Joe Allen - $30k in a week? 3+ months of vacation a year? JUMPIN' JACKS bounce house biz

Joe Allen is the owner of Jumpin' Jacks, a family owned and operated event rentals company that offers bounce houses, inflatables, and other event entertainment in Sonoma County.
 
Majority of rentals take place within a 6 month window from the end of April until the end of October, providing for a great lifestyle and very comfortable, livable income for Joe and his family.

Listen in as he shares his story - jumping (no pun intended) from cellular retail sales to buying (what was at the time) a very small bounce house business and making improvements that have helped him build to 750+ events per year (and growing).

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Transcript

Speaker 1: 0:00

Welcome to the 27th episode of how I Built my Small Business, the show that is dedicated to sharing the insight that entrepreneurs have about how to start and grow small businesses. Join us as we unravel the stories behind their entrepreneurial journeys. I'm Anne McGinty, your host, and today I'll be chatting with Joe Allen about his journey from cell phone retail sales to owner-operator of a jump house business. Jumpin' Jacks is a family-owned and operated event rentals company offering bounce houses, inflatables and other event entertainment, and is based in Sonoma County. They've provided entertainment at the Raiders Training Camp, butter and Eggs Day in Petaluma and hundreds and hundreds of other events each year. You can find a link through to his business in the episode's description. Thank you to our listeners for being with us today. Joe, thanks for coming on the show.

Speaker 2: 1:00

Thanks for having me.

Speaker 1: 1:01

I noticed that you studied entrepreneurship at college and I was wondering if you could give us some of the top takeaways that you took from your degree.

Speaker 2: 1:10

I think one of the biggest takeaways I had was the ability to look through multiple lenses in business. In entrepreneurship, you touch on a little bit of everything, so you're part of marketing, you're part of the accounting, you've got to look at things from a legal aspect as well, and so being able to put on different hats and wear them throughout the business.

Speaker 1: 1:28

Would you say that going to college to study that was worth the expense?

Speaker 2: 1:33

Good question. No, when I was in college, tuition tripled in a two-year period. It was insane and you don't get wages that are worth the cost anymore unless you do something yourself or you're in the top 1%. Really, most people I know that have got a degree don't do anything with their degree. They found better paying jobs outside of it.

Speaker 1: 1:56

Interesting.

Speaker 2: 1:57

Yeah, was it good for me? Yes, overall, but worth the expense. I feel like overall hands-on experience has been a better teacher.

Speaker 1: 2:07

And what makes you say that?

Speaker 2: 2:08

The reason for that is things like marketing. It was very high level and so they would teach you to do copy. Here are some power words that you would use, but there was no technical skills. So when I needed to advertise for Google AdWords, I had no idea what I was doing. When I want to advertise on Facebook, I had no idea what I was doing, because that technical aspect was never actually taught in school, just the high level concepts, and I was wasting a lot of money on ad spend just because I had not learned that from school and it was something I had to teach myself outside of school.

Speaker 1: 2:42

After college what was your experience before you took ownership of Jumpin' Jacks?

Speaker 2: 2:47

I worked in the cellular industry doing retail sales, did that for about eight, nine years and then purchased Jumpin' Jacks.

Speaker 1: 2:55

How did that transition from cellular retail sales to business ownership happen?

Speaker 2: 3:00

Yeah Well, it started when I was young. With my first two jobs, I immediately knew I couldn't have a boss. So entrepreneurship is what I wanted to study, so I wouldn't have a boss in the future. And it just took the corporate work world, just grinding away in sales. And there was just a timeframe that I was like, look, I need to get out of this. My wife and I were planning to move back to Santa Rosa so I was like, look, businesses are for sale right now and it so happened to be that there was an inflatable business. My brother knew a little bit about it and I could bounce ideas about that with him. In entrepreneurship, at the end of your course and studies you do a business plan.

Speaker 1: 3:36

My business plan was on starting a laser tag family entertainment center business Awesome and so it kind of just fell in my lap where it's kind of in the wheelhouse of what I was interested in from college days all the way to my brother being in the industry at that time as well, and how did you source the capital for financing the business?

Speaker 2: 3:55

Yeah, part my life savings and then the remainder was through a micro loan. So because this was a small business and it was very small when we took it over, traditional loans from big banks wasn't going to happen. There was a small profit margin with the business so that, combined with how low the loan amount was, it wasn't worth their time. So we partnered with a local nonprofit in the Bay Area called Working Solutions. They only loaned to the Bay Area community. So as far north they go Sonoma County, which is where we're at, and then mostly Marin County and San Francisco area and they mostly do it for working capital, but they also will do micro loans for purchases of businesses as well.

Speaker 1: 4:37

And what was the process like?

Speaker 2: 4:39

It was pretty straightforward. So when you purchased the business, we were going through a business broker and so they had connections there and it's just you know, pull on your credit. You had to have a business plan, so that was. One good thing that came out of college is I knew how to make a really detailed business plan, put that together and how we were going to grow the business to be able to basically fund the loan.

Speaker 1: 4:59

When you first took over. What was that like?

Speaker 2: 5:02

It was extremely challenging. One thing that corporate worlds have is they have their systems in place and you plug in as a cog in the wheel and follow their roles and plans, whereas this company we took over first day employees have no idea that we're buying the business because of an NDA, so that's a shock to them when we walk in with the previous owner. And there was no systems in place. More or less Ordering and tracking things was done by paper. Employees had no uniforms, so it was kind of weird where people would knock on the door and it's just a random guy. Everyone used their own vehicles. There was no control of that as well. So the first season and a half because we took over halfway through the year was a roller coaster of just trying to keep it running and change everything all at once, from the way things were rolled to the way we did things. We didn't have trailers, everyone was just throwing things in the back of their trucks, so it was crazy.

Speaker 1: 5:58

But I guess it gave you a lot of opportunity.

Speaker 2: 6:00

It did. Yes, yeah, we've completely changed our entire process from top to bottom.

Speaker 1: 6:06

And you mentioned that the business was very small when you bought it. How small was it?

Speaker 2: 6:11

Yeah, so I believe his wife took the orders over the phone while he operated everything and did the deliveries, and then there were two part-time weekend only employees for the busier times. Total number of inflatables and games and stuff we purchased was about 35.

Speaker 1: 6:27

And how big is your team now?

Speaker 2: 6:29

So now we're a family owned and operated. Just to give everyone an idea of this, me and my brother are full time and I have another brother that comes in full time during the busy season, and then we have three regular part timers that join us every season, and then we hire one to two more part timers to fill the void for the year.

Speaker 1: 6:47

What about your level of inventory?

Speaker 2: 6:49

We're about 75 units give or take between inflatables and carnival games and stuff like that.

Speaker 1: 6:55

Amazing. So what other improvements have you made?

Speaker 2: 6:58

One of the things we noticed is just the further we would drive out. So people all the time will say, hey, we're only 20 minutes from the furthest part of where you're delivering. Can you just deliver it to us for the same price? It has to be a no, because it's just not 20 minutes. It's 20 minutes there once and then you go back to your normal delivery area. Then you've got to go 20 minutes travel extra to them and then 20 minutes back, so that 20 minutes is really now over an hour of additional travel time, and in that period of one hour, if we just stay in our vicinity, we can do two and a half deliveries compared to that one, and so you should have three deliveries in that same timeframe, and we really had to condense our delivery area over time as we got busier.

Speaker 1: 7:41

What's your radius?

Speaker 2: 7:43

So ours is pretty small. The furthest north we go is Windsor, and the furthest south we go is Petaluma.

Speaker 1: 7:49

typically, oh yeah, that's very condensed.

Speaker 2: 7:52

Very condensed. We go to Sebastopol, which is west, and then we basically don't go east of Santa Rosa because there's not enough in the market. To Sonoma, it's not a straight line. You basically have to go north and south and wrap around Sonoma. So it's very inefficient to go there from any direction of the cities we go to and from. So, yeah, we basically are 10 miles north, 10 miles south, and then Sebastopol stretches most of that area, but they're on the west side.

Speaker 1: 8:18

So good, ok, what else?

Speaker 2: 8:21

One of the big changes we did from an operational standpoint is we now deliver the day before for everyone and pick up the day after as part of our business model. The reason for that gives us a lot more capacity with less staff. Before, when we took over, everything was four-hour rentals. We paid extra for additional time and party start time could start at 8 am and go all the way till 8 pm, and the hours we worked were 6 am till midnight. Sometimes it was ridiculous. Part of it was the smaller inventory so we'd have to turn the units for the next day, whereas now everything's the day before, day after. We start deliveries at 8 am and we're done by 5. Pick up the next day, 8 am to 5.

Speaker 1: 8:59

Brilliant.

Speaker 2: 9:00

And the other beautiful thing about it is it relieves stress on the parents knowing that the equipment's there on time. They get extra time with it, so there's a benefit and a value to that for the customer, and we were able to route our orders in a perfectly efficient manner where if we're in the neighborhood, we're delivering all of those inflatables to the same neighborhood, versus zigzagging that we were doing just to make sure everything got to places on time for same-day delivery and pickup.

Speaker 1: 9:24

Oh yeah, that efficiency of just keeping your crew in the same location is huge.

Speaker 2: 9:29

Yeah, we cut down our fuel costs our maintenance goes down.

Speaker 1: 9:38

Our overtime doesn't really exist anymore now. That's amazing. So much more sustainable for employees too. Absolutely Gosh, amazing improvement. Oh yeah, and if you don't mind sharing, how much can your business bring during the busiest week?

Speaker 2: 9:47

So our busiest weeks are in a school's time A lot of in-school parties on top of schools having events. We'll do somewhere between $25,000 and $30,000 a week.

Speaker 1: 9:57

Nice, and how is the seasonality?

Speaker 2: 10:00

We close down from Thanksgiving till February. It's just so slow it doesn't even make sense to operate sometimes and there's the rain and any rain on a unit. We need multiple hours to dry it before it starts to mildew the equipment and it fills the unit. So if it's not hot it takes even longer if it got filled inside the unit. So we try to avoid it at all costs.

Speaker 1: 10:21

So I used to own a seasonal business as well, and people used to always ask us this question what do you do in the off season?

Speaker 2: 10:28

I hang out with my family, go on vacation. I'm a dad, so that's what I do.

Speaker 1: 10:34

That is awesome. You got like a three month holiday.

Speaker 2: 10:37

Pretty much. It's built into the model now yeah.

Speaker 1: 10:40

That's great. So what have been the biggest challenges that you've faced?

Speaker 2: 10:44

Building processes to begin with, starting from scratch. That took a year to really figure out because I didn't know what I was getting into truly. So our margins weren't good at first. Marketing plan did not exist, so just starting from the ground up in that regard. And then, of course, big one for everyone was COVID. Base idea of our business is people coming together and hanging out. And all of a sudden we were told we're not allowed to do that for a whole year. And so that whole year we did almost nothing. Funny enough, my youngest was born the night. Everything was shutting down. So the next morning after he was born my phone was blown up and full of voicemails, with everyone canceling their events for the year.

Speaker 1: 11:25

Oh ouch.

Speaker 2: 11:26

Yeah, so it was a little bit of a stressful time, but the beauty of it was I got to spend a lot of time with that kid when he was a little one, whereas the other ones I didn't as much, because of work. It wasn't even until 2022 that we could even deliver to parks again, so it was a two-year period where parts of our business model didn't even exist anymore.

Speaker 1: 11:43

Oh my gosh.

Speaker 2: 11:44

Yeah.

Speaker 1: 11:45

Almost every guest I've interviewed up until this point has mentioned COVID. It's just very fascinating to see how it affected different businesses and yours being outside. I actually thought it would survive okay, but I guess it still involves people gathering.

Speaker 2: 12:02

People were very cautious. In California there's people that I know that would come from a red state and they were having the best years they ever had and in fact, manufacturers were like always sold out of everything because they are growing so much during this period, because no one's going on vacations or Disney World or any of that, so they did at home things, and just the part of being in a blue state was we were more cautious. Yeah, how do you decide when to add to your inventory.

Speaker 1: 12:25

And just the part of being in a blue state was we were more cautious. Yeah, how do you decide when to add to your inventory?

Speaker 2: 12:30

The business tells me more or less. So we really are detailed on our accounting and bookkeeping so we watch how much each units are going out and which product lines. So when we first took over, everything was mostly just your standard jump. About half of that inventory was just your classic 13 by 13 bounce house, which has the least amount of margin but was easy to do with one person. But the most popular thing was the units with slides. But that was not even 10% of our inventory at that time. So we had to change it to what people want. Where the margins were and whatever gets rented the most, which is typically your combos and your water slides during the year, is what we've reinvested into.

Speaker 1: 13:14

And is there much of a difference between the manufacturers of jump houses, or is there like one in the whole world?

Speaker 2: 13:20

There's a lot. Actually, there's probably just 10 different manufacturers in the LA area.

Speaker 1: 13:25

Oh my gosh, yeah, yeah.

Speaker 2: 13:26

There's quite lot. Actually, there's probably just 10 different manufacturers in the LA area. Oh my gosh. Yeah, yeah, there's quite a bit. We mix between three or four different companies. Almost all our bounce houses come from a company called Ninja Jump. They're just the longest lasting and dependable units that we've ever found.

Speaker 1: 13:40

How do you approach your philosophy on pricing? Is it just what the market can bear, what your competitors are doing, or do you have another strategy when it comes to pricing?

Speaker 2: 13:47

We really just build it backwards. We've talked to people that are bigger in the industry and where their labor costs are what their marketing costs are. So we kind of factored that into where we need to go. We know that it costs us about $75 an hour alone just in labor and fuel and maintenance on vehicles, and then you know 10% is marketing. So we just build backwards for our pricing and then, once we did that, we kind of just follow inflation each year with price increases.

Speaker 1: 14:17

You mentioned talking to others in the industry. How are you connecting with them?

Speaker 2: 14:22

This industry is interesting. Everyone just talks in Facebook groups. There's multiple and everyone's pretty open. But I did join a group that meets in Vegas every year, led by a gentleman who's gigantic in the Texas area, basically can deliver to the whole state.

Speaker 1: 14:39

Oh, my gosh.

Speaker 2: 14:40

And he kind of coaches people and joining. That is where I got a lot of my insight of where things should be. He's bought multiple companies so he looks at the profit and loss and be like, OK, this company is spending way too much on labor or their vehicles are too old and they've got way too much maintenance and can see where their problem points are by the company and turn it around.

Speaker 1: 14:59

essentially, what would he or you say is the ideal profit margin for this type of a business?

Speaker 2: 15:06

If you're not in the growth phase, I would say 25 to 30%. If you need to reinvest into the company to grow it, I would try to keep a margin of at least 10 to 15. The first two, two and a half years we had a profit margin, but we're just reinvesting all the profits into the business. So no salary for me, things like that. So what do you got to do?

Speaker 1: 15:26

Absolutely, and the reinvestment has helped you streamline your operations while doubling the inventory in a handful of years. So good for you. Approximately how many events per year are you providing rentals for?

Speaker 2: 15:39

We do about 600 to 800 events a year.

Speaker 1: 15:41

Oh my gosh, that's a lot.

Speaker 2: 15:42

Last year was 750. And it's mostly from end of April all the way till Halloween is the bulk of that.

Speaker 1: 15:49

Oh wow, six month season and 750 events that is awesome. Yeah, have you had any favorites?

Speaker 2: 15:57

Yeah, I have two. The first one was probably the coolest I've been to. We went to the Raiders training camp and it was really cool to go there. You had to go through multiple layers of security. Once you get behind the fences there were so many sports cars and super lifted trucks and escalades. It was awesome. And then you know, you got to see behind the scenes of the defensive coordinators meeting room with a defensive team and things like that and it was just kind of fun to see a peek behind that. You know football fan myself. And then one of my favorite events that we do is we're partnered with the Oakmont Grandparents Club and so we do three events with them a year. Upcoming here we do their Easter event that we bring some bounce houses to. My grandpa was my favorite person in the world, so just helping foster that relationship between grandkids and grandparents is just something that I love.

Speaker 1: 16:43

That's awesome. And what strategies have been the most helpful in growing your business?

Speaker 2: 16:50

A becoming efficient, like I said, with the day before delivery, day after pickup, just being able to bring in your costs, especially in this inflationary environment. We've been able to navigate it very well without having to terribly increase our prices that you see everywhere right now, and then just deliver a good product. Be communicated with your customers. There's so many times I get calls from people who's like I've rented a bounce house and I can't find them. They have no email from placing an order for home. It's just a lot of these other companies don't have the systems in place to make the customer feel secured in what they purchased.

Speaker 1: 17:23

Yeah, most of them.

Speaker 2: 17:24

Yeah.

Speaker 1: 17:26

I hear it daily. Yeah, it's something I really like about your website. It's just, it makes sense, it's easy to book and everything.

Speaker 2: 17:34

We're still the only one that has even pricing listed, so you don't even know if they're just making up a price or yeah. It's just not very straightforward.

Speaker 1: 17:41

What do you think the reservation is about publishing the prices?

Speaker 2: 17:45

Just knowing some people in the industry, they will price higher for corporate events versus individual parties just because technically there's more wear and tear if it's a larger event than a private party and so it makes sense. But I mean, if you just price right, you're fine. I don't think it's that big of a deal.

Speaker 1: 18:04

Yeah, it seems like it's worth the added efficiency of publishing prices and allowing for online bookings. How has the company's growth been since you took over?

Speaker 2: 18:14

We've grown typically about 30 to 35 percent each year. That's great. There's a giant jump from 2019 to 2021 numbers because I think there was so much pent up demand we almost did 70 percent growth that year compared to 2019. And then it kind of has slowed down to normal growth patterns at this point.

Speaker 1: 18:34

What are your goals for the future of the business?

Speaker 2: 18:37

So our goal going forward is so most of the time, we streamlined everything to being part of what we call the backyard market, mostly private party rentals. Right now, a lot of the inventory we're purchasing is more focused towards school carnivals, company picnics and things like that. So that's where our next, I think, growth is going to be at.

Speaker 1: 18:56

Is trying to target the bigger events.

Speaker 2: 18:58

Bigger events. Yeah, we've always been part of them, but we had a very limited inventory towards that. So when we first took over and for the first couple of years we really only had one obstacle course. Now we'll have seven going forward so we can do more at a time because a lot of those events are in the same certain periods of the year. So for end of school year events they're really big Last week of May to the first two weeks of June, and then fall stuff is usually throughout all of October. Last week or two of September.

Speaker 1: 19:27

So I don't know what your warehouse looks like or anything. Do you just have trailers that are outside and then you preload them so that your drivers can just drop them off? I mean, how do you keep that process efficient?

Speaker 2: 19:36

That's the dream, right? We have a warehouse and then we have offsite storage. So because different times of the year we have different types of units that are going out. So summertime it's all water slides and water units going out. So summertime it's all water slides and water units We'll have the main warehouse during about June through Labor Day, and then we'll dry them out and put them in storage for the fall and spring periods where we have mostly obstacle courses and the combo bounce houses inside. So we rotate inventory from our main warehouse. From that Our trucks and trailers get loaded in the morning of, and then we have a software that we use for our load sheets and routing and whatnot.

Speaker 1: 20:13

And some of these bounce houses, I assume are quite heavy.

Speaker 2: 20:16

They are, and that was one of the headaches when we first took over was since nothing was done in a trailer. It was all about compacting things into a back of a pickup. We just had really tiny dollies that were not really made for anything bigger than our smallest units really, and so the tires would break down on the jobs. They were just terrible. So now we use actual mechanical dollies and so when you tilt them back, none of that weights on your shoulders. It has casters on the backside and you just push a button and it goes. Now they have a ramp and then they're electric, so they just go up and handle it all.

Speaker 1: 20:49

It sounds a lot easier.

Speaker 2: 20:50

Sounds like a worthwhile investment I wish we did it earlier, to be completely honest.

Speaker 1: 21:01

Well, so, speaking about that, what else do?

Speaker 2: 21:02

you know now that you wish that you had known when you were younger Patience. I always expected to be able to start or buy a business very quickly. Out of college I bought a car before I had a driver's license, so I'm a very impatient person. So I expected to turn the corner really quick in setting this business up for success. I was like one year we'll get it done and realistically that wasn't the case. It's more of a regular wake up and grind to make any progress in the world, and so patience.

Speaker 1: 21:31

Are you happy with the revenue that you are making? Are you able to make a good, livable salary?

Speaker 2: 21:37

Yes, absolutely. I think this is the best decision I ever made. Being a dad's super important to me. Part of the beauty of this business when we first got into it too was or so I thought it was mostly weekend work and my wife's a teacher, so Monday through Friday I could work from home, hang out with the kiddos. Weekends I work, and she was off from being a teacher and the busy period was summertime she's off and then wintertime I'm with the kiddos more often. And at first it was really hard. We mostly lived off her salary first two years into the business. But as we've grown I now have a salary and, yeah, we can do well in Sonoma County and it's a great time.

Speaker 1: 22:14

That's awesome. What advice do you have for aspiring entrepreneurs that you think is just really helpful to know?

Speaker 2: 22:22

If you're thinking about going into business or entrepreneurship is just jump into it. Every time I've decided to make a big change in my life or jump for a new opportunity, it's always been a positive experience, so just go for it.

Speaker 1: 22:37

Yeah, I heard somebody say the other day that the most successful people that they know are the ones who have failed the most.

Speaker 2: 22:42

Oh yeah, there's lots of failures, lots of products that we don't do anymore because they didn't make sense and line up with the business model, and it's part of the experience.

Speaker 1: 22:50

And then what else would you say?

Speaker 2: 22:52

I would say bringing value on your product is important. In the end of the day, a pencil is a pencil, a pen is a pen. A bounce house is a bounce house. So one of the things I've seen most people do is try to compete on price, and they don't last very long and if you have the same castle bounce house as the other five guys, what's going to set you apart For us?

Speaker 2: 23:15

As far as I know still, we're the only ones that don't charge extra to deliver the day before and pick up the day after. It's just part of our business model and it brings value to us that we're more efficient and brings value to the customer that they don't have to worry about showing up late for whatever reason. They get extra time with it in their mind. I've had parents say it was so great that you brought it the day before because my two-year-old is just too scared to go in there with the other kiddos, so we got to have just family time in it and they got to play on it, whereas before, if it was just during the birthday party, that kiddo never got to even play because they were too scared with the punctuousness that happens.

Speaker 1: 23:47

I think that's a major perk, having the extra time. That is really big for parents. It is yeah Well thank you so much for coming on the show and sharing your experience and knowledge with us.

Speaker 2: 23:59

Absolutely. Thank you so much for having me.

Speaker 1: 24:05

If you're still with us. Thanks for being here. Today's key takeaways If you can't get a loan from the bank, look for nonprofits in your area that provide startup capital for small businesses. Joe was able to get a microloan from Working Solutions in the Bay Area, and there are companies like this across the country. You never know what kind of businesses are for sale. You never know what kind of businesses are for sale. There might just be one that would work well for you, so take a look.

Speaker 1: 24:34

Joe bought a business that was very, very small, but it also had tons of opportunity, because it didn't have any systems in place. Ordering and tracking was still done by paper and there were no company uniforms or vehicles, for example. These are all opportunities to increase revenue, profits and also the value of the business if you were to sell in the future. Keep detailed records and track your best sellers, whether that is a type, a category, a SKU and so forth. There are Facebook groups geared toward just about every type of business. If you're thinking of starting a business, consider joining one of these groups and see if you can get some free advice.

Speaker 1: 25:18

If you're doing a business like bounce house rentals, keep your business efficient by focusing on increasing jobs within a small radius from your base so that you can reduce opportunity costs experienced through transit. Lastly, bring value beyond your product. Sometimes businesses are offering the same product or service, and competing only on price isn't necessarily going to work. Think about what you can do to make yours the best option. I release episodes once a week, so come back and check it out. Have a great day.