Writing a business plan for your eBay store.
Being Smart about your Goals.
My history with business plans.
Working in a legal career for many years has afforded me many opportunities to see what it takes to have a successful business.
All of the businesses I helped incorporate are still functioning today and have seen growth over time.
In this article, we will explore ways to help you achieve your online selling goals on eBay, although these practical ideas can be applied to any online selling venture.
Tips for starting out on eBay:
Create an eBay ID that suits your overall business model.
Create a logo and use it for your profile picture.
Find out if you need to register in your state for a sales tax license and apply for a tax ID number through the IRS.
Create a bank account for your business name.
Create a website or blog to drive traffic to your eBay store.
Know your products.
Have a business plan.
Considerations for starting an online business.
There is a used consignment shop locally in town that caters to a high-end customer base.
Situated on waterfront property between a train station, famed bed and breakfast, and quick access to the highway, this is probably the most successful children's consignment store in this part of the state.
Of course, I have no personal experience with their bookkeeping. Their annual income isn't published. I do know for a fact, they are without a doubt, the most expensive used clothing store in my area. They seem to pack in a crowd every day of the week. People line the streets in their oversized SUVs waiting for an opportunity to pick through the day's selections before being bought up by someone else first.
What makes this store so uniquely successful compared to the rest?
First of all, location is everything. With location though comes cost.
One of my favorite children's stores is on top of a hill in an area with heavy traffic. They are quite less busy. In fact, they put all of their consignments out front to draw in traffic. Strollers that cost $500 new are marked down to $50 in excellent used condition. Little Tykes sand boxes that go for a swell amount on eBay sell for as little as $20 in this open-air storefront setting. Why?
While the more successful store is located in a highly visited area, the second store is off of a main road with heavy traffic where it's a burden to maneuver in and out. It's not a place you would visit when in a hurry to get somewhere afterward.
I think the first store is more appealing because it's off of the beaten path, but widely visible by tourists and people traveling to this area to stay in the beautiful waterfront Inn next to it.
How is this information relevant to starting an online business?
When starting an online business, location is still relevant. Your presence has to become known online. Once upon a time, people setting up an online account on eBay had to do very little to gain a customer base. The selling venue has approximately 1.5 to 2 million visitors every day.
Considering this information, first you need to ask yourself, do you want to be that business that watches a lot of traffic go by on the main road or do you want to be that business that has a large amount of traffic shopping in your store? I think for most people the answer would be the latter.
You not only want to start an online business where your presence will be seen by multi-millions of customers, but you also want to be that business that makes money! Isn't that the point of starting an online business?
Ok, then, let's head on over to our next topic.
What you need to know to achieve your goals.
Once you've figured out that in order to blossom, you need to plant yourself, you are ready to know how to achieve your goals.
First, literally start writing notes in a notebook or journal. Start listing ideas that roll off the top of your head when you are in the "thinking" mood. This will usually come naturally when you are excited about an idea and can't wait to get started. I'm one of those people that simply forgets what I think about after a while, so writing down those ideas can really help look back and reflect on what your thoughts are for achieving your goals.
Understand your own goals. Are they realistic?
What are you selling? Do you have a specific amount of money that you would like to make over time or do you want to make a standard amount to live off of every week?
Some people have relatively small goals that can be achieved with minimum effort.
For example, if you are a hobby seller and have a lot of things to sell from a unique collection, maybe running weekly auctions will be more beneficial than opening a store. But if you have standard items bought wholesale, perhaps a store or using fixing now pricing will help you achieve your goals.
At this time, eBay offers 50 free listings per month without opening a store. Stores have different tiers of pricing. The basic store offers 150 listings per month. Even without a store, you may be able to achieve your goals if all you have to sell are about 50 items a month.
How to create a business plan.
What is a business plan?
A business plan is your set of business goals, the reasons you believe they can be achieved, and the plan to attain your goals.
Your business plan is based on your choices. There are no set rules you have to establish for creating your own plan. You are free to think about and change your plan as your business evolves.
A business plan must be realistic. If you set your goals too high in advance, your business plan will likely cause more aggravation than success.
Start with a notebook. Write down your goals.
What is it that you want to achieve in your business?
Questions to ask yourself when creating a business plan.
As related to your business:
Example: children's consignment store
What product does your company want to stock?
Children's clothing, accessories, toys, books
What type of customer is the company targeting to sell it's product?
Parents of children under 10
What size market is the company facing?
What kind of retail competitors is your company up against?
Retail department stores
How will the company manage growth?
Setting aside savings for investing in a warehouse
How does the company reduce risk?
Consigning products with potential value
What are the company's expenses and overall plans to meet them?
Stocking enough inventory to meet basic expenses
Example business plan strategies.
The above table shows examples for setting up a business plan for a children's consignment store. This is only an example plan.
- First, the business should investigate what products to sell. For instance, I was shopping downtown one day and a new store opened in an indoor strip mall. The outside was decorated very festively with lights and beautiful paper leaves to match the fall air outside. The grand opening sign prominently advertised homemade candies and gifts. I couldn't wait to run in to the store and grab a sample hazelnut chocolate square calling out to me from the table near the owner. As I gradually made my way past the beautifully decorated tables and displays of homemade candies, I came upon a pile of dirty toys that looked like they would be better suited in a backyard. Trying not to judge, I ignored it and followed my eyes around the room until I came to a nearby table of beautifully decorated gift bags full of chocolates to purchase for my co-workers. As I was leaving, a lady behind me made a comment about the toys and was told they were $5 each. The owner was selling them in her handmade candy store. Personally I felt they took away from the ambiance of the store. They would have been better suited for a tag sale. So, this is something to consider when you are researching a business structure. What types of products are suited to compliment each other?
- Secondly, what type of customer is your company targeting? Obviously if you are selling handmade candies, you aren't going to be selling to toddlers. You put time and care in your product and you want it to get noticed by people that will come back when looking for a nice gift.
- What size market is available to your business? If you live in a rural countryside where the only store is 10 miles away, chances are your candy business might not be overflowing with customers. If you live in the city on the other hand, setting up a candy shop in the downtown section near all of the tall glass businesses, you just might hit the jackpot with your Aunt Nel's cherry filled delights.
- What is your competition? Here in my town, there is a restaurant that has been in business for over 50 years. They have the market cornered on fried seafood yet they aren't technically a seafood restaurant. Several years ago a seafood restaurant moved in next to them. They charge twice as much as the pizza restaurant, but the overall taste of the seafood isn't any better. The seafood restaurant has recently expanded but does not have nearly the customer base as the pizza restaurant. My advice is when you are setting up an online store, take a look around. If the market is already flooded with like items, you may want to expand your business to include other products, or invest in a totally different product line. Also, think about what retail stores your customer base can shop at locally. Are your products and prices comparable? What makes your online presence so appealing? You've got to stand out from the crowd!
- How will you manage growth? Will you hire employees? Do you work out of your home and if so, is there extra space for expansion? The number one complaint I hear from online home-based businesses is there is not enough room in their home to expand their business to its true potential. I know of a craftsman that started working from his home. He built a 3-bay garage, then invested in a building where he manufacturers his products. This took years to achieve. He now employees 20 people. Do you see yourself expanding in time? Do you have a plan about how you would like to grow your business if you become this successful?
- Risk. Anyone stepping out in retail takes risk. Just ask the latest supermarket to go out of business a few towns over. How are you going to reduce risk? When I walk in to a grocery store and see all of the produce that is being tossed for lack of interest, I think to myself that the supermarket must lose a fortune investing in perishables when there is no guarantee they will sell. Similarly, I've seen damaged and stained clothing in the consignment store with a high price tag that is eventually tossed. (That stained clothing took up space that another piece of clothing with value could have been displayed.) The secret behind the successful consignment store is that it hand selects every piece of quality merchandise is sets out for sale. If the entire store was filled with stained merchandise, pretty soon their reputation would fall and people would lose interest.
- Expenses. Fortunately, when you set up an online business, you do not have the overhead a regular retail chain incurs. If you have a home-based business, your expenses might include internet, printer cartridges, postal meter, lights, gas, and capital for more products, etc. In your notebook, write down what expenses you will incur and come up with a plan to meet those expenses every month. We'll discuss that next.
How to stay competitive.
Here's free advice to help you grow your business.
Remember that as soon as one person sees your business thriving, you will have more competition to contend with.
Never rely on one product to get your business through.
If you have found a particular vendor to stock certain best-selling items in your store, don't let that secret out.
The key to staying above your competition is to constantly upgrade your research.
Yes, it takes a lot of research, dedication, commitment and hard work to run an eBay business.
The most successful are the ones that have learned from years of experience and worked their way up. They don't give up. They just try harder.
What about sellers that are banned from selling on eBay?
Create an About Me page on eBay and drive traffic to other venues online. Use eBay's About Me page as an online marketing resume.
Successful online selling tips.
I've known many people who sell on eBay from their home as a hobby. They do quite well.
What if space is limited in your home? My dearest friend lives in a small home. She also sells on eBay. What is her secret? She sells a particular clothing item that fits in a priority flat-rate envelope. These are some things she did to set up a successful home-based eBay business:
- Invested in a thin pantry and installed it in her living room to store shipping supplies.
- Works from a corner computer hutch in her living room and uses her dining table as shipping central.
- Purchased a small shed for her back yard where she organizes her stock in to bins. (Granted this will not work for everyone, but it does work in her area where inclement weather is not an issue.)
- Shipping supplies are free because she uses priority mail envelopes.
- Developed a relationship with a local store where she gets all of their leftover stock at the end of each month.
- Developed a specialty by becoming an expert in the line of items she sells.
That was a true life example of someone who doesn't have a lot of space but is very successful selling on eBay and maintaining organization in her home.
What about someone who has the space?
My advice is to answer this question first. How many items do you plan on listing on eBay? Do you want a store?
First of all, I have seen just as many people succeed on eBay with a store than without one and vice versa.
One of my favorite all-time sellers who I used to buy from when my children were smaller has never had an eBay store. She runs about 600 items a week, both fixed price and auction. She has four children. She has made eBay her number one source of income. I am amazed at her talent.
When I think about these two ladies, I know that if they can achieve a comfortable living from eBay, I think it's possible for a business to expand and become very profitable by selling on eBay.
I think one thing to keep in mind is that everyone thinks of success in a different way. You need to think about what it would mean to be successful to your business. What does success look like to you?
Here are some recommendations for become successful selling online:
- List daily. Listing everyday seems to get the most traffic to your listings, whether in store or not. The #1 tip I hear people say is that it takes about 10 listings a day to have a steady stream of sales.
- Pricing. You don't have to be the cheapest. Some sellers who have items priced way over market value get more sales because it's the perception of the buyers that drives the prices up. Some buyers perceive stuff is junk when a seller lists it for cheap. At the same time, you have to be competitive if you are trying to achieve selling in quantity.
- Pictures. Obviously, buyers can't touch or see your items in person. An online photo has to speak for itself. Choose photos that are in focus and show the product in good lighting.
- Listing templates. There are sellers who believe listing templates help gain sales. Other sellers are not convinced. Websites that provide listing templates for a monthly subscription include (this list is not conclusive): Seller Sourcebook, Auctiva, and Ink Frog. (Garage Sale works great for Mac computers and mobile phones!)
- Writing descriptions that sell. Make sure you write descriptions that accurately describe the product.
- Branching out to other selling venues. As of right now, from the majority of sellers online, eBay is not the only venue online but has the best sell thru rates. Branching out to other venues is great for developing a presence online. It doesn't hurt to list your items in other venues to gain more traffic.
- Treat eBay like a business. Many people sell on eBay every day and are very successful. Regardless if you are selling old stuff from grandma's attic or if you have found a product that sells well online, treat it like a business and not a personal venture. What do I mean? Don't be discouraged if you aren't successful at first. It takes time to grow a business and expand beyond your goals.
How to achieve your desired income selling online.
Recently, for the first time, I listened to the words of a very prominent seller on eBay. What she says makes a lot of sense.
First of all, she has 10,000 items listed on eBay but they are all unique. She does not sell wholesale products.
From what I've learned, there are two basic styles of selling.
Some sellers buy wholesale and list a large quantity of items at a time. For example, 10 identical dolls, bought in a bulk lot, listed for $20 a piece. That's 10 items from one listing.
This particular seller, said she shops at thrift stores and such for like items. For example, 10 8" glass plates, all the same size and weight. Not necessarily all the same pattern.
Her selling tip came as a revelation to me. All this time I thought the most successful sellers needed to have a lot of like-kind inventory to make a big profit. I honestly thought that was how they could list so many items so fast and keep up with a fast-selling pace. Not so as I found out.
Let's take a closer look at these two examples.
Ten plates are all the same size.
Ten dolls are all the same size.
Each plate will take bubble wrap and a box to carefully pack and ship them in.
Ten dolls already in a box might require the same shipping container such as a priority mail box.
The listing template will be set up in a similar fashion by both sellers. How so?
While there will only be one listing for the dolls, there will be 10 separate listings for the plates. The difference is with the plates, even though it seems like it would require more work, once you create your first template, you can use that for each plate and just change the pattern or color on each listing. Relatively speaking, both items can be listed in a similar amount of time. The seller who has wholesale items doesn't necessarily list faster than the seller with 10-like items.
The secret is in the quantity. Both sellers have 10 items.
In order to achieve your selling goals, you'll have to first come up with a dollar amount that is comfortable for you. After meeting expenses, how much income do you wish to gain from your eBay sales?
If your expenses include utilities, gas, internet, shipping supplies, and eBay fees, you will have to figure that total in to the amount and subtract it from your overall selling goal for each month.
One successful seller suggests that if you want to make $400 each month, you need 400 items listed in order to accomplish that. (Obviously that means you will need to price your items accordingly because not everyone has a 100% sell thru rate.)
Using all of the information I have provided above in this article, also think about what you would like in an eBay store if you chose to create one.
For example, if you sell children's clothing, adding toys and baby products might help drive traffic to your store.
Some sellers believe that having a good starting base of a certain number of items in their store at fixed price and running a few auctions a week helps drive traffic to their stores as well.
I'm a paper artist and am constantly looking on eBay for the latest trendy gadgets to help me create and design more of my own embellishments. What I look for when I'm shopping online is a one-stop shopping concept.
Let's face it, everyone selling on eBay can't afford to lose money and start off their auctions at $1. However, when I need a few products at a time, shopping online can really add up! I look for sellers who offer great prices and all of the items I have on my checklist. In other words, it's ok to branch out and stock items that you normally wouldn't think to when you are selling on eBay. You want to drive customers to your store.
It's also important to note though, in some cases it is best to stick with one product. For example, a seller who sells Prima flowers (a line of flowers made for scrapbook artists) may want to be an expert in just that. That's ok too. I've bought from several sellers that specialize in a certain product because I can get the latest products from them. That's one thing you need to consider carefully. When you are selling in one product, remember to keep your selection updated and current.