Are You Fooling Yourself?

Socks and Baseball Cards

This is a follow up to the Sock Story.  Today I’m taking on the guys and their foolish businesses that their wife or girlfriend secretly complains about to her girlfriends when you’re not around.

There are many variations – the hobby business that the guy thinks is a real business. The eBay store, the comic book store, the baseball card shop.

What do these have in common?  Often it  is a hobby or interest that the guy tries to turn into a business.  If you listen to them talk you’d think they were making a killing with their business.  But like every great fish story, there’s more hiding under the surface.

Walk-in Traffic isn’t the answer

If you have a store front baseball card shop (like the sock shop), you’re not likely to get enough walk in business to turn a profit.  So you need to be doing deals at card shows and online.  Otherwise you’re likely to go down the drain with your business venture.

Why?

You may have some really valuable baseball cards.  And the profit potential on those cards is really good.  But if you start to project those profits onto the rest of your inventory, you’ll be in for a rude awakening.

Good products sell.  Bad products don’t.  A rare rookie card may bring big bucks.  But you can’t get much for the off player.  But do you unload those for cents on the dollar just to clear them out of your shop?  Or do you hold onto them HOPING for a buyer?

Inventory is the Silent Killer

You might make money early on by selling the best of your inventory.  And at that point everything seems great.  But what eventually happens is sales slow and your remaining product just doesn’t move as fast…or at all.

And that’s when you’re done.  You’re cooked.  It is like the car dealership with a bunch of broken down cars that no one wants.

So how DO you make these types of businesses work?

Well first you have to operate in a very well defined and profitable niche where you’re the expert or the go to person in the niche.  If you’re a baseball card shop, online you are maybe the expert in certain years, players, or types of memorabilia.  Or you have some other “X factor” that brings people to your store instead of someone else’s.

Whatever you do you need to differentiate yourself and then make sure your marketing and inventory is all tied into that niche.

Then watch your inventory like a hawk.  Paper profits are just paper.  Until you convert a buy into a sale.  Into cold, hard, cash.  You just have another fish story.  Not a profitable business.