Library of ideas
Library of Ideas

crucible of experience
Crucible of Experience

stairway to a fortune
Stairway to a Fortune

Treasury of Tales
Treasury of Tales

Vault of Old Videos
Vault of Old Videos

Portfolio of Motivation
Portfolio of Motivation

Table of Negotiation
Table of Negotiation


Additional articles:

Get Rich After Retirement

Never Break the Copper Rule!

Barter Page

Step Twenty Two to a Fortune:

image of a locksmith pin kit

 

Experiment Title

Only The Buyer Knows: Lock Pin Set

Vision

My Dad had a box of strange metal pins in his closet.  No one in the family knew what they were, so I ended up with them. 

It turns out these were lock smith pins.  A search on ebay reveals that smaller kits were selling for up to fifty dollars. The exact kit that I had was not available.

I assumed it could be sold on ebay if I listed it with as good a description as I could create, and good pictures.

 

Objective

Our goal at this point of the learning and experience curve (step 22) calls for an investment of up to $6.11 for a return of $6.72 or more.  I had inadequate knowledge to do a proper research so I just hoped a locksmith would know what it was and buy it at a bargain.

My objective for every deal I do is for everyone involved to win/win!

From $134.44 in reserve capital, I plan to invest up to $6.11 in expectation of growing that to $6.72 or greater.  That should yield a gross profit of $0.64 or more. 

Step 22

Starting capital                                    $134.44

Planned investment     risk                      $6.11

Investment receipt goal                           $6.72

 

Hypothesis

If the seller doesn't know the value of the item he wants to sell, several buyers may bid against each other to get the price up to a profitable level for the seller.

 

Procedure

 

I listed the item with as good a description as I could write.  I showed several pictures with good detail.  Those exact pictures have been lost.  The picture in the above illustration is similiar but not the exact pin kit.

This case had been stored in a detached garage/storage space.  The outside case was very dirty.  I washed it with soap and water, dried it, then sprayed it with Armour All.  It was amazing; it looked new.

I got two questions from prospective buyers.  One wanted to get an exclusive arrangement for a "Buy Now" immediate sale at $50 before any bids had been made.  He also wanted me to send it to Canada with him paying the additional price.  I handled that one pretty well in that I waited a few hours and there was a bid making it impossible to comply with a request that I did not wish to concede. 

The second bid made the first bid obsolete!

Question # two asked for shipment via UPS with buyer paying the difference in price.  I conceded that.  This prospective buyer also wanted to know if it was okay to wait four days to pay.  That was okay, in that he could have done that without my permission but it was nice to warn in advance.

The final bid was 115.63 plus 12.00 for shipping and $1.30 for insurance.  I recieved $128.93 from buyer.

Expenses were:

0.36 Gallery Fee
0.60 Insertion fee
1.00 bold listing
3.80 Final Value Fee
_____________________
5.76 ebay fees
4.04 pay pal fee
8.51 shipping tape from wal mart
9.03 shipping labels from Staples
15.70 post office and insurance
_____________________________
43.04                                                   128.93 - 43.04= $85.89                                                                        

 

Results

I sold the kit for 128.93 (including shipping)

I had $43.04 in expenses.  My gross profit before tax was $85.89

 

 

Ending gross capital  (before deductions)            $220.33

 

Questions

Why did I spend so much time with the small deals when the larger ones seem to make so much more money?  A When I first started this series ,like most penny capitalists, I didn't have much money to invest.  Even if I'd had larger amounts of money, I would surely have over-invested and lost it as I had in times past.  It has taken some time, but I'm beginning to develope discipline.  I'm also developing confidence.  With a growing reserve so much larger than the amounts of capital I am risking is building certainty of my success. 

Though the size of my deals are still small, I am certain I will succeed.  I am certain I will not only reach my goal of two million dollars, but I will be able to do this over and over again.

A friend and business associate from the art and frame business, Ben Woltman, once told me he and I had the exact same struggles.  I was doing business in the tens of thousands; he was doing business in the millions.  He said the only difference in the struggles was the size of the deals.  Ben was importing whole shiploads of picture frame molding from china.  I was buying sticks of molding (just enough for a frame or two) from Ben.

So if the penny capitalist has enough patience to work through these small deals, he will have no trouble working the larger ones latter.  He will also have plenty of reserve to cover his inevitable losses as they come up.

What did I learn from this deal? I learned that the deals seem easier the larger they get rather than harder--so long as I am not investing too far outside my experience level.

 

Conclusion or Final Result

Raw materials, applied skill, and a little labor can increase the market value of a product.   

I started with $134.44 in capital. I was looking to risk $6.11 in hopes of growing it to $6.72. After the sale before tax and charitable deductions I had  $220.33

35% tax on profit of $85.89 would be $30.07  That leaves $55.82

Giving back to world we share, we pay 10% or $55.82 for a worthy cause.

Now we have $190.26 for investment and surplus to cover bad deals.

 

 

Next Step 23