How many businesses fail? The statistics are enough to give you a tummy ache. If you want to avoid being just one more consignment or resale shop that goes out of business, here are the things I have learned from watching, advising, and consulting with resale businesses across the continent: my compendium of consignment calamities/ resale wrongs/ buy-outright boo-boos that you might avoid if you see them here in black and white.
1 The first way to absolutely ruin your resale business before it even gets a chance to draw its second breath is selling what you want to sell, instead of what the people in your marketplace want to buy. You might adore, oh, say, Argyle socks, but if not enough people in town want or need them… well, let’s just say, a pair here and there of Argyle socks don’t pay the rent.
2 Money. It all comes down to money, doesn’t it? But not only for the obvious reasons. Sure, as an expert said, “The biggest issue that most entrepreneurs have is money. They’re not properly capitalized.” That certainly is a major money issue…but not the only one. Let’s start with not understanding your costs. Fiddling with and using your store space for dollar racks when you could use your energies on $15 racks. Investing in goods which you can only sell for twice their cost, when the same money could be returning many more times the cost of investment.
Then there’s misallocating money. Spending consignors’ money on advertising or overhead. Not having the tax money you have collected when it’s time to transmit it. That’s the business world equivalent of gambling with the rent money.
3 More talk about money: Are you too stingy? Too often, shopkeepers let frugality keep them from efficiency. If you are losing business because you can’t keep up with business, you need to find a way to solve that. But I can’t afford help! Is the drowning cry of many a shopkeeper who would have thrived…if she hadn’t been so cheap that she didn’t want to pay for help. Buying serviceable equipment and functional fixturing may seem like an extravagance, but if it makes you more productive, it’s downright stupid to hoard pennies here. One last word on money: Keep residual cash available at all times. Who knows when you’ll stumble across the deal of the century…or the storm of the century?
4 Now you won’t find this way to ruin your business, I guarantee, on any other “10 ways” list. It’s my own personal bugaboo. The fourth way to ruin your resale business is to bore your marketplace to death. This can be in presentation: Your shops looks the same as it did three years ago; or it can be in merchandise: How exciting and purchase-provoking are your goods? Shake it up. Add a little romance. Put some sizzle in your shop.
5 Reason Number Five that will ruin your business: doing what your competition does. Know what your competitors are offering, but don’t duplicate it. Find your own market appeal. Differentiate yourself by filling an unmet need or want in a more compelling way that your competitors. What’s your USP (Unique Selling Premise)?
6 Letting opportunities waltz on by, while busy humming a dirge. Whatever’s in the news: flash-in-the-pan “community closet running out of clothing for the homeless” or longer-lived ecology concerns/ economic forecasts; the shopkeeper on the way to ruin can’t be bothered to get the shop’s name and philosophy out there, because business is so bad. Self-fulfilling prophesy, that. How to fight this attitude? Learn to write a cogent and useable press release for every media outlet available. Have a press kit ready to go at all times. Read the news and listen to the Zeitgeist.
7 Playing Little Napoleon. Oh it’s tempting, that’s for sure. Resale shops are unique in that their suppliers of goods are many, diverse, multitudinous… and each has her/his own agenda. It’s not like ordering a line of goods from a manufacturer or distributor. Each of your suppliers has her or his unique take on what, when, and even why they want you to help them turn clutter into cash. This can be wearing, like herding cats. In order to herd this bunch of independently-minded cats, the shopkeeper who is ruining her business resorts to fighting words: “you have to” and “you can’t”..leading to energy- and budget-draining confrontations. And it’s not only your relations with suppliers. This Napoleonic attitude can flow over to customers as well. You can’t go around bossing your shoppers into giving you cash for your goods. Much as you’d like to.
8 Mixed messages. The shop who wants to position itself as a Mom-friendly venue but which maintains business hours which don’t match the needs of its target audience. The shop who wants to capture the working woman and her underloved wardrobe but which stops accepting incoming at 4pm. The boutique which wants only the best merchandise, then presents a it to shoppers in a less-than-quality manner. The proprietor who bills herself as the style and fashion expert but who dresses as though she’s running to the grocery on a rainy night. Keep every aspect of your business, from decor to decorum, consistent with your target market.
9 Another certain way to ruin a resale business is to assume that everyone’s paying attention. That the $1200 TV commercial you ran will have them leaping off their couches, grabbing their mad money, and rushing over to your store. Or that the front-page article on your shop that you scored last May continues to draw traffic five months later.
Truth is, no one is paying the slightest bit of attention to your business. And even if they do notice a mention of your business and make a mental note to come, they forget. Heck, even your best, most-regular, most-loyal customers and suppliers can easily forget you.
So, to keep from ruining your business: remind them often and in as many ways as you can think of about your business. Magnetic signs on the side of your car are not enough…nor are they “too much.” Anything and everything you can do, in a style appropriate to your marketplace, should be done. Always and forever. You don’t see Coke quitting advertising, do you?
10 According to research conducted by Dun & Bradstreet, 90% of all small business failures can be traced to lack of knowledge. Dozens of small business go under, not because the owners weren’t smart or talented or good managers, but because they were trying to re-invent the wheel rather than rely on proven, tested methods that work. They don’t take advantage of the education available everywhere, from books and Internet sources, SCORE and the SBA, even their own clientele. That’s something I particularly note: the shops which fail are seldom the shops which are actively learning. The ones that disappear have compounded their problems, many of which are listed above, with a staunch refusal to learn better.Number 10 can be solved quickly and easily at the TGtbT Products for the Professional Resaler. Those Products will help you avoid the other 9 Best Ways to Ruin your Resale Business.