Step Nineteen to a Fortune:
Wealth is simply a frame of mind
I had a bundle of picture frame molding stored in my attic from a frame shop I owned years ago.
This material was the ends left over from sticks of molding purchased to make custom picture frames for customers. Some of it could be used to make mini-frames and sold on ebay.
The next step (number 19) in the overview calls for an investment of up to $4.59 for a sale of $5.05 or more. A search on ebay shows that picture frames sell pretty well. I have the tools and materials to convert the old molding ends into small frames. I'll clear clutter and make money at the same time.
From $101.85 in reserve capital, I can invest up to $4.59 in expectation of growing that to $5.05 or greater. That should yield a gross profit of $0.56 or more. Picture framing is a skill that everyone doesn't have, but anyone can learn. The professional equipment that Debbi and I have makes it easier, but an inexpensive miter saw and a cheap framing clamp is all that is really necessary.
Starting capital $101.85
Planned investment risk $4.59
Investment receipt goal $5.05
Conversion of raw materials into a product of known demand is a viable method of raising capital
Black picture frames are always in demand.
The molding was mismatched in color and design. I bought a can of black paint to fix that. I built 16 picture frames.
Actually I built a few more than that but some had flaws that were good enough to use but not good enough to sell as "nice". I'll throw those in the box as a free bonus and explain they are damaged but maybe the buyer can find some use since they will be free.
Some of those that were scratched, I painted. They were all black, some shiny laquer finish, some paint, some matt finish. They looked pretty good when I was finished.
I sold the 16 frames for 29.38.
I had 10.96 in expenses. My gross profit before tax was $18.42
sale price $29.38
Actual investment and expense $10.96
Gross Profit or loss this deal
Ending gross capital (before deductions) $120.27
Why did I risk more investment than the schedule called for? A plan is a nice and neat schedule with symetrical increases in size. Real life is not symetrical. It almost never follows a straight line. A successful capitalist learns to be flexible and adjust to the demands of his investment.
What did I learn from this deal? I learned that a risk is a calculated risk, not a gamble. A real capitalist seldom gambles.
Raw materials, applied skill, and a little labor can increase the market value of a product.
I started with $101.85 in capital. I was looking to risk $4.17 in hopes of growing it to $4.59. After the sale before tax and charitable deductions I had $120.27.
35% tax on profit of $18.42 would be $6.45. That leaves $11.97
As a good person we pay 10% or $1.20 for a worthy cause
leaving $112.62 for investment and surplus to cover bad deals.