Summer Business School
by Rob Spiegel
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.
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.
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