Referral Harvester

I was 12 years old when I started my first business. I was breeding hamsters. Six female and one male hamster formed the core of this fledgling business. We lived in a small two-bedroom flat and my room was completely taken over by my business. Each hamster lived in its own cage and Stud (yes, really), the male got to move from female cage to female cage with short rest periods in between, in his own cage. He did need rest from time to time… With six females producing an average of five babies in every litter, I had about 30 to sell every six weeks! I sold baby hamsters (pups) to all my friends at school and church and business was going very well. After a few months, I expanded my business to include cages, toys and feeding equipment. My mum took me to a pet wholesaler where I would buy cages, feeding tubes, dishes, wheels and anything else related to hamsters. Adding a small mark-up, I created “package deals”. You could buy one hamster, cage, a bit of food, feeding tube, wheel and wood shavings for ZAR 5.00. (South African Rand) Bargain! Then there were the wood shavings. If you know anything about hamsters, you’ll know that they can be quite messy. In those days, we used wood shavings in the bottom of the cage to catch the mess and for the hamsters to nest in. The wood shavings had to be cleared out every few days and fresh wood shavings placed into the cage. Wood shavings for this purpose could be bought from the local pet shop at ZAR 0.20 per bag. I got the idea to approach a local joiner to find my own wood shavings. There was a large joinery company about a mile from our flat so I cycled up there one day and “negotiated” with the owner. Truth is, they were just binning the shavings in the skip every day, so didn’t care if I wanted it. This meant I could cycle up there every few days and fill two bin bags with wood shavings. Tying them to my bike, I’d take them home and re-package into plastic shopping bags. Now I could supply my customers with wood shavings at ZAR 0.10 per bag! So, instead of one-off sales, I had a product my customers needed on an ongoing basis. Business was booming! But, as you can imagine, there are only so many kids in my school and church. My business got to the point where everyone who wanted a hamster had a hamster. My market was drying up yet my females were still producing baby hamsters at lightning speed. Sure, I still sold wood shavings every week but very few hamsters. My business had struck a brick wall. (In hindsight, I should have just slowed down production but at 12 years of age, it just didn’t occur to me). And then I had a Eureka moment! I spoke to all my regular customers and offered them a month’s supply of wood shavings for each friend they introduced to me, who wanted to buy a hamster package. This opened up a whole new market to me. All these kids had friends in other schools, sports clubs, churches and family. They would happily bring new customers to me for a month’s supply of wood shavings. They saved their pocket money (as they no longer had to pay for their continuous wood shaving needs) and I had new customers. Bear in mind the wood shavings didn’t cost me anything either (just the time to collect from the joiner and the time it took to re-package into shopping bags). As a new customer bought a hamster package from me, I would make the same offer to them. This resulted in constant referrals flowing into my business. My mum was roped in to help with deliveries since I now sold my products in a fairly wide geographical area. Every Saturday morning, we would load up the old, orange VW Beatle with hamster cages and set off to deliver them to my new customers. Some Saturdays we had to make more than one trip. I made more money during those months than any other kid in my school. After feeding my hamsters, paying my mum for fuel (for deliveries), buying hamster vitamins and all other costs, I made an average profit of around ZAR15.00 per week! To put that into context, most kids received ZAR1.00 per week in pocket money, in those days. I still received my ZAR1.00 pocket money from Dad every week, and also had ZAR15.00 on top of that. I was rich! (or at least felt rich) I did learn at least two things from this experience at the tender age of 12. Firstly, referrals can absolutely sky-rocket your business. I’m pretty sure the idea of referrals has been around for eons, but to me, at that point, I thought I had come up with an absolutely brilliant, bright, new idea. Secondly (in hindsight), I should have invested all the profit I made back then, instead of spending it on cool pencil cases, sweets and toys. I am passionate about referrals and I have always focused on this part of business, throughout my life. In this book I want to share with you how you can leverage this phenomenon in your business.