Have You Made Mistakes In Business?
When we first ventured out to become entrepreneurs by leaving our full time jobs over 15 years ago, we started out by entering into the world of buying and selling on Ebay.
There were two main routes serious sellers could take to make money on Ebay. One was to sell antique and collectible items and two was selling shipments of ‘stock’ from China.
We went the antiques and collectibles route which involved sourcing these second hand goods from auction houses.
The Country Fair
However, one day we were at a country fair and came across a man who sculptured very large wooden art pieces. We were quite impressed with the quality of his work and the beauty of the sculptures which he had created.
Having liked his work so much, the thought came, “why don’t we commission him to make some smaller versions of this art that we can sell on Ebay”.
So a deal was struck for him to produce half a dozen or so small sculptures for an outlay of £750 (as memory serves).
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Works Of Art
The finished items were delivered to our house.
The sculptures were about 12 inches (30cm) in height had a bulbous shaped base with a stem like structure proceeding from the base. The wood was fine and smooth and the quality was exceptional.
We were excited to place these ‘works of art’ on Ebay, hopefully anticipating lots of profitable sales!
We waited and waited and waited - tumbleweed city - nobody shared our love for the wooden sculptures.
So we eventually dropped the price, perhaps we could just ‘break even’ - no such luck!
So we dropped the price further, perhaps we could make a small loss - no that didn’t work either.
Reaching Out For Help
We shared the story of our failed experiment with fellow ‘Ebay Power Sellers’ other sellers that were part of an established Ebay community.
‘Helpful’ suggestions were volunteered as to how we could get rid of them including one such which would involve a bonfire and placing said items on the bonfire.
I can’t remember who lovingly coined the name for our works of art, but they dubbed them the ‘Wooden Onions’ and the name stuck, (they did indeed look like large wooden onions!).
Cut Your Losses
So what can you do in this sort of situation?
It was clear we were not going to recoup our losses so we decided we might as well have some fun.
So we ran a competition amongst the Ebay Power Sellers to give a few away for free, we could take our loss and turn it into a marketing opportunity!
Many were now keen to win a Wooden Onion, all of a sudden, their popularity increased and the process of moving some of them on became quite a bit of fun!
Eventually we managed to get rid of all the Wooden Onions, I think we may have actually sold a couple for a fraction of the price paid many months later (if not years), but hey!
So what were the valuable lessons that we learnt from all this:
1. Due Diligence With Market Research - What Does Bob Want To Buy?
We were at the time Antique Dealers not Art Dealers.
So in the absence of experience in dealing with selling Art some more detailed research would have probably gone a long way to uncover that such decorative pieces without a well known Artist name against it were unlikely to attract a high price tag.
Despite the quality of the Wooden Onions, Ebay was not the place to sell them.
We were also not set up to sell them at other venues such as fairs which would have been a more suitable selling venue as their true visual impact was lost when marketing them online.
2. Protect Your Capital
On reflection that was a lot of money to spend on an ‘experiment’. At the time £750 would have been equivalent to $1200.
When the recession hit years later which really rocked a lot of online entrepreneurs, especially Ebay sellers, that stock used up capital which would have been very welcome then.
One of the reasons business go out of business is because of cashflow issues. It is therefore vitally important to protect your capital. All expenditure in a business should be well thought out and calculated and risks should be avoided at all costs.
3. Shiny New Object - Don’t Get Distracted!
We were doing well buying antiques and collectibles from auctions and selling on Ebay. This was our core business and our whole Ebay shop was set up for this market and attracted such customers.
The Wooden Onions were brand new items and although decorative they were not really something people would ‘collect’.
The antique and collectible items that sold best were pieces which we could attribute to a known maker or manufacturer.
This turned out to be a costly shiny new object experience in terms of time, money and effort.
4. Make The Best Of A Bad situation
No point crying over spilt milk as the saying goes. Learn and move on!
At the point of being unable to recoup our losses we were able to soften the blow by using the Wooden Onions to create some marketing opportunities, by running the competition that generated interest around all of our stock.
It also makes a great story and illustration which you are reading right now...
Do You Have A Wooden Onion In Your Cupboard?
The trick is when we make mistakes in business is not to berate ourselves but to learn from our mistakes and to share our lessons with others as well.
Every experienced online entrepreneur has a Wooden Onion in their cupboard, so what is your Wooden Onion story?
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