Prison to Profit - How I Started With $5K And Built A 7-Figure Vaping Company

$300,000
revenue/mo
2
Founders
20
Employees
product
Vape and Juice
from Whitstable
started December 2013
$300,000
revenue/mo
2
Founders
20
Employees
1.33M
alexa rank
1.02K
followers
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Hello! Who are you and what business did you start?

I’m the founder of Vape and Juice, an online and offline vaping store, based in the UK. We have a delivery service in Ibiza and do a little international trade, but our primary vape market is in Britain. We started in hindsight, as a terribly put together website in 2013 and sort of fell into the bricks and mortar element of the industry. 7 years later, we are a slightly less bad website, with a chain of franchises.

When we started the company it was simply because I had quitted smoking with electronic cigarettes, we had very little money, to begin with, and not having the best CV meant it was this or back to the dole queue. It sounds dramatic but I was in a tough spot in my life. I’d made mistakes in my younger years that meant I had a conviction, getting past the recruitment processes when you are an ex-con isn’t a task for the faint of heart.

Doing my own thing, therefore, seemed the only solution. I knew to vape was not about to be uninvented and if you could take someone’s addiction, make it less harmful for them, and 90% cheaper, the industry would flourish. There wasn’t much of anything in the UK, I took a chance and Vape and Juice happened.

Our local vape shop business began at £5,000, 7 years later, we turn that over in one day online.

prison-to-profit-how-i-started-with-5k-and-built-a-7-figure-vaping-company

What's your backstory and how did you come up with the idea?

I’ve always aspired to work for myself or having my own business. As a kid, I found a local newsagent that would sell adult magazines to me. It wasn’t even as if I looked old enough, I definitely didn’t. I would bring the magazine home, carefully remove the pages and posters, roll them into a tube, and sell them at school to my friends.

No sooner had I been handed the website log-in, did I realize I couldn’t advertise vape kits or e-liquids on Google and Facebook. Lesson 1 - do some prior research!

My parents would send me each Sunday to spend the day with my Grandpa who ran a little antique store in rural Essex. I would watch people come in and sell him something, only for him to sell it later that day for a profit. I loved watching that happen. Then I’d go home and my Dad would be closely monitoring his stocks and shares. All of my family had their own businesses, so it’s bred into you at a young age.

I began to collect militaria, old army cap badges, and the like, looking for them at a cheaper price than their recent valuations.

After school, it was only ever going to be the military or finance for me. I ended up doing both. It was in finance where I made a hash of my life in my early and mid-20s. I was working in broking at a time when there was still that ‘Wolf of Wall St’ vibe going on. Our bosses were the yuppies of the 80s, drugs were rife and I fell into a bad crowd, working in quite a ‘grey’ market.

I ended up penniless, unemployable, and imprisoned. It was a dark time and I put my family through hell.

I could write a story devoted to that time. But while my confidence was knocked, I don’t think you ever lose the understanding of how to sell if you can do it. You just need to sell the right thing to the right people, in the right way. So I ended up in retail.

How did you know what your website or store would need?

Truthfully, absolute guess. I browse the internet, I shop, I think that’s about as much knowledge I had. Look, don’t consider this therefore the way to do it. I have had to right so many mistakes along the way. I look back now and every lead we didn’t capture, every upsell we didn’t do, every own brand we didn’t promote… that’s a lot of missed opportunities.

A lot of what we did was budget depending. A former friend of mine pitched himself to be my ‘marketing guy’. I didn’t know the first thing about marketing from a theoretical standpoint and I wanted to help him out. We agreed on a salary, or pay rate, and then he asked me what the marketing budget was. I looked at him and said: “You’re it.”

When you’re a small business, you don’t need to give favors to mates, it never works out well. But you can also and should also do a lot of the essential tasks for a short while also. Just to understand what your needs are.

So many companies, I see recruiting for a ‘Social media and SEO person’, as if they are one and the same. They aren’t. But it’s because the recruiter in that company has never done the work or learned it. This means they are going to spend tens of thousands in wages not getting even remotely close to the value of work they could get by hiring on expertise. So it’s important to know the value of the job done well.

So we made the website and it looked more like a brochure than a well put together eCommerce platform. 6 months in we were doing £60 a month. It wasn’t until 3 years later when I took it upon me to manage that it started motoring. The first thing we did was offer free shipping to all and sales went up by 400%. Overnight almost. Had we paid for expertise, we would have grown exponentially more as there was less competition 4 years previously.

prison-to-profit-how-i-started-with-5k-and-built-a-7-figure-vaping-company

That’s a huge missed window of growth.

But we can’t dwell on those things and we work daily now to offer improvements. I went to a convention a while back and they stated this: “More people are on other people’s sites than your own.”

I didn’t quite get it at first, but then it dawned on me, how often are you designing a website with no consideration to what a user is used to seeing on others. You want customers to understand it quickly, navigate easily, buy simply. If you have to explain how to use your site first, you have already lost the room.

It’s why Linkedin is more like Facebook and so on. Analyze the competition and see what works for them. We use an app on our Vapeandjuice.co.uk site called CrazyEgg, it shows us user clicks. It means we can change elements if no one demands it. It’s all about optimizing for user experience.

Again we learned these things late, it’s why sometimes it’s good to invest in the right talent early on. Just make sure they know what you are working with. Nowadays we partner with SEOFairy, a local marketing agency we get on well with. I can see them in person, I can pick their brains and they don’t do work we can do in-house already.

As for the vape shops, we really didn’t have a set design until it was forced upon us by a landlord. We opened our early shops up on £4,000 here, £3,000 there. We salvaged items from eBay and that figure included the deposits, the sign, and some stock. It was bare in those days.

As sales went on we would accumulate more stock, signs were not always matching, spit, and sawdust. It wasn’t until a landlord for a prime location asked us for a landlord pack and a sign that was to a commercial standard, that we had to up our Vape and Juice game.

My wife is a designer so she put together a nice PDF and then went about creating a storefront mockup. It looked professional and we stuck with it. I had a good friend who had invested in us a small amount and that helped us move forward in a more coherent way.

What did that do for us? Well, it cost more for a start to open new stores, but it definitely helped with opening new vape franchise locations. We still tried to keep the costs down and we have always used easily sourced materials. I am a geek for taking photos of retail storefronts and collect pictures of A-frames; it gives me a lot of inspiration when doing my own things.

Tip: If you are going to embark on becoming a retailer, which is an insanely stupid thing to do at the best of times, become a scholar of the game. See what others do. Try to work out why they do it. It will help you no end.

prison-to-profit-how-i-started-with-5k-and-built-a-7-figure-vaping-company

Describe the process of launching the business.

No sooner had I been handed the website log-in, did I realize I couldn’t advertise vape kits or e-liquids on Google and Facebook. Lesson 1 - do some prior research! This meant, we really had no way of getting traffic to the site other than through blogging. This led to two things. Firstly, I learned a lot about content marketing, although not enough and secondly, that we would need to open a physical shop.

Some months went by when my Uncle pointed out an empty shop across the road to a cafe I was sat in and suggested I pitch the landlord with cheap rent for a few months. “Great, now where do I find him?” I asked.

Turns out I was eating breakfast with him! I had been working with his building company, so I knew my way around a plastering trowel and paint tray, which meant it wasn’t much effort to get it in ship shape. My dad helped me put the sign up above the door and it was a trip to eBay for the shop counters.

A business plan was entirely non-existent as were cash flow forecasts. I needed to see if it would even work first. The local newspaper and even the MP popped in, in my first week and interest in the store grew quickly. It was then I realized I was onto something and it just took off. Day 1 we did £27 when we sold that store in February of 2020, that day we did £1000.

You can see on the left below where we started and how it evolved to now.

prison-to-profit-how-i-started-with-5k-and-built-a-7-figure-vaping-company

Since launch, what has worked to attract and retain customers?

Every trick in the book of the hustler’s guide to retail we have probably tried. From sticking we have moved posters on closed down competitors stores, directing their old customers to us. To handing out lighters to smokers in pub beer gardens with a discount code and our Vape and Juice online ecig store details on. Lighters never get thrown away, they get borrowed.

We have tried billboards, sly paid ads, Pornhub advertisements, SEO, Amazon but fulfilled by ourselves, with a business card giving a discount code and link to our site on. Grabbing people off the street, affiliate marketing, SEO, buying old company’s expired vape domains, I could go on.

But what really works? It’s offering an exceptional level of service and asking for word of mouth. Either directly, via email or just making sure that you exceed people’s expectations that they tell their friends to shop with you. I hear more people say their friend told them about us than say they saw a billboard, or website banner.

prison-to-profit-how-i-started-with-5k-and-built-a-7-figure-vaping-company

Also think like a customer, not a shopkeeper. It’s the most common mistake people make in business. They aren’t thinking about how they would want to be treated. You know when you send a company an email and you get an auto-reply saying, someone will reply back in 24-72 hours? Yeah, well we don’t do that. We just reply. If you can’t do that, then you aren’t investing in customer experience sufficiently.

I’ve realized the importance of getting rid of bad apples, there are certain things you can’t live with for too long in your business without it destroying your hard work.

No amount of charts or graphs need to explain that to you. You want immediate gratification when you shop or look for information - don’t assume you are an isolated incident.

How are you doing today and what does the future look like?

In February of this year, we decided we wanted to put most of our attention to becoming the best online vape shop we could be. While also producing new e-liquid brands and spending more time helping our franchises. This meant a few weeks before the lockdown we have all seen worldwide, we parted company with our own e-cig stores and well, that was good timing!

Our online sales have risen by 800% and we have had so many people who used to use our stores, doing Vape and Juice brand searches directly into Google. We know that is a major ranking metric these days, so it’s helped us no end.

We have gone from having our online sales account for 3-5% of total turnover, to it becoming most of it. Obviously things will change when shops re-open, but the work we have done in this time to foster retention and easy re-ordering we hope will see us in great shape going forward.

My goal after the deal was to ensure the website was doing £30,000 plus per month to simply pay the smaller team's wages. On top of that, we have the wholesale and franchising revenue of course, but pleasantly our target has been eclipsed somewhat.

The plan going forward is to ensure that this rise in sales is not a one-off. We have worked hard to create systems that mean we can handle higher sales volumes and now our efforts go into driving more organic search traffic to Vapeandjuice.co.uk which means more people can experience our local shop values online.

Through starting the business, have you learned anything particularly helpful or advantageous?

I’ve learned that the phrase, perfect preparation prevents pi$$ poor performance, which is really very true. It’s an old army saying that officers would say to us. It would go in one ear and out the other. Now I get it.

Had we worked out what we wanted site user’s to do, or shopping journeys we wanted customers to take, we would have maximized sales vastly.

I’ve realized the importance of getting rid of bad apples, there are certain things you can’t live with for too long in your business without it destroying your hard work. You just have to avoid being sentimental with some people as their actions will lose other people their jobs. And if you can’t have those conversations, employ someone who can. That will mean you can focus on other areas too.

One other crucial thing - there is only so much you can do yourself long term, without it costing you growth. You can’t sit on two toilets at once, so rather than being below average for many things, focus on what you are great at, and invest in someone else to be great at the other.

I still do it now sometimes and have to sanity check myself. To save money I will go flyering, but that time could be spent creating backlinks to improve our google ranking and earn far more sales than flyering will generate. I did it yesterday - my wife told me off!

What platform/tools do you use for your business?

I am an app nerd. I’ve even done a podcast or two reviewing them. Check out my startup marketing podcast - The MOB Show

Glorious plug there. What do we use? Ahrefs I think it is in most SEOs toolbox, it is definitely in mine. It’s a phenomenal tool to see what you should be doing, but it’s also got a really good blog. Not often that a company produces a blog worth reading. They win on that front.

Something that I don’t personally use but my wife does in our social media scheduling and that’s Later. They have a fantastic blog too.

Our site uses Shopify which has some solid app plugins. One of which is Virthium that lets you reward with a cash incentive for reviews, good or bad - another is Shop Sheriff. The team there has produced a great AMP editing system which ensures you can get your site accelerated for Google’s new mobile page system with very little effort. Plus both are run by good people and answer their web chats as quickly as I do.

If what you are doing isn’t going to offer people something better than that which already exists, you’re just a ‘me-too’.

One other honorable mention is the Ike to-do list app for your smartphone. It’s based on Dwight Eisenhower’s four levels of to-do system. Not only is a to-do list on your phone a convenient place for it, but it also acts as a simple way to switch off at the end of the day. You write your next day’s tasks in it, then you can sleep easier. You don’t want to be spending the first part of your tomorrow, planning what you are going to be doing. That’s a dumb way to get productive.

What have been the most influential books, podcasts, or other resources?

I love audible and podcasts to be fair, but podcasts work well for short hikes or gym sessions. I am pretty eclectic in what I listen to. It could be about the world’s biggest mortgage fraudster on Koncrete, to pure marketing tips about SEO. But I will always love a good business autobiography.

Podcast wise, I have Koncrete, Marketing O’Clock, and How I built this with Guy Raz subscribed to. I’ve got Afrojack for some running music and I loved Will Ferrell’s Anchorman Podcast. I spent a while listening to Gary Vee and similar, but it seems to have moved away from business tips on marketing, to mental health stuff and I am just not going to use my data for that. Listening to podcasts is good for my mental health, listening to podcasts about mental health to improve my mental health, just seems banal.

Books though...

If you ask me to recommend three books, I will tell you two of them. The third is my secret weapon. But Shoe Dog, which is the story of Nike by Phil Knight, what a book! Second up, because it’s an interesting tale by a guy who made the effort to reply to my email when I reached out to him AND because I think he got a rough deal. It’s Gerald Ratner’s The Rise and Fall….and Rise Again.

I love it when the subjects narrate at least part of the book, and they both voice spots in theirs. You can really connect with them then. In Gerald’s book, it gave me a great sales tip for a marketing campaign, which more than paid for itself.

There are others that have helped me too, such as Jocko Willink’s Extreme Ownership, Robert Green’s Strategies of War. One that I was recommended to by a team of senior marketing execs after a pitch was 22 immutable laws of marketing. You are never going to take everything in, but if you get one or two gems out of each then you are well ahead. As it happens, all of these will offer you much more still

Advice for other entrepreneurs who want to get started or are just starting out?

Three things I always say to people, when they ask how we grew or started our vape shop brand, Vape, and Juice.

Make sure what you are doing is needed by an audience and not just wanted by you.

If there isn’t demand from others for it, then you are going to have to make people want to demand it and demand it from you. That’s a big hill to climb if it even can be done. A lot of people aspire to own their own business, just as I did when I opened our UK vape deals website in 2013. It doesn’t mean others aspire to shop for those items.

Likewise, if what you are doing isn’t going to offer people something better than that which already exists, you’re just a ‘me-too’.

The only tool you will have in your arsenal is price-cutting and that isn’t very sustainable as a business model - nor unique. We had a guy who opened a vape shop right opposite ours in Southend a year or two back. He picked the dark side of the street right in front of a bus stop too, but he didn’t last more than 10 weeks. He just couldn’t offer anything that we couldn’t match. He must have lost a lot of money on that. He would have been better off going to the casino.

You might be smart, but don’t assume the competition is stupid.

Just like the scenario above in our home territory of Southend, UK, another company tried it opposite our flagship as well.

They assumed because of their size they would muscle us out. They spent fortunes on creating an unwelcoming, identity absent store. They didn’t stop for a second to consider that a locally run vape shop in a prime location might have been doing something well to be there.

We created a community, we had a unique story to the area and we were already more advanced than they were in customer data collection through our loyalty scheme. Just on loyalty schemes, when you have someone’s email but not their business anymore, you have a chance to get them back. Don’t overlook loyalty plans.

On top of all this, most people are creatures of habit and high streets are areas of declining footfall. What that means is, you are going to struggle to win most of the customers from our ecig shop, there won’t be many new customers coming down the street and you will be burning more cash than just your initial investment.

Recruitment would be hard for them. We paid more than they did and I worked from the store’s basement, so we could respond with agile changes. I hate being reactive, I believe what we have is a service level worth something, but it doesn’t hurt to be able to bring out the kicker.

They had been in talks to acquire us and pulled out. Their CEO was aware of a product I sold at a higher price, which made up 20% of my sales. I think they were banking on that being their angle in. It failed, I cut the price by offering an increased quantity multi-buy deal. Increasing the overall gross profit on the usual transaction, while offering a better price to customers. The competition either had to match it, which wouldn’t win you, customers, you need to go further - or they change their business’s pricing which would hit them across their 40 stores.

I’d always known at some stage I would have to lower the price on this product line (Vampire Vape Eliquid) but I did it at the last possible minute to ensure I let everyone else play their cards first.

Finally, they recruited people who used to work for me. People that we had let go as they just couldn’t keep customers happy. I don’t think at any time in the takeover process they had asked us about our staff training programs or why we think customers shopped with us.

I had been prejudged by the competition and their ego means they still lose money at that store to this day.

Are you looking to hire for certain positions right now?

Our focus right now is online growth. We are trying to bring the offline shopping experience online. Everyone talks about how they care about the customer and it’s really just grandiose noise. How are we different? A number of reasons, but importantly I’ll answer the web chats on a Sunday night myself if we need to.

I think that probably illustrates what our customer mindset is like. To that end, I am always looking for people who can add real UX value to our site or can do something within the SEO field that others can’t. If you think that could be you - get in touch.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
David Mason,   Founder of Vape and Juice

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