A common trap many sellers fall into when they first begin to experience some success is that they fail to manage their eBay cash flow. Too often, their initial success results in a spending spree that consumes all their profits.
Suddenly your sell-through rate is up, profits on everything you sell are excellent, and the money is pouring in. It can be tempting to take all your profits out of the business for the vacation you’ve been dreaming of; a new wardrobe; a down-payment on a new vehicle or other major purchase.
While those things sound nice, you can not let yourself give in to the temptations, if you want your business to continue to grow.
Every business experiences peaks and valleys in sales throughout the course of a year. Most sellers understand that. But what many beginning sellers don’t realize is that, throughout the year, their business will also experience peaks and valleys in the opportunity to buy inventory also.
They fail to understand that profits on paper is not the same as cash on hand.
When you are dealing with antiques, collectibles, and other used items, you never know when the opportunity to purchase high quality inventory or a large quantity of desirable inventory will present itself. Usually, when it does, you will need to make quick decisions and be able to pay for the merchandise immediately.
If you make a habit of spending all your eBay profits, you may find yourself without the needed funds when these opportunities present themselves.
Whether you are just getting started on eBay, or have been selling for years, it’s important that you make a habit of faithfully setting aside a set percentage of all your net profits specifically for new inventory acquisition. Only by doing this can you expect your business to experience significant growth over time.
What percentage of your profits you set aside each month is ultimately up to you. If you are just beginning I recommend you make an effort to reinvest all your profits back into your business for the first three or four months. After that time, evaluate your own individual needs and adjust the percentage. Whatever you percentage you decide upon, the important thing is to keep adding to your ‘inventory pool’ each month.
There’s nothing more disheartening then not being able to take advantage of a great deal or a great find because you don’t have the money available to pay for it.
Photograph by Refracted Moments.
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