Starting the Wrong Way [CC#8]

If I could go back to July 2012, I would do it all over. But I didn't already have the experience that tells me... it's coming.

It was a cool and sunny summer in Michigan. The dining room table held a stack of paper and plans next to my laptop. I succeeded to register ROCC, LLC (a partnership held Limited Liability Company) in the state of Washington. The reason for this was two-fold. First, my family called WA home, had drivers licenses there, voted and annually filed taxes there. Second, we had some "guanxi" relationships there (as the Chinese would say). A couple good recommendations for a CPA Firm and an attorney who we might trust were just what we needed to start with a bit more confidence.

In the past I had a terrible experience opening and operating a 501(c)3 Non-Profit organization in the State of California. Sadly CA has a lot of regulations and is more costly than other states to operate your business from. Washington was a dream in comparison: less paperwork + less "mafan" hassle = more conducive to our small business.

So between the CPA, the law Firm and the State of Washington Business Bureau, and the good ol' World Wide Web (Internet) I was able to expedite the needed papers from Washington State to Washington, DC (for Chinese Consulate Authentication) and finally back to me in Michigan. ROCC, LLC was not only formed, but it was authorized to do business in and make an investment in China!

So, we needed cash to invest in China. I put out the call to our partners in California, Oregon, Washington and Michigan that it was time to make contributions. Businesses require capital, but technically we didn't have a "business" we just had paperwork. Sadly we fell into the trap of raising and spending money before we had any real business. We needed systems in marketing and coffee contracts which were generating new customers with revenue and profit. We had spreadsheets and projections, but again - it was just a plan.

In our own way we believed, "If you build it they will come."
"If you buy a roaster and start a roastery they will come."

If I could go back to July 2012, I would do it all over. Back then I didn't have the experience that tells me, "go look to find existing assets and put them to use." I tell new entrepreneurs this all the time.

All over China (all over the world) today there are under-utilized roasters (assets) sitting idle ready for outsourcing and toll-roasting contracts. In the beginning we could have saved ourselves from spending an entire year of generating customers on our investments if we had operated with someone else's assets for a time. If there really is a clientele for your product you can save piles of startup-cash by renting another persons roaster (use it from Midnight to 4am if you have to). What's more are the relationships and knowledge (e.g. poor product choices, gaining access to supply channels and vendors, etc.).

However, we chose to carve our own path and write our own story. Enthusiasm was high. A few close family and friends heard the ROCC story and caught the vision. The ROCC partnership had financial contributions and we were certified to "conduct coffee business between the US and China." 

red stamps required

Extra measures needed to be taken to ensure I went back to China with all necessary documents in hand. Within 10 days ROCC, LLC was incorporated, documents were expressed to the Washington DC Chinese Consular Business Section. A business must first be recognized by a special department issuing permits (which come as beautifully notarized sticker type documents) before it can make a foreign investment to China and operate in country.

Part 2 of this story was the exciting challenge of buying our Diedrich IR-12 roaster sight-unseen off of Craigslist and shipping it from the Oakland port of Los Angeles, CA to Wuhan, China. Those developments happened between legal and bank registration work.

Incredibly documents crossed the country by plane while I coordinated phone calls in multiple time zones to government offices and express courier services. I opened business bank accounts and established my wife's father as a co-signer to serve while I was out of country. Papers in hand by mid-July I was back on a plane headed for Wuhan.