Sunday, May 11, 2008

Dave Novak - The Reluctant Millionaire

Dave Novak was just 21 when he started his eBay business in 2002. A recent graduate of the Art Institute of Phoenix, his first job had been as a graphic designer with large Internet company. After the company floundered and he got laid off, he got another corporate job, but soon rumors began circulating of a merger and more layoffs.

About that time Novak's first daughter was born, and he decided he was sick of the whole corporate scene. "I wanted to be home around my family, and so my wife and I invested $2,500 and opened up our eBay store," he said. Because he was a bit of a handyman, and knew something of home improvement, he did research on emerging trends in that industry sector. He decided to go into the business of selling high-end steam showers. "And we've been riding this wave ever since," he said. was profitable right from the beginning, and has grossed over $1 million for the last three years. Novak is the only employee. He manages the Web site, answers the phone, responds to e-mail inquiries, and provides after-sales support.

Not having any e-commerce experience, eBay was the easiest place to start an online business, he said, because the technology infrastructure was there to do everything from listing the product for sale to communicating with potential buyers to accepting payment. He started small, and cautiously: buying only one steam shower unit at a time, and only purchasing another one after he had sold that one. "We kept our overhead very low," he said.

But success brought its challenges. Two years ago, Novak made a difficult decision. Because his business had been growing so fast, he had been having trouble handling it all himself. So he had begun hiring employees. Soon he had four workers on payroll, doing everything from helping him in the warehouse with shipping and handling, to answering the toll-free number, and providing customer support. "I can't say I loved it," he says now about the experience of being a boss. "It definitely took a load off me, and allowed me to ramp up and start selling a lot more. But everything got more chaotic, and I had to spend time managing employees. I just decided, in the end, that it wasn't something I wanted to do."

So Novak laid off his employees, and made the deliberate decision to scale back. "My priority is my family," he said. "I want to keep it simple." He had the opportunity to open a retail store selling steam showers, but declined for the same reason. "People said, 'Just get it up and running, and hire someone to manage it for you," but it doesn't work that way," he said. "I could be making a lot more money today, but I decided it wasn't worth it."

Naturally, Novak couldn't do what he's doing without leveraging a broad range of technologies. There's his Web site -- now independent of eBay -- that is set up for e-commerce with an online catalog, shopping basket, and checkout. He has an 800 number and fields quite a few calls. Although most of his sales come from the Internet, he's found that because it is a relatively large purchase -- units range from $2,000 to $4,000 -- many people like talking on the phone before handing over their credit cards. He's also incorporated live chat into his Web site, which he says is a popular feature, and allows him to be very efficient at both sales and support, as he can monitor multiple chat sessions at one time.

He purchases Google ad words as his primary vehicle for getting the word out about his business. He's also been lucky enough to have been featured in local television and radio spots, and in specialty home and bath magazines. "I've never placed a traditional advertisement," he said. "It's either been free, because someone has done a story on us, or it's online."

Sometimes it helps for people to know he's a small business, sometimes it hurts, he said. There are clearly people who would prefer to deal with a large, established firm. "I rarely come out and tell people it's just me here," he said. "But a lot of people like the fact that they are talking to the owner of the company, and feel they are getting personal attention they wouldn't get at a bigger firm."

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