This week, I’m telling a fun story about my past business life.

Like most entrepreneurs, I tried and failed a lot before I found my niche.

Throughout high school and college, I had three core goals for starting a new business.

1. Pay my monthly expenses.

2. Bank a little extra to start investing.

3. Lastly, and most importantly, beer money.

At the time, this didn’t require much money—about $2,500 per month. So, I started and tried quite a few.

The Car Flipping Business

One day, I was sitting in a friend’s apartment, and he told me about one of our mutual friends making a decent living just by flipping cars. Without thinking, I told him we should give it a try.

We went to school about 2 hours north of Houston, where there are tons of car auctions just about every week. So, we went to one a few days later to see if we could buy a car that we could then re-sell at a decent margin.

We quickly realized thought that this approach would probably yield a 10% gross margin and maybe 5% net on large amounts of money to us upfront. This strategy certainly wasn’t going to pay us the $2,500 a month each that we were looking for.

Instead of abandoning the idea altogether, we decided to find auctions exclusively focused on the cheapest possible cars. This usually meant that they had just been totaled.

There we’d usually be able to find a 1-2-year-old car that had been in a bad wreck for $3-5k. Then we’d shoulder the risk of estimating the fix-up costs.

More specifically, we stuck to buying the nicer brand-name cars and never paid more than $7k for one. We then fixed up and resold each vehicle for between $15-20k. Our net margin typically sat at around 20%.

Why It Worked

The secret to this business was focusing on the Houston market.

In Houston, people love to look rich. So we sold our fixed-up vehicles for cash to people looking to drive a nice-looking car for maybe half of what they could find it for at a dealership.

There are probably so many things wrong with what we did but it was my first look at some success. We ended up selling over 50 cars and making around $250,000 in 24 months of income.

Here’s what it taught me.

Know your market intimately, then focus on it relentlessly.

Hungry for More?

1. Follow me on Twitter and LinkedIn for daily content to take your business to the next level.

2. Shoot me an email with your questions or requests for what you’d like me to write about next.

‘Til Next Time,

Connor