Hi everyone. On this Tuesday Tips post we're going to jump right into a series on "How To Start A Reselling Business". If you're new to our blog, you might want to read the earlier posts first: Should I Start A Reselling Business? Part 1 and Part 2.
I'm planning to break up this series into several posts. And so far, I have the following:
• Initial Planning
• Identity / Branding
• Legal / Tax
• Technical / Website
• Acquisition / Storage
This seemed to make sense in my head for a roadmap to starting this type of business, but we might be changing it as we go along.
Now is a good time to remind you that I'm not a lawyer / accountant, I didn't take any business or econ classes and nothing we write here should be construed as "professional advice". Proceed at your own risk...
OK, so you've decided to try your hand at the reselling business. The first thing you need to do is some Initial Planning.
Truthfully, reselling online is a very different game than most "businesses". I remember one of the first online businesses we had (in 2002 or so), we tried to find relevant information on how to start one. The problem was that 90 percent of what we found online referred to a Brick and Mortar business. This is probably not as true now, but it sort of forced us to come up with our own approach.
Basically, what it comes down to is that "barriers to entry" in the reselling business are very minimal (or informal), but your information and support might also be minimal (or informal) as well. You can just start selling on Ebay tomorrow, but when it comes down to treating your business like a business, no one is going to lead you by the hand and tell you what to do.
Because it's so easy to start, most people just jump in without planning. However, if you think you might make this a part time or full time job, it's probably a good idea to at least take a stab at SOME sort of plan.
So what kind of initial planning for Reselling should you do?
Well, ANY kind of planning is better than none. The nice thing here is that we can start with some assumptions. Most other sites we visited said to come up with a "Mission Statement" or whatever first. In this case, we already know your mission statement:
Buy valuable or desirable things cheaply. Sell them online/offline for a profit. Repeat.
Yes, this is greatly simpified and there's a whole lot of devil in the details. But it's rather nice that we're all on the same page here. I'm also going to assume that for the most part:
• You'll buy your inventory at thrift stores, garage/estate sales, auctions, closeouts, etc.
• You're going to sell things on Ebay, Etsy or other online/offline venue.
OK, now we can start planning all those devilish details. As I said before, ANY planning is better than none. I don't know if you want to do a full-on "Business Plan". I don't know if that's necessary. But here are a few things you might want to start with. You can write them down, or just keep 'em in your head:
• Pick a date to start the business
This is good both for the legal aspect and to help you to focus. I would pick a date at least 3-12 months(!) in the future, so that you'll have time to set up the necessary legal stuff. I would also pick a date that's not too close to the end of the year - in other words, don't pick December 1 as your starting date. It just complicates things unnecessarily, because in most cases you'll be working off the calendar year. Try and stick with your date as much as possible. Think of it as the "day you officially started your business", even if you did planning and other stuff up until the day.
• Think about where you're going to acquire your inventory
Yes, we've already assumed that you're buying items second-hand. However, you should probably think about exactly where your inventory is going to come from. If you don't know, then I would target thrift stores and garage sales first, since I've yet to hear of any location that has NEITHER of those. You can always expand later - it's what a majority of resellers do.
• Think about what you're going to sell
Truthfully, you should probably already have an idea about this. Clothes, books, collectibles, electronics, fine art - you should have at least one area of focus to start with. This is also going to help feed into the next section about "Brand and Identity". You should at least be knowledegable about ONE type of thing you're going to sell. I guess you'd call this your "reselling niche". Go online and find out as much else as you can about products in your niche. Bookmark sites that deal with your niche. Make friends with other online sellers in that same niche.
• Think about your target market
On nearly every business start-up plan we looked at, this was an important part of planning. I think this depends partly on your "niche" as well. Basically, think about things like - are your customers male, female, single, young, old, wealthy, bargain-hunters etc. Different reseller sites deal with different clientele, so it can make a big difference where you decide to sell your items.
• Think about how your customers will find you
The nice thing about selling online is that there is a good chance that part of the infrastructure for finding customers is already "built-in". If you sell on Ebay, people will find your item by search. If you sell on Etsy, they can find your item through search or through the community. If you sell on your own website, people can find your item through search engines or word of mouth. Social networking, forums, groups, email lists can all help as well. Keep an open mind about how to get customers to notice you.
• Think about where you're going to sell
Again, this is tied in with your reseller niche and your target market. Ebay would be the default online venue for most people starting out, but you might want to skip that for Etsy or your own website, or you might be looking to do an antique booth/swap meet. Many people diversify their selling venues, which I think is a good eventual route. Write down some ideas, but also plan to be flexible if things change.
• Think about your competition
I'm assuming that a majority of you are going to be reselling vintage, antique, unique or older items. One of the nicer things about selling these type of items is that the competition isn't necessarily the "enemy". With traditional businesses, you often end up with a cutthroat mindset - step on anyone to get to the top. Geez, just look at commercials today. With vintage and antiques, there's a good chance that NO ONE has what you have. And even if you do, the condition, color, quality may be different. There is a whole lot more chance of your item standing out. The problem is - there are a TON more online reseller stores out there than traditional stores. You still have to think about how you can differentiate your store from others out there.
• Plan for initial costs
As we said before, the nice thing about reselling is that there's not much startup capital involved. You don't have to rent or retrofit an entire building. However, if you want to "go legal" there are going to be some startup costs. And there are also things to consider like seller fees, office and shipping supplies, camera costs, software, business cards, research books and subscriptions, and rent (if you're doing a physical booth). How much total? I can't answer that. =) But I would seriously reconsider if money is so tight that can't afford to spend a couple hundred dollars on your initial startup.
• Come up with a Basic Start-up Timeline
In the start-up business parlance, I guess this would be a "Milestones" chart. To be honest, this bores the living heck out of me (too many bad memories from office jobs). But I think it might be very helpful for others, at least for the start-up part. I made one when we started anyhow - here, have a look at this fancy-shmancy Excel bar chart.
Basically, just make a list of the things you want to get done before the business launches, along with the range of dates you think you might get them done. Work backwards from your chosen "Start of Business" date. It can be detailed or general. You can use a calendar instead of a list or bar chart. You're supposed to actually have Milestones for several years after startup, but I didn't do that. Oh, and PLEASE don't base your own start-up on this particular chart - I guarantee it's not gonna make sense =)
I want to end the Initial Planning section with the following thought: I really believe that the best time to start a business is when you don't absolutely NEED to start a business..
If you try to start when you absolutely need the money, you'll likely fail because you'll make decisions and plans that aren't favorable for a long term outlook. You'll take shortcuts. And you'll regret them later.
I think not having pressure to make money enables you to make better plans for any business. I know that some people thrive on that type of pressure, but I'm guessing this is not most of you. Otherwise, you probably wouldn't have read this far. =)
OK, next Tuesday we'll start in on section 2 of How To Start A Reselling Business which will be about "Identity and Branding". But there's a chance I might have to delay until Thursday or the week after, because of other work. Writing this series has been sort of fun for me so far, and I hope you're getting something out of it too!
Previous posts in our Tuesday Tips ReSeller Series:
[1/25/2011] Should I Start A Reselling Business? Part 2
[1/18/2011] Should I Start A Reselling Business? Part 1