One of the ways that I thought about making money again was by doing something that we used to do in our old business. A segment of our business was basically flipping old motorcycles. We’d buy them, take them apart, and sell the parts separately. We found out that there was a market for this when we found out that our original plan of buying old motorcycles in bad shape and restoring them wasn’t working out too well.
At one point we had 16 motorcycles in various condition in my parents’ garage a couple years ago. Luckily, for me at least, some of those parts are still there and they were nice enough to allow to sell all the parts and pocket all of the profit.
So I’ve been doing that and I’ve made some money. I got to wondering if I could turn this into a full-time gig. Unfortunately, after putting my income and expenses into an Excel spreadsheet, I don’t think I can. I realized that I make about 68% profit on the parts I sell on eBay. This actually seems pretty awesome but that’s only because I got these parts for “free.”
Let’s look at an example to see where the catch is. Say I find a motorcycle and buy it for $1,000 and I can sell all the parts for $2,000. (From experience, this kind of markup is pretty rare. This kind of knowledge comes from taking action and seeing if something will work out for yourself.) But anyways, let’s say I can make that much. Depending on how diligently I work, I could tear up this motorcycle in about a week. Then I have to clean up the parts as much as I can, take pictures, weigh them, organize them in a way that I can keep track of what’s what, research what the going price is on eBay, and then input them onto eBay to go up to auction. That would take at least a week.
Then the auctions would take at least a week. I’d spend the next couple of days (depending on how many parts are sold) packing and shipping them. All in all, it’ll take about a month from start to finish to sell all parts so I get about $2,000 in income in a month. Not bad, right?
Well remember how I said that I make about 68% profit on what I sell? Well $2000 X .68 = $1,360. So that’s my profit. Then subtract my initial investment of $1,000 from that and we get $360 ($1,360 – $1,000) and that’s all the profit I make for about a month of work. That sucks.
Especially since my goal is to make at least $1,000 a month. That’s not even half!
- Don’t go all in at the beginning. This is a mistake we made the first time around. We took out loans and invested in at least 5 bikes right away. This put us in a hole and it was a mess to try to keep track of which parts went to which bike. Less is more when you’re starting out.
- If you’re thinking about starting a business, start out small and see how it goes. If it goes great, good; go ahead and proceed. If it goes bad, chalk it up to a lesson learned and be thankful you didn’t invest anymore time and money than you already did.
- Know all costs. It’s nice to see how much money you make but it’s more important to know how much your expenses are.
- Find out all the “hidden” fees associated with doing business. When it comes to eBay there’s a fee for selling something, a fee for shipping costs, and a fee to list an item! PayPal also takes a certain percentage when you receive payment through them. There’s probably something that you haven’t thought of. You won’t know until you are in the process of doing business.