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Baldrick · 09-28-2004, 03:16 AM

I echo the other sentiments, and this particular partner would make me a little nervous... He speaks in significant generalities, which is bad when presenting a "Strategic Business Plan". He should KNOW how much a business license costs, or at the very least how many personal bank accounts he has (danger Will Robinson, danger).

Also, I would think that estimating and building a business plan with a 39% margin expectation is setting yourself up for dissapointment. Even retail, which has significantly operating expenses, don't make anywhere near 39% margin for the most part. And people shop at eBay (and online in general) for two reasons - to find the ultra cheap price, or to find something they can't find at their local retail. The first reason means operating at around the 15% to 20% margin max (depending on the product you're selling, of course). The second reason is far more work trying to find that specific product, but once you do you can then make your higher margin. The perfect option is a mix of the two. Find a fast moving, hard to find item that you can make a good 30% to 40% margin on - but good luck with that! Everyone on eBay is looking for those items.

Are eBay business viable? Absolutely! A group of friends of mine just broke the $5 million a year in sales this year, selling almost exclusively on eBay. But it took them years to get to that level. Years spent building relationships with vendors, and finding the right mix of product at the right price. It sounds like in this business plan, your friend is counting on turning a profit pretty much immediately. What happens when after the first year he's only made about $200 net profit? Does he get discouraged and bail, leaving you with the mess to clean up?

Also, you mention that "I do feel that people can change though, and he's really getting his act together at U of A". Are you sure you want to be the one that finds out whether he's changed or not, especially in a business venture?

Just my two cents. It can be done, and done very well, but it's alot of work that it sounds like your friend may not realize.

09-28-2004, 03:16 AM	#12 (permalink)
Baldrick We are everywhere... Location: Barrie, Ontario	I echo the other sentiments, and this particular partner would make me a little nervous... He speaks in significant generalities, which is bad when presenting a "Strategic Business Plan". He should KNOW how much a business license costs, or at the very least how many personal bank accounts he has (danger Will Robinson, danger). Also, I would think that estimating and building a business plan with a 39% margin expectation is setting yourself up for dissapointment. Even retail, which has significantly operating expenses, don't make anywhere near 39% margin for the most part. And people shop at eBay (and online in general) for two reasons - to find the ultra cheap price, or to find something they can't find at their local retail. The first reason means operating at around the 15% to 20% margin max (depending on the product you're selling, of course). The second reason is far more work trying to find that specific product, but once you do you can then make your higher margin. The perfect option is a mix of the two. Find a fast moving, hard to find item that you can make a good 30% to 40% margin on - but good luck with that! Everyone on eBay is looking for those items. Are eBay business viable? Absolutely! A group of friends of mine just broke the $5 million a year in sales this year, selling almost exclusively on eBay. But it took them years to get to that level. Years spent building relationships with vendors, and finding the right mix of product at the right price. It sounds like in this business plan, your friend is counting on turning a profit pretty much immediately. What happens when after the first year he's only made about $200 net profit? Does he get discouraged and bail, leaving you with the mess to clean up? Also, you mention that "I do feel that people can change though, and he's really getting his act together at U of A". Are you sure you want to be the one that finds out whether he's changed or not, especially in a business venture? Just my two cents. It can be done, and done very well, but it's alot of work that it sounds like your friend may not realize. __________________ You can be young only once, but you can be immature for the rest of your life...