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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