I'm in love with the Sea Bags business.
Making flashy bags out of discarded sails is a crazy way to get rich.
I saw my first Sea Bags store in a coastal town in Massachusetts.
Then, another one in Vermont.
I smelled *money*.
And I was right.
The concept is simple:
·       Get discarded sails from boat-owners
·       Use local labor to turn them into bags
·       Sell them at a huge markup
How Big is Sea Bags?
By the numbers in 2021:
45 retail locations
Inc. 5000 list 3 times; including in 2021 because they grew 60% that year
200,000 bags a year.
At an average selling price of $125/bag, that’s $25,000,000 / year in revenue!
My best guess is they’re running 80% gross margins on those bags.
Assuming 50% of sales goes to rent and overhead, you end up with a typical luxury business net margin of 30%.
Or $5-7mm a year in free cash flow!
How Did Sea Bags Get Started?
·       1969: founder Hannah Kubiac’s father opened a similar business which he sold in 1973
·       1999: Kubiac could attend college or start a business to make extra money. She chose business.
·       2006: Beth Greenlaw joined as President (employee number 3). She brought experience and ambition. She knew the bags from her mother’s gift shop.
·       2013: Kubiak wanted out. Greenlaw brought in two partners to do a buyout.
·       2014: Greenlaw steps down from CEO role. Brought in two LL Bean executives to take the business to the next level.
What can we learn?
· Luxury businesses are GREAT businesses. You can get amazing margins when your customer buys for emotional or status reasons.
· Often, the most profitable move is finding the right person to run your business. And it’s not you!
· Simple ideas are often the best. Sure, complexity is sexy, but simplicity often wins.
What do you think? Reply with your thoughts on this one.
More from me you might have missed:
·       How 2 Argentinians plan to make $28,000,000 in 12 days:
An oilfield sign business for sale I considered. From our podcast Acquisitions Anonymous here: https://www.buzzsprout.com/1964407/11070421
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