It's been an entire month since we started the 100Kproject. I think part of any successful endeavor is taking time to critically reflect on what you are doing, assessing if it’s working, and course-correct if necessary. This is especially vital in a situation like this, where exploring and evaluating different strategies is part of the project. It’s been said elsewhere before, but it’s always important to take time to work on your business as opposed to in your business. Sorry in advance for the long post, but this is the “good stuff”. ​

Evaluation of Strategy:
Buying/Selling:
At the most basic level, buying/selling things is working. For very minimal investment/risk (averaging about $25-30/week), I’m able to acquire tangible goods that I can inspect before purchase, and sell face-to-face or on ebay for very nice profit margins (typically several hundred percent, since I’m usually buying very cheap items). I will share my very basic spreadsheet that tracks my purchases/sales on the Progress Breakdown page, check it out and see if there’s any other information I should be collecting or sharing!

Some critical issues with this strategy thus far have been the relatively large time commitment in buying items, and the large amount of effort and time in finding buyers and meeting/executing the sale on an individual basis and in-person. In addition, most of the great deals I’ve found have been on lower-dollar items (or physically large/heavy items), meaning that my ability to make large amounts of money or tap into markets requiring shipping is very limited.

The real effect of the issues above is in efficiency and scalability. While I enjoy it, it’s unlikely that I can sustain an average of 1-2 auctions/week (as each one takes 3-6 hours), certainly not more. In addition, there’s a limit to the number of high-potential items I can find at each one. The number of customers I can find/meet is also limiting, and each sale takes a large amount of time considering I typically only make $10-20/sale.

Part of the evaluation is “can I fix these issues?” Well, I think there are a few key strategies I can embrace to help the efficiency of the buy/sell strategy:

1. Focus on bigger-ticket items- Now that we have a larger pile of cash to invest, maybe we should start looking at larger-ticket items. Buying a few items in the $20-50 range that could be sold for $100-200 would be more time-efficient than buying many $1-5 items and selling them for $15/20. The margin isn’t as big of a percentage, but the net $/hour might be much better. The question will be the consistent availability of those types of items (and can I sell them quickly to avoid having hundreds of dollars in inventory), so that will be my focus in the next couple of weeks.
2. Optimizing my time- While you can find good items at almost any time, I’ve noticed that 75% or more of the great-deal items I buy are sold in the last 15% of the sale. Toward the end of the auction, the crowd starts to dwindle and many of the flashy/advertised items have been sold (and people that have been purchasing items all day are thinking about all of the money they’ve already spent and all of the stuff they have to carry!). I think by focusing on this time (and maybe even skipping the first few hours) I could limit my time commitment and focus on the most profitable period of the auction.
3. Selling- This is where I need the most work, as listing these items on 4-5 places (several apps, craigslist, Facebook, etc), filtering out the scams and actually finding someone to commit and follow through has been difficult (and it’s not the “fun” part to me). My average “time-to-sale” for a items is about a week, which means I have things sitting around taking up space and cash until they sell. I’m not sure how to fix this issue, though I’m looking into options for clearing leftover inventory quickly (maybe at lower margins… fire-sale type strategy) at a flea-market or other venues. I also think that with larger-ticket items (see above), I could potentially price items more aggressively to move them quicker (maybe buying an item for $50, knowing it’s worth $200, but listing it for $150… settling for less margin but moving the item quickly).

I think these few strategies could help add a little fuel to the buy/sell fire, and hopefully accelerate our profit. Still, I think this buy/sell strategy requires so much individual time per transaction, that I’m not sure it’s very scalable. This leads me to three main conclusions:

1. This is still a good strategy for multiplying our $250 into more capital with minimal risk/time.
2. Optimizing on the buying side (larger items, focusing on the end of auctions) could help accelerate the process.
3.  This strategy is not likely to take us to 100K in an acceptable timeframe, other strategies are needed. 

Future Strategies:
In past posts I’ve discussed the relative ease of bringing ideas to life in our modern world. I still think this is the case, and I love the idea of making a product and building a brand, potentially ustilizing existing sales tools like Amazon. My issue is, of course, figuring out what product to make and how to bring value to a niche. I have a couple small ideas (I’ll share those in the future… I’m not trying to tease but want to keep them internal until we figure out what we want to pursue), and am in the process of exploring the feasibility of those products. Right now, that feasibility is based on what I perceive the market to be, the competition, and the price of production of these items. I’m looking into items I can source from other manufacturers, or items I can make myself. I’m currently researching competitors, discussing designs/costs with suppliers, and developing and evaluating pricing structures.

What I’m seeing right up front, is that the barrier to entry for something small like this is probably something like $5-10K, depending on what I’m thinking of doing. This might include special equipment if I’m manufacturing myself, or a MOQ (Minimum Order Quantity) of inventory from a supplier. It would include building a new website/ecommerce site for my brand/product. It would include registering as an LLC. All of these things I will document and share as I (hopefully) go through them. In terms of “business capital”, this cost is really very minimal… but in terms of the 100Kproject and the rules I’m playing by, we’re going to need to make some more money.

These ideas are motivating me more than ever to get this cash flow rolling so that I can invest in other, more scalable strategies. I’m starting to think that I might need to find something in-between the auction buy/sell and building a micro-business to accelerate the process. More on this later as well, I’m trying to find ways to add value to items I buy for minimal investment to get the maximum price (think “fixing things up” or “customizing”).

Overall, I think it’s been a successful month. I’ve had fun, learned a TON, and holy cow we even made a (small) profit. Plus I’ve been able to share a lot of the process with Pam and the boys (the twins are auction celebrities now), which I’m really enjoying. I can’t wait to see where we can find success next, the nature of this project is that it’s going to keep getting bigger and bigger, and I think it’s going to get very exciting very quickly.
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One month down, many more to go. I’m starting to think it’s going to be a wild ride.  

Thursday, 6:18 am. I know it was then because that’s when I hopped in the shower before work. That was the first time since Sunday that I noticed my back not hurting from carrying all of the heavy auction items, landing me squarely in the wimpy/whiny category! I guess entrepreneurs should be a little tougher, I’ll need to work on that…

The reward, however, was worth it. Customers have been difficult to get committed this week, I’ve had multiple initial offers on small things when the would-be buyers stopped communications when it was time to setup a meeting. I’ve also had a couple low offers for some of the items, so I’ll hold off on a better price. The huge victory, though, was of course the boat motor.

After purchasing the motor (and lugging it home), I looked for similar ones online to try and come up with a value/price. It seemed that purely parts motors (motors that won’t run) were priced around $100, and running motors were closer to $400-500. Since I didn’t know much about this motor (besides what I could see), and didn’t really have a way to hook it up and get it running, I decided to price it conservatively at $200 on Sunday night to see If anyone would be interested at that price…

I might have overdone the "conservatively" part, Monday brought a string of no less than 8 people calling/texting/emailing throughout the day, trying to be the first to get the motor. I ended up selling it Monday night for $200 (the guy bought another small thing while he was here!), for a $195 profit and in just one day.  The customer ended up getting it running within 48 hours, so he got a great deal on it. I couldn’t help feeling like I missed an opportunity to make even more if I had listed it higher, but not knowing the quality of the motor and wanting to move it quick, I think I did ok. Plus, it’s our biggest sale/profit to-date, so that’s awesome!

At this point, we’ve officially passed the “double-up” point, and are well above $500 in less than 1 month (checkout our Progress Breakdown Page for some details!). I’ll need to keep doing bigger ticket items if I want to keep a good pace, we add to the stack much faster $50-100 at a time than $10-20, and it takes a lot less of my time to find a couple customers as opposed to 10-20. I think maybe I’ll start focusing on items I can sell for $50+ dollars unless it’s a really great deal.

More updates coming this week, including a First Month Summary and a look into some future ideas I’ve been exploring. Here's a hint: I'm getting quotes from manufacturers!

Stay tuned!