. Since Jack invented the product and has a patent on it, he wasn’t too worried about competition or someone else trying to horn in on his action. At least at this stage of the game.

But there are now personnel problems as well. He is not selling ten or fifteen bottles a day anymore. Now he is selling nearly three hundred bottles a day and most of it by mail. That means it’s more than he and his wife can handle alone. He needs people to answer the phones, to pack , address and mail product. He needs people to enter names of customers into the computer data base and people to process credit cards and checks. And he needs those people immediately as orders are continuing to come in daily and are growing in number and starting to stacking up. What’s more, there will be three hundred again tomorrow. Maybe more! And more the day after and more the day after. Are you beginning to see the picture?

The solution was not all that easy either. Think about. By the time you advertise for help, interview possible candidates, possibly check references, negociate salary, have them give notice at their present job and come to work for you, and even given that you did all that on the fast track, you have piled up about four thousand more orders and getting further behind everyday. Not a good situation for a new employee to walk into on their first day on the job.

Then you call your supplier back, who you will remember told you that ‘there is no problem, they can make as much as you need,’ and tell them that orders are up and you need want to be safe, so you want one hundred thousand bottles by next Friday. You hear a funny choking gasping sound and your trusted supplier tells you that for an order that big, he would need about a month to fill it. You remind him that he said, ‘no problem, all you want.’ He says, we can do it, just not that fast. But the orders are piling in now by the hundreds a day.

If you are thinking to yourself, why not just stop advertising and slow it down, we can tell you that Jack thought of that one. He did pull the ads, but the orders didn’t slow down very much. Why? Well for a reason and a goal that every sales organization hopes and prays for, but seldom sees. After a couple of months of being in business and selling Blue Stuff, the product was so good that the re-orders started pouring in. And brother, did they pour in. A bottle of Blue Stuff if used daily, as was the case by chronic pain sufferers, needed to be replaced about every 30 to 45 days. Re-orders were nearly eighty five percent of original of new orders. That is an amazing fact in itself, and of course caused more problems. Now people were calling and writing 24 hours a day to get their Blue Stuff and Jack needed some professional help in the way of answering phones, credit card handling and shipping. Investigating companies who do that and choosing the right one took more time. Time that Jack and his meager, overwhelmed staff didn’t have.

Personnel problems continued to plague Jack and his company. They needed help so badly that Jack and his staff were literally stopping pedestrians on the street and asking them if they needed a job. Hiring people off the street can have it’s own problems. Because manpower was needed so badly, the new recruits were tossed into the fray with little or no training, that in itself caused problems. In a given day perhaps 3,000 orders would come in, but the staff could only process 2,300 of them. Afraid that they would get in trouble for not getting all the orders out, the staff would hide the remaining 700 orders with the intent of getting them tomorrow. Problem was, there would be 3,300 orders the next day, and the staff would again hide the unprocessed orders.

After a few weeks of this, Jack started getting calls from customers wondering where their bottles of Blue Stuff was. It had been several weeks, and nothing had arrived. Jack investigated and to his horror, discovered nearly 10,000 orders hidden in drawers, file cabinets, boxes and some orders even thrown away, because employees feared getting fired for unfulfilled orders.

We are going to jump ahead in this little story a bit and tell you that within a few more weeks, Jack did choose a telemarketing firm who also handled the credit card processing and he chose a separate fulfillment company to handle the shipping. With those problem now seemingly under control, Jack decided that it was time for the next step up. So he re-started the advertising campaign, this time on a national scale. Orders jumped to over five thousand a day within a week.

Could his supplier handle it? Yes, by that point, the supplier had caught on to the increased numbers and were making plans to keep up. But they were now making a critical mistake themselves. The orders were coming so fast and frequently from Jack, that the firm doing the manufacturing was having their own problems trying to hire staff and keep up. They were managing to keep abreast of demand from Jack, but the they had another worry. So much of their resources were being used or spent on Blue Stuff manufacturing that they were ignoring their other customers. Too much of the supplier’s resources were being used in one place and they were falling behind with their other customers.

Could the telemarketing firm handle it as they said they could? No, they couldn’t! Despite their repeated assurances that they could handle the amount of business, as it turned out, Blue Stuff overwhelmed their resources too! The telemarketers had over 50 phone positions and nearly 500 incoming lines, but when Blue Stuff was in its full swing advertising, 500 phone positions couldn’t handle the work load at the peak times. Fulfillment did not seem to be a problem, but that was about the only place that was not in trouble. Fortunately, the fulfillment people had handled large rush orders before and had a good idea of what to expect. But when orders starting hitting 18,000 to 20,000 a day, even they were strained a bit.

Blue Stuff even got some personal attention from the Post Office. When the Oklahoma City Post Office reported to Washington that one customer was shipping in excess of 10,000 packages a day through Priority Mail, the Postal Service sent several special agents from the home office to make special arrangements for Blue Stuff’s business. It got to the point that the Post Office just simply sent a semi-truck once a day to pick up the orders from Blue Stuff. That was this particular truck’s only mission.

And there is more, much more. In one instance, when Jack changed credit card processing companies, the growth of orders and money startled the new credit card processor so badly, the company started to believe that Jack must be involved in some kind of scam. In what the card-processor called a ‘self-protection’ move, they escrowed or confiscated is a better word, nearly half a million dollars of Blue Stuff’s funds and refused to give it to their customer. They just simply refused to pay Blue Stuff the money, holding it against what they believe had to be the inevitable incoming claims and massive returns. Of course that never happened, Blue Stuff was legit, but imaging the grief that caused Blue Stuff, having that kind of cash flow interrupted without notice and without immediate recourse.

Are you getting the picture? Unprecedented uncontrolled growth can be almost as deadly as no business at all. So, do you really want all the business you want? Probably so, but now you might have the idea that controlled orderly growth is the right way to do things. Even though you hear and read stories of phenomenal growth in the business world, you can now see, that growth on such a scale can bring some giant headaches.

The whole story of how Jack McClung built his empire, sold as of today over $200 million worth of Blue Stuff product and solved most of the problems the we have mentioned in this article are covered in detail in the book. It’s a fascinating account of a man who made and lost three fortunes in his life and went on to great glory and later, unbelievable trouble with counterfeiters, knock-off artists and even the Federal government. But, that’s another story!