The Biggest "Hidden Cost" In Any Business
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#147;My husband and I both retired last year, and were looking to supplement our income by buying and selling things on eBay. We have been working at it about 30 hours a week for the past 10 months, but looking at our year-end results, we seem to have made only about $30,000 after expenses. Do you have any tips to help us get a better result out of this business?#148;
Boy, do I. But first I have to lay some bad news on you #150; if what you#146;ve just told me in your e-mail is true, you haven#146;t made $30,000. You have actually lost money.
The biggest #147;hidden cost#148; in any business #150; not just an eBay business #150; is the cost of your time. Time is extremely precious stuff, and is actually more valuable than money, because no one gives you any more of it once it#146;s spent.
Looking at your results, I see that you and your husband have spent 30 hours a week (that#146;s 60 hours for the both of you) for the past 10 months. Assuming an average of 4 weeks in any calendar month, that comes to a total of 2,400 hours (60 x 4 x 10). You have made only $30,000 during this 10-month period. This means each of you has been working for only $12.50 an hour ($30,000 divided by 2,400). A little bit better than minimum wage, and of course you have all of the joys and pleasures of running your own business rather than slaving for someone else, but based solely on numbers you#146;d both be better off signing on as shift managers for McDonalds.
Sure, the work at McDonalds isn#146;t very fulfilling and will not make full use of your superior education, intelligence and training, but the hours are a lot more predictable, you go home at the end of your shift (whereas when you run your own business it#146;s with you 100% of the time, all the time), and you get some basic benefits to boot.
Don#146;t get me wrong #150; I#146;m not saying you shouldn#146;t be running an eBay business out of your home. For a lot of retired folks and other #147;stay at home#148; types, eBay is an absolute God-send for making some extra bucks in your spare time (full disclosure #150; I am on the faculty of eBay University and travel the country teaching people how to do just that).
But running an eBay business is extremely #147;labor intensive#148;. That means you need to put in a lot of person-hours. Think of all the individual, separate activities you have to do to make an eBay business successful. Here are some examples, and I#146;m sure you can think of more:
going to flea markets, tag sales, garage sales, estate sales, liquidation sales, police auctions and Heaven-only-knows-why sales to find affordable stuff you can sell on eBay;
photographing each item;
researching the price of each item on eBay;
finding out enough about each item so you can write a halfway-decent description in your auction page;
keeping records of your inventory, so you know just what you#146;ve got in stock at all times;
creating your auction pages, one at a time;
packaging each item;
weighing each item and determining the postage and insurance costs;
sending customized e-mail messages to the successful bidders;
entering each successful auction on QuickBooksreg; or your favorite accounting program;
standing on line at the Post Office, or your neighborhood UPS Store, making sure the stuff gets shipped out the right way.
Man, I#146;m getting tired just writing all that!
If you#146;re going to be a success on eBay, you#146;ve got to learn to make the most of your time, which means doing things in such a way that you can put up the maximum number of auctions in the minimum amount of time. Marsha Collier, who writes the #147;eBay for Dummies#148; series of how-to books (
www.coolebaytools.com
), has a few tips, among many others:
make sure you#146;re selling stuff that gives you big profits #150; if you#146;re only making $1.00 profit on each item, you#146;re going to have to post hundreds of individual auctions before you see a real return on your investment of time;
if you#146;re posting a lot of auctions, use #147;auction management#148; software programs such as
www.auctionhelper.com
,
www.auctionworks.com
and
www.manageauctions.com
, to save time and #147;standardize#148; the process of posting auctions so you can #150; forgive me #150; grind them out like sausages;
use a standardized auction page #150; call your local community college#146;s Graphic Design department and have one of their seniors (preferably an #147;honors#148; student) design a standard template for you, and use it in each of your eBay auctions so you only have to #147;fill in the blanks#148; with each new auction (this will also give your auctions a distinctive #147;look and feel#148; which can set you apart from your competitors);
use eBay#146;s #147;relist#148; option when an item doesn#146;t sell so you can get it back in circulation fast with only a few changes (such as a better photo or a lower reserve price).
Remember that your time is the biggest #147;hidden cost#148; in any business. None of us is getting any younger, folks, and I don#146;t want to spend my Golden Years pouring plastic peanuts into cardboard boxes, no matter how much fun it may be the first couple of hundred times.
Cliff Ennico (
cennico@legalcareer.com
) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at
www.creators.com
. COPYRIGHT 2004 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com.
