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Summer Business School |
My teenage son is going to summer school. He’ll being taking a business class. The deposit for the tuition is reasonable, roughly $250. However, if he does poorly, the cost could rise considerably. If he does well, all funds will be returned with interest.
He also has a summer job. The deal is the same. If he does poorly, the job will actually cost me. If he does well, he will bring home considerably more than he could earn slinging hamburgers.
The summer business class and the summer job are one in the same. We’re going to spend the summer seeing how well he can buy and trade on eBay.
My son has a subject specialty that is necessary for success in business: knowledge of video games. Never mind that every teenager in America has the same special knowledge. We’re hoping that every teenager doesn’t have the same inkling to try this knowledge out on eBay. Shhh.
Early indications suggest that his summer efforts will be fruitful both in education and in wages. He showed me numerous examples of bulk sales in games. For two or three hundred dollars, you can purchase 20 to 25 games. That’s about $10 to $15 apiece.
He scrolled down the list of games, saying, “I’ve seen this one go for $20 individually. This other one goes for $18.” I asked him to total up the going price for every game on the list to get some idea of total return on the supply. “Well, I’m going to keep some of the games,” he said. Oh oh. Well, maybe that’s ok. I would have ended up buying those games anyway. So I’ll end up ahead.
He placed a $180 bid on a set of 20 games. The auction was three hours from closing.
Next he showed me Internet-based sources for the necessary packing envelopes. He found a dealer selling quantities of 50 at 25 cents a pop. We checked everywhere for a better deal, our local Staples, Quill’s online catalog. My son’s online dealer had the lowest price.
I plopped down my credit card for the $12.50 purchase. We checked back on the 20 games. A new bid appeared for $200. My son upped his to $210. Two hours to go on the auction.
My son already knew shipping details from selling old games of his own. He had established a stellar reputation on eBay for both buying and selling individual games. My goodness, this is easy.
All the pieces were in place for a successful small business: subject expertise (my son knows which games sell), access to low-cost supplies (the bulk games), access to consumers (eBay), access to shipping and materials (the envelopes and the U.S. Postal Service’s reasonable rates), seed capital (my credit card), and low overhead (my home office, my computer, my Internet connection). This sure beats the paper routes and busboy jobs of my teen years.
We checked the auction. One hour left and a new bidder had appeared. My son placed a new $250 bid. Now we’re at $12.50 a game. The average selling price is about $18 or $20. Postage is $1.20 and the envelope is $.25. The profit per game – not counting the free overhead – is about $5.00. And he’s thinking about keeping some of the games.
The other necessary elements for a successful small business will be bookkeeping and discipline. He’ll have to make arrangements to pay back his seed capital and he’ll have to retain enough of the cash flow to ensure he can keep buying bulk games. Ideally, he’ll build up that cash reserve so he can take advantage of potentially lower supply opportunities – what’s the cost per game if you buy 40 games? 50 games?
Down to the last few minutes of the auction. The bidding was getting more active. It closed before my son could get in a last bid. Final price: $300. Ouch. “Don’t worry, Dad. There are hundreds of these bulk games for sale. We’ll bid on another one.”
This is going to be a fun summer.
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Rob Spiegel is the author of Net Strategy (Dearborn) and The Shoestring Entrepreneur’s Guide to Internet Start-ups (St. Martin's Press). You can reach Rob at robspiegel@comcast.net.
Article source http://w4rum.com/2289.t
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| [By Kimber Fulcher] [05/May/07] |
