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 
how is space allocated for the pricing and sorting of inventory ?Do you have certain areas designated for certain items , i.e. knick knacks, clothes , children , etc?
I’m not sure, Sharon, that any shop has their workspace permanently divided into areas by categories… besides the obvious fixturing of shelving vs hanging racks, worktables vs open floor space for incoming furniture. My best advice here would be to remain flexible, since your intake will vary from day to day, maybe even hour to hour!
[…] The 10 Best Ways to Ruin a Resale Business is a list you won’t see anywhere else. Especially #4. […]
This comment is for George Olsen. My business is very slow from Dec-Feb .
I now (after 11 years being in business) accept snowsuits- boots, gloves, hats,coats, childrens shoes-jeans & costumes anytime. Reason being,when
these slow times come (like winter months) we will have a supply of these items
very much needed to help with sales. You see I am learning that sometimes
people are ready to get rid of items when their cleaning out. So, they may have a yardsale, consignment sales or just give them away. But if they know that they can bring it to you to hold on to until it is time to sell it for that season,
they may just do that. But, I do have a large place to store these items until needed. And I also have been in business for a long enough time that my
consignors trust me. This will be the first year I will have a good stock of
costumes ready to go out on time & maybe not get overlooked in someones
box til after Halloween.
Hi Auntie Kate, My wife and I started a resale shop about a year ago. We are located in a small town that most people would consider “The Boondocks”. Although our customers constantly tell us how great our store is, we most likely will be going out of business at the end of our lease in a few more months. I feel like we’ve done just about everything right, and I knew it would be a challenge going into this being out so far. Maybe we’ve relied on our Facebook page: https://www.facebook.com/TreasureIslandResale?ref=hl, to generate more business, but it just isn’t enough. We also tried Radio just before Christmas, but with the weather in Wisconsin, December, January, and February are bad months to be open. Any ideas what we might try?
Thanks for any advice you can throw our way.
George, being in a location that requires a specific trip is, shall we say, a challenge! And Wisconsin winters… even the BEST of them… will dig a hole in resalers’ pockets every time!
Of course FB isn’t enough. I don’t know your area, but is there a local paper? A radio talk show that folks listen to? What kind of direct mail have you done, and do you do a broadcast email? How can you “add value” to folks that will motivate them to drive on out?
Kate I’m a about to be who need some good tips for a beginner.
Rachel, welcome to the industry! I’m sure you’ll enjoy all the posts here on my blog, as well as the free info on my website at http://TGtbT.com When you’ve gotten a feel for the industry, you’ll be ready to learn from the Products for the Professional Resaler at http://TGtbT.com/shop.htm We look forward to following your progress to a successful shop!
Can I add #11? Keep your hours consistant! If your door/phone/internet says you open at 10 and close at 6, be open atleast 10 to 6. Don’t come late or leave early. It will kill your business, people talk about that place that is never open when they try to go.
Kate all are good points but number 2 is the bane of many businesses. It is a catch 22. You have to spend money to make money but if you aren’t selling enough to spend any then where are you? In this tough economy it is nearly impossible to get a loan for a small business. If you start a business and you have enough money to keep the business open AND have enough money to live on then that’s a whole different thing. You can have all the consignors in the world, but if you don’t have enough customers to buy it, then it becomes a money issue. I always pay my consignors, but I am always wondering if I will sell enough to make the rent. Also, I am not going to pay someone to help me in my store until I am able to pay myself. It is usually 2 years before a business becomes profitable. Not always, but on the average.
Martha, I TOTALLY agree. You wrote: “If you start a business and you have enough money to keep the business open AND have enough money to live on “… it is SO important to face up to the fact that just because you open a business, doesn’t mean the cash will come flowing in from Day One. It saddens me to see many a great business fail because the owners didn’t realize that it takes time and a LOT of sweat to get a business going. They haven’t got the time to develop their businesses so they fail, when they would have succeeded with some back-up money, and therefore, time .
[…] Over 10,000 people read the series 4 Days to Resale Success. In contrast, less than a thousand read the cautionary tale, The 10 Best Ways to Ruin a Resale Business. […]
[…] The 10 Best Ways to Ruin a Resale Business (scary stuff here) The photo was adapted from a great fashion blog to follow, Fashionmefabulous.com […]
[…] The 10 Best Ways to Ruin a Resale Business (scary stuff here) The photo was adapted from a great fashion blog to follow, Fashionmefabulous.com […]
Super Helpful Katie – thanks!
I know it was a good one, because it made me squirm a little.
Great article Kate!
BTW, USP stands for Unique Selling Proposition, not Unique Selling Premise (don’t you just love nuts like me that spot this kind of stuff :-)!!! I use to teach Marketing at the local college.
In the 1960’s, Rosser Reeves (Chairman of the Board at Ted Bates & Company) coined the term “unique selling proposition” in his book Reality in Advertising, giving us the precise definition as it was understood at his company:
1. Each advertisement must make a proposition to the customer: “buy this product, and you will get this specific benefit.”
2. The proposition itself must be unique – something that competitors do not, or will not, offer.
3. The proposition must be strong enough to pull new customers to the product.
Julie
Hey Julie, you can correct little stuff like this anytime… as long as you contribute such valuable additional info! 😉 Thanks!
Once again great advice…..good point on keeping on with the learning. Thanks again.
[…] The 10 Best Ways to Ruin your Resale Business […]
[…] The 10 Best Ways to Ruin a Resale Business […]
[…] The 10 Best Ways to Ruin a Resale Business […]
Thanks Kate. I will be thinking hard while I read this over and over. I’m happy to say that I am doing more things right than I thought.
What valuable information for someone like me who is dreaming of my own store one day! I feel like these past few weeks of reading everything on your site, as well as the products and manual I’ve purchased, have been like going to college for opening a resale shop. Every day I look forward to the wealth of knowledge I will get from reading your site. Thank you so much Kate!
I am sending this link to all the shop owners to be who have emailed me recently!
Way to Go Kate! Thanks for a wonderful top 10 items to consider when making your shop thrive!
Each area, will be digested over the next 10 days!
Thanks Again!
Nice and “wide eye” opening!
Thanks as always Kate for your wisdom!