Step Twenty Eight to a Fortune:
Big Profits in Record Players
I discovered a market for old record players.
I was looking to see if there was a market for old phonograph records. There was. I had a lot of old records, but I had no way of knowing the condition any of them were in. As I looked into the possibility of buying a record player, I discovered a market for phonographs I did not know about.
About this time I stumbled upon a local school auction for 15 record players. I bid $45 and won. It turns out there were only 13 record players.
Step 28 schedules an investment of up to $10.90 looking for a $11.90 or more. According to the overview of steps, It was suggested I reduce old junk for this step. I have 13 record players in a closet. That is not old junk, but I need to get rid of them. They take up far too much space.
From $204.93 in reserves , I was supposed to invest up to $10.90 in hope of expanding that to $11.90 or more. I won an auction for $45 and got 15 potential inventory items for that money as well as making it possible to check out my old record collection for possibility of sale.
This works out to $3.50 for each phonograph. I could not have done this large of a deal had I not had a nice reserve. Sometimes this will happen.
As in the previous step, I put two transactions together as one to get it to an appropriate size, here I make one large buy and break it down into many deals as I sell them. There are no fast rules to this process; we do what works.
Starting capital $204.93
Planned investment risk $10.90
receipt goal $11.90
If I find a great opportunity larger than I am conditioned to handle, I can break it into smaller deals to match my current experience level.
I bid $45 for these "record players."
I won the auction but one of the items turned out to be an old projector. Unable to find a market for it, I discarded it. Another was a tape player that did not work well. I discarded that. Now I had 13 record players in various states of repair.
So each of these items cost me $3.50.
The first unit sold for $79.12 including postage
$79.12 - $3.50 cost = $75.62. There was additional expense of $25.98. I had postage, ebay final value fees, insertion fees, and pay pal fees, which leaves $49.64 gross net before deductions for tax and contributions.
Note: When a capitalist steps outside his experience level, expenses can happen that he is unprepared for. A large reserve capital fund provides easy funding for surprise expenses that might drive a less prepared capitalist to failure.
gross net profit before deductions was $49.64
Ending gross capital (before deductions) $254.57
What did I learn from this step? I learned that if I build a large surplus, I can take advantage of really good opportunities when they come up. By keeping my investments at levels I can handle, I not only preservemy capital through money management, but provide a deep well to draw from when that special deal comes up.
This is the difference between calculated risk and blind risk.
I started with $204.93 in capital. I was looking to risk $10.90 in hopes of growing it to $11.90. My total risk prorated over 15 future deals comes to $3.00 purchase plus additional expenses that came with a larger sale. After the sale before tax and charitable deductions I had $254.57
35% tax on $49.64 is 17.37 that renders $32.27
10% for contribution from $32.27 reduces that by $3.20. Now we have
$29.07 increase to make $234.00 for investment and surplus to cover bad deals.