For the last five years, I\’ve run a small electronics supply chain business as a kind of \”side hustle.\” I sourced a niche category of consumer electronic devices and arranged for distribution. The business was profitable… in the last few years, I made around $50,000/year on volumes of about $1M/year. And it didn\’t take too much time; I\’d estimate that I spent about five hours a week on this business.
Last week, I made the decision to shut this business down. Here\’s why.
Learning had stopped
The business was pretty simple. Essentially, I place orders for items, arrange for their distribution, track everything, and receive payments. With some frequently, I had to handle a shipping exception… a damaged item or an undelivered shipment.
But there was opportunity for learning when I started this business. I learned about a new industry, about market inefficiencies that allowed my business to exist, about making new connections with partners, about managing capital, extending credit and financing.
Two years ago, I learned how to use business process automation tools to automatically handle about 90% of the tracking tasks, allowing me to scale the business up by an order of magnitude.
But in the last few months, running this business had become boring. Each morning, I\’d sit down at my computer, crank through a few orders, update a few spreadsheets and deposit a few checks. I had optimized the business and the interesting work was over.
Increase in losses from theft
One trend I\’ve noticed is that, over the last two years, there has been a distinct uptick in shipments that have gone missing. While package delivery companies are supposed to only deliver during business hours, practically, if they are running late, many will simply leave packages at the door. And pretty much anything delivered to a warehouse after business hours gets stolen these days.
Second, more and more packages simply go missing. Many of my suppliers have begun using third-party delivery companies which are notorious for falsely claiming packages are delivered. And gig-economy package delivery drivers are equally bad. But this is an increasing problem even among larger, reputable carriers like UPS and FedEx. I\’ve noticed that signature-required deliveries will frequently be filled in with a fictional name and left at the door.
At first, my suppliers and shippers absorbed these losses, but others in this same business have been stuck with five-digit losses when a shipment is stolen and no one covers it. I figure it\’s only a matter of time before a large shipment goes missing and I\’m left holding the bag.
Risk of exposure to banks
In this business, I typically extend a five-digit amount of credit to each of the distribution partners I work with. It hasn\’t been a problem; in the last four years, I have never not been paid by any of my distributors. But the email I received from one of my distributors opened my eyes to some risks I hadn\’t considered.
In the last few weeks, the media was abuzz about the failure of Silicon Valley Bank. None of my business partners banked at Silicon Valley Bank, but one of them did bank at Signature Bank, the lesser-talked about bank that failed that same weekend. The federal government stepped in and made all depositors whole, so I\’ll get paid. But that was a stressful weekend.
Ultimately the story of the failure of Silicon Valley Bank and the others is a story both of inappropriate risk management that led to realized losses and incentives that allowed insiders to get their money out first. In light of this, I\’m reevaluating my appetite for risk.
Growth in other businesses, other projects
But I\’m not just shutting this business down because I\’ve grown less interested in it and I see more risk on the horizon. I have a lot less free time these days because my other businesses are growing.
I\’ve grown my freelance writing, content creation and content strategy consulting business from authoring a few articles a month for Forbes Advisor to working with half a dozen big-name clients including top-tier publications like the Wall Street Journal and coaching others on content strategy. I\’ve had to say no to several new clients simply because I didn\’t have enough bandwidth to dedicate to them. This year, I\’ve been invited to speak at several conferences. And I\’ve inked revenue partnerships ahead of launching my own platform. (Stay tuned for news about that launch!)
In addition to growing my other businesses, I\’m putting a renewed focus on finishing up my instrument rating. After the instrument rating, I\’m likely to be shopping for a new flight school and/or flight club and figuring out if I want to build time toward a commercial rating.
At the end of the day, I\’m shutting down a profitable side-hustle business to focus on my priorities. Walking away from any business is a difficult thing to do, but sometimes saying \”yes\” to opportunities means saying \”no\” to others. In every case, I\’m grateful that I am in a position to make this call.