Jas0n

2011 was a pretty good year for our company and we're really excited about what will happen in 2012. Despite eBay fee increases and new restrictive selling policies, we still came pretty close to our sales goal. This was our first year as an official S-Corp and we got a pretty strong start. We branched out onto Amazon in October which gave us a nice 100k in sales for the holiday season. Overall, for 2011, we did $948k in sales which is just under our $1 million goal.

There were a lot of roadblocks on the way. Mainly rising eBay fees and new policies that really restrict the way we operate. PayPal decided to hold $20k of our money hostage for no real reason. Amazon is increasing their fees in the first quarter of 2012 as well. Along with a hundred other issues that came up over the last year that whittled down our profits. Early in the year we predicted that we were easily going to do over $2 million in sales at a ~50% higher profit margin than our current profit margin. But by May, with all of the changes on eBay, we knew that wasn't going to happen.

However, $948k is still pretty good by our books and our current profit margin, although a lot less than it was at the beginning of the year, is still more than enough to keep us motivated. We got a trade show in Vegas coming up in March and by the end of August, we'll have moved into a permanent location either in the Midwest or in California. Once we get things going, we're going to start importing directly from China. There are a lot of things we're excited for in 2012 and although there's definitely going to be a lot of unpredictable setbacks, we're hoping for at least $2 million in sales by the end of 2012.

Looking back at 2011 I realize that although there is still a ton I don't know about the business world and e-commerce, it's unbelievable how much I learned over the last year. edzwoo keeps saying we should write down what we know so it would be easier to train new employees in the future and who knows, maybe in 30 years write a book about our experience

I remember buying our first storage shelf about a year and a half ago to help organize our products. We were getting to the point where we just had too many boxes lying around and needed a better way to store our products. This was when we had less than $3000 in merchandise so one shelf was enough at the time. After assembling the shelf and putting some stuff on it, I took a few steps back to get a better perspective of what I just did and man, I felt SO legit. That was when I started to feel like what we were doing wasn't just a part time thing (I was still in college at the time) but rather something I could do as a career.

A few months later we had a CPA on our payroll and a lawyer setting up the S-Corp for us. I thought having to buy storage shelves for business purposes was pretty sweet but getting incorporated was really amazing. We were now a legal entity and we even had shares of stock. It was pretty awesome.

A few months after that edzwoo and I flew out to a trade show in New York. Felt pretty legit handing out business cards and wearing a badge with our company name on it. After a day or two though, we realized that we were one of the bigger companies there. We were actually bigger than a good number of distributors there too. I don't think anyone there took us seriously though because of our age. Most of the buyers there would inquire about products in quantities of 10 or 20. Because the way we operate requires that we move products really fast, we usually purchase items in the hundreds and thousands. And usually when you purchase in those quantities, wholesalers will give you a price break or a discount of some sort. But very few of the sales reps at the show knew if they could give us any price breaks so we couldn't tell if certain items were worth purchasing. Either way, it was in New York and we had a blast.

I know how everyone on LP love charts and graphs, so here you go

eBay - the red bar isn't accurate and for 2010, we didn't really focus on the business so it's not a very good comparison



Amazon



tl;dr
it was a good year

0 votes

Comments (17)

I know it's been a while since I've written anything about the start-up of the business I run with edzwoo. To be honest I just didn't really know what to write about. From where I left off last time, a lot has happened but most of it is administrative stuff that probably wouldn't interest you guys very much. So instead I figured I'd talk about the house I just moved into along with what's happened over the last couple of weeks. If you read edzwoo's blog post you'll know a bit of what's going on.

I moved into a house with edzwoo, acckerman and a friend from high school at the beginning of August. It's a four bedroom, 2.5 bath, 2600 square foot house. edzwoo and I rented out the house for the sole purpose of running our eBay business. We figured we would use the entire first floor as storage and hoped that it would be enough space to last us for the year. We were wrong. This is our house two weeks after we moved in.



We purchased somewhere between 10,000lb - 15,000lb of inventory since we moved in and we're bringing in around 2,000lb - 4,000lb worth of inventory each week. We're at the point where we actually have to start storing things in our backyard. It's pretty likely that we'll need a warehouse soon. The only reason we decided to rent out a house instead of a warehouse in the first place is because edzwoo and I are pretty lazy and wouldn't want to drive to a warehouse every morning. We also don't plan on staying in Illinois permanently. If things go as planned, by next August we will be somewhere close by San Fransisco because that's where a lot of the major shipping ports are located. We would be able to directly import products from manufacturers in China and Pakistan instead of having to go through wholesalers in California. Pretty much all legit wholesalers are located in California because of the port locations and the cost of freight transport from California to Illinois accounts for 20% of our total inventory cost. Because of this, it didn't make much sense to us to invest in a warehouse, set up industrial sized shelves, purchase pallet jacks, etc if we're just going to move after a year.



We also recently transferred our proprietorship to a S-Corp which greatly limits our liability if we are ever involved in a lawsuit. Also, edzwoo and I each received 500 shares of stocks which I think is pretty awesome. You gotta feel pretty legit when you can say that you own your own company and it issues stocks, even if the stocks are not public. So the whole process of forming an S-Corp costs less than $300 if you fill out the application yourself. Our lawyer recommended that we just file the documents through his firm so he can take care of all the paperwork and handle the incorporation process. He estimated the bill to be around $1000 which didn't seem bad but he ended up charging us $2500. We got value-towned pretty hard there. Our accountant is also charging us $950 to go through our transactions for the last six months and integrating all of that into Quickbooks.



Well, that's about it. Holidays are coming up which means we're going to get a ridiculous amount of sales. From mid October to mid December last year we had so many sales to process it nearly killed us. I stayed up for three days working on eBay stuff and studying for finals. Hopefully we will be better prepared this year.

0 votes

Comments (6)

If anyone has a spare Guild Wars Key for sale, either Guild Wars, Factions or Nightfall, please let me know. Thanks.

0 votes

Comments (1)