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.
Auntie Kate The Resale Expert 
Thank you!! Great advice and motivational.
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Hi Auntie Kate,
I wanted to really THANK YOU for taking the time to post your advise to many thousands of viewers. You may not get a thanks from everyone but you will get the good karma that comes when helping people without expectation.
I myself am a computer re-sell business owner for many years, and am thinking about starting my own engine for re-sellers. So you can imagine that I have learned A LOT of what not to do and what to do. You have captured important bites in your ’10 list’ above. And I thank you personally….because it matters to see that someone else has noted these things also. It makes these important points stand out even more for me personally.
Again thank you for your output. It helps many, many people. Positive energy is sent your way continuously for your help.
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Thank you Vera, for thanking me. The consignment/ resale/ thrift industry has come a long way, thanks to the sharing & caring attitude most shopkeepers embrace. We are all originals, so we realize that helping our peers, helps us all!
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I want to open a non-profit resale shop. I have many friends who donate to Goodwill. I have 2 friends who are lucky enough to be able to buy a new wardrobe every school year and donate the previous one to Goodwill. I am disabled, but would still like to run my own business. I have never run a business, my education is a masters in elementary education. I had to unexpectedly resign due to health issues, so we have been living on an extremely limited budget. So, I have no money saved to start this venture. However, the town where we live has no clothing stores- – none of any kind. There are 2 dentists, a Dollar General, a hardware store, a flower shop, a bait shop, gas station, pizza place, and a bank. Women really need a place where they can run in and purchase a sweater or a scarf of a purse. And, I want to keep costs low. The majority of the women in our small town cannot purchase a new wardrobe every year. And, I have always tried to reduce, reuse, and recycle. I think resale shops are just a great way of doing that. I also want to have event nights for local women who have home businesses- – jewelry, cosmetics and beauty products, etc. They could host a show at my shop so that might bring in some new customers into my store. I was thinking that if my friends, and others, would donate their things to my shop instead of Goodwill, I would not have the financial worries of consignment and my stock would have $0 cost. If I could keep advertising costs low then my biggest expense would be the cost of the building. But, if I were non-profit how could I make a living myself? Have you ever heard of anyone doing such a thing?
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Hi Laura, People with a mission start not-for-profits all the time… and many not-for-profits run resale shops as a source of funding for the goals of the organization. Starting a NFP involves legal issues, so the first thing you will want to do is find an attorney who is familiar with the tax rules for NFPs.
If you simply want your own business and you want people to give you their underloved possessions so you can profit from the sale of same… you’ll have to ask whether you will have a reliable source of free stuff to continue your business through the years. You’ll have to market your business is more important to the wellness of the community/ the planet than your town’s existing charities (e.g. Goodwill) and make donating to you easier than donating to them.
And, of course, a store full of great goods given to you is not the only thing to consider. How will you motivate people to buy from you, so that overhead can be met, with enough left over to provide you with a living? Event night like you mention are great… but unless you have a steady stream of purchasers, you won’t be able to stay in business long. Without both business and personal living expenses saved up for 6-8 months, I’d hesitate to suggest you go forward. I’d hate to see you put a lot of effort and money out, only to be sunk by the necessity for cash to pay the landlord and the electric company down the road.
There is a possibility, though, that you may not have thought of: Presenting a proposal to an already-established NFP in you community, that you establish and run a resale shop FOR THEM. A church? The local school boosters’ club? The historical society or hospital? If you go this route, be prepared to show them a business plan, projected P&Ls/ cash flow, how much you plan on donating to them and how much of a salary you will take. This might be a great way to structure your business if their Board and their legal advisors can see the promise you do in having the business. It would answer the unspoken question “Why should we donate to/ buy from you?” and having the backing of a local group would mean more publicity and public notice for the shop. It would also solve your financial situation, since the NFP would be covering overhead and your salary.
In the meanwhile, check out more posts on the blog, especially (but not exclusively) those about NFPs. We also have a Pinterest board especially for NFPs and info on our web site too. Come back and let us know what you’re doing to make your dream a reality. It’s always great to hear “the rest of the story”!
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If the NFP were a PTO/ PTA would I be able to run/ manage/ head the entire resale shop/ business as well as sit on their board?
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That sounds like a legal question, Cindy! But if you’re asking if you’d have the time to fill both positions, I’d say yes… and I’d actually recommend that the manager of an NFP shop be a full-fledged member of any board which has the authority to affect the running of the shop.
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I have always had a dream of have my on antique shop. i have a passion /love of old things. My problem is money, location. i take care of my spouse who is a disabled vet.. i have been since i was 21 years of age now let just say i am over fifty; and my dream is still alive. sure i would like to make cash, but i believe . you have to be invested in your dreams, so for years i have collected things one at a time, hoping to earn enough cash to for fill my dream . i have things but no location yet, any ideals. on how to find cheap rent but great location and safe. .
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Hi Wanda, Good for you, to keep your dream alive. If there were a great location and safe, there would have to be a reason for cheap rent… like maybe a landlord who loves antiques as much as you? Who doesn’t need to get top dollar? Who, instead, might be open to taking a percentage of your sales instead of a fixed rent?
Another option would be, perhaps, to have a seasonal sale in a rented hall. Might that work for you? Or to consign your items to a shop, or rent a booth in a “flea market”?
The main thing I’d like to say here, though, is that most small shops fail because they simply don’t have enough capital to weather the slow start of the business…. so please, be sure to go into whatever you decide with your eyes open. I’d hate to hear you wasted time, talent and treasure by not having enough to hang in there until you establish a good base for your dream shop. Be sure to come back and tell us how you’re doing!
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I am contemplating opening a consignment shop…could use solid advice for what “not” to do. Money is always an issue but I would like to kick start one on a very tight budget with a huge warehouse to do so. I have the space, but need vendors and fresh customers.
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You’ve come to the right place, Dawna! The list of what NOT to do is way too long, but the Manual and our supplementary Products, my site, even my Facebook, Pinterest, etc will tell you what to do! Also, our consumer-oriented site and blog will orientate you to the shoppers’ wishes and desires. You have a great learning experience ahead of you; I know you’ll be motivated to get all that knowledge to work for YOU!
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My big dream is to prepare for and open a new resale business in a physical store as well as advertising physically and virtually. What are some good virtual locations that will attract an audience? I will not specify what market demands are popular in my community until after I have set up and have been running full speed.
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Thanks for the Q, Andrew. “Some good virtual locations that will attract an audience” depend on the audience you want to attract. The good locations depend on the type of clientele you want to sell to: a computer nerd? A young mother? An aspirational home-lover? A retiree or a preteen? Book lover or hard-metal fan? Define your ideal shoppers, then figure out where they visit. Take a look at the statistics of advertising in various social media: what type of viewer hangs out where? That’s where to advertise!
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