Garry Conn wrote a comment once, “Jason, we visit your site for tips on what to do when starting a business, but how about you start talking about what NOT to do!”
Well Garry, thanks for the inspiration. This is going to start a new series on “How not to start a new business.” It will entail things to avoid, or things to pay close attention to. In the end, I hope to let other young entrepreneurs and professionals really get a gist for what isn’t required when starting a business.
The first entry into this series is one I am particularly fond of. A nice lesson learned by a 18 year old young entrepreneur (namely, me – 8 years ago…).
When I was younger, I got involved in an Ebay enterprise. You know, where you buy from a wholeseller who drop ships directly to the customer. Make no mistake though, it was something I dreamed up, I didn’t buy a kit or a get rich quick package for it. I got on the phone and called resalers!
For being 18, it wasn’t a bad business. I sold all kinds of aftermarket body kits and mirrors, and so on. One month in fact, I had sales of just over $18,000.
The reason I closed up shop was simple. The merchant service people, the ones who handle credit card transactions, dropped the ball on three transactions I took over the phone. I bought the bumpers on credit from the wholesaler, and had them shipped to the customers.
About 5 days later, I got a bank statement in the mail. The merchant company reversed payment on $3,200. So my account was sitting in a hole of around $2,800.
To make a long story short, I stopped selling on Ebay. I went back to my day job and worked as much overtime as possible to recoup the money. So much for a first business. :0)
Those of you reading can point out a number of things I did wrong. I wasn’t operating with an adequate amount of cash in the bank. I didn’t keep a close eye on the credit card merchant. And so on.
My point is this: details are everything.
Small details can come back and haunt you in a big way. Take advantage of the small things and always expect something to go wrong. Keep a cash reserve relative to your merchandise (and their price points).
The only thing worse than no customers is pissed off customers.
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{ 6 comments }
Jason,
I work for a major bank currently, and I used to work in the Credit Card dispute section.
I saw all sorts of eBay related things, whether it was people selling the infamous XBox Box or resellers making money as a middle man. I’ve seen just about everything! Working there was a valuable experience and helped me learn more about what to do and what not to do when it comes to dealing with credit.
Great tip! Hopefully people take it to heart
Great post! I write and manage the YoungEntrepreneur.com blog and made your post one of our Young Entrepreneur links of the day!
Keep up the great work!
Evan.
Thanks Evan and Kyle! Credit cards are definitely a little tricky. Anymore, I just recommend Paypal. It seems to integrate well and it is pretty adequate for a business’s needs.
You have to be careful when trying to make money at home that it is legit.
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