5 Lessons From Owning & Operating Businesses In The First Year [Part 1] | #Business | #Finance | #Investing | #Growth | #Mindset

“Build your own dreams, or someone else will hire you to build theirs.”
– Farrah Gray

“The man who moves a mountain begins by carrying away small stones.”
– Confucius

BreakawayIndividual.com
Zy Marquiez
June 23, 2019

The first year in any venture can be a rollercoaster ride, particularly in business.

Such ventures can include incredible highs and torrential lows, but it’s the full length of the journey, what you learn from it and what you ultimately implement that will really set you apart from the of the field.

Based on these ideas, key insights will be discussed in this blog post based on lessons learned from the initial year and change of operating small businesses.  Future blogs covering additional insights will follow thereafter, so keep a look at for those in the near future.

As a preamble offering background to the following insights, the following considerations will be based on the experienced gained from two small business owners, one of them being my close friend Jabai and that of myself.

Hussien Jabbai, who conceptualized this post nigh a week ago in one of our business brainstorming discussions, is CEO and Owner of Jabai Performance, wherein he also focuses on Personal Training, and is also the Founder of the Fire Fighter Training Systems (FTTS Project), which aids in Injury Prevention for First Responders.  Conversely, I myself am CEO and Owner of both a LEGO-parts store on Bricklink named Blocked up, and also the Square One Productions Ebay store.  Both of us have known each other for about six months and have learned a great deal from our business platforms and numerous business conversations.

The advice that follows is a conceptual collation of significant lessons we have learned in our respective businesses in hopes that other business owners may have a foundation to venture from and some idea of what to do, and what not to do.   Examples will follow from either one, or each of our respective fields where applicable.

#1:  Know What You, Your Products & Services Are Worth

A business transaction, is not unlike any other transaction.  Agreements, whether contractual or not, are purely two parties agreeing upon a set of parameters and/or a certain price point.  Not all price points are created equal, however.

To give you an idea, while business A might offer to sell their services to customer B, at say $500 per transaction, that doesn’t mean that this is the ideal price-point for the product or service.  An exact or very similar transaction could take place at the $750-1000 price range between business C and customer D, and if that is true, then selling your services lower than what the regional, national or global average is, is highly detrimental, and could even set your business back when compared to the competition.

Within personal fitness, how much each trainer charges is obviously a personal choice that is coupled with experience, not unlike any other business.  The model that Jabai chooses to employ is one where the services he offers aren’t the highest priced, but certainly aren’t the lowest either.  If he prices his services too low, he’ll just get swamped with customers, his time won’t be as efficient given the value he puts on his time and the experience he has garnered in the field, and he would ultimately undercut himself.  Likewise, if the prices he sets are too high, it will not only narrow down the range of potential customers who can afford his services, but it will also limit the likelihood of garnering repeat customers as well.

Now, in my own personal aside, when launching the LEGO-parts selling business platform I have pursued on Bricklink, I employ a software used Brickstock.  Narrowing down a lot of information into a bite-sized piece, each particular LEGO set has parts lists that can be viewed as the inventory sheet, and each of these parts is sold for a certain price.

Now, the key part here is that each LEGO part is priced at a global average within the Brickstock software, not a regional or national oneThis means that, if you don’t know, and I certainly didn’t know this at the nascent stages of starting the Blocked Up Bricklink store, the your regional (or national) price of most individual parts could be much, much higher than the global average, then you would be leaving significant profits at the table.  Some of the reasons for this price discrepancy are that in Bricklink (1) some buyers do not like purchasing from sellers over-seas because of the additional shipping charges they incur, (2) many Bricklink stores outside of the United States have (surreptitious) hidden fees, and (3) the issue of waiting much longer for parts is highly problematic when many of the LEGO MOCs (My Own Creations) that are designed by independent LEGO creators are on a time table.

These reasons are why many LEGO creators don’t mind paying a higher premium or a much higher price in certain instances for individual parts within their actual region.  However, this isn’t something that’s written about anywhere within the LEGO community that I have noted.  It is definitely something to take note of because if you happen to have a store with tens of thousands of parts, hundreds of thousands (or even millions) of parts, then adding even $0.05 cents per part is netting significant profits over the span of a hundreds of orders, entailing tens of thousands of parts, or more.

I have seen Bricklink Businesses who I wholeheartedly support, and whom I appreciate greatly that have been around for over 10 years and whom I have also learned a LOT from that have done this mistake and still do so, and whose business model stays stagnant or grows only slowly, and definitely not at the rate that it could.  To be fair, I am only talking about stores where people are doing this for a living, and not selling parts as a hobby.

Also of note, I am also not stating that people need to have the highest prices for their parts, nay.  What I am saying is that, if a product is selling for a given price within your region, pricing a hair under that price is something to at least be considered at minimum, since many times these parts would be cheaper than any other store out there anyhow.  Pricing parts any lower than that is financial suicide given that you’re only going to grow slower and not take advantage of the supply and demand price mechanisms that rule economics.  Just as important, carrying out such glaring oversights in my honest opinion are also a colossal time waste given that this time could be allocated to further grow the business or even free up personal time if that is what you seek.

#2: Always Pay Attention To Your Competitors

Learning is growth, and growth should entail learning.  A significant way individuals can learn in life is by learning from others, and in business this is no different.  And thankfully, one of the best ways to learn is from those that came before you, or those that partake in your business field.

As touched upon lightly in the aforementioned point, some business products/services have established price ranges, while others do not, in which case you would have to figure out what the price range and market is for that given product/service.  In most businesses however, if you look hard enough you can ascertain what prices are optimal for your business, and one of the best and simplest ways to do this is by keeping an eye on similar businesses.

This advice might seem ‘obvious’ at first blush, but it’s something I often see overlooked on Ebay every single day, and that’s not an overstatement.

In addition, other notable things other businesses could do is (1) move prince ranges up or down, which affects your product and profits, (2) have complete control of most of the market, which (a) gives then incredible flexibility in the control of setting the market price, (b) often aiding them in pricing products/services at a much lower price point given that they are in it to flip-products quickly, not unlike a convenience store or even Wal-Mart, which follows a different model than simply pricing products at a specific price point.  And (c) this affects the speed at which your products sell.

#3: Know What Your Lowest Price-Point Is & Don’t Go Below It

From what I have gathered, in many online businesses, sellers will undercut each other relentlessly to the point that they are barely profiting from their products.  In my personal view, this is like willingly choosing minimum-wage when you could make a higher per-hour rate, or per-transaction rate, than that.

As a business owner, this used to bother me because I always felt the need to have the lowest prices with certain products, but that’s not always feasible (or reasonable), and many times it’s downright detrimental to your business model.  In Ebay stores, as well as in Bricklink, there will always be stores with lower prices, but that doesn’t bother me now because prices aren’t the only thing that people rely on, which brings me to the next point.

#4: Know Your Business Model

In business, like in life, it is incredibly important to know your business model in its totality.

Now, in the case of my friend Jabai, he has set his business model with a price point at a happy medium where not only he is satisfied with, but at a point where his customers are as well, which encourages customer loyalty.  I follow a similar mindset with most of the products sold, although not in the exact manner because where Jabai sells a service, I sell thousands of different products/parts between both stores.

Along the same line of thought, could each of us set the price of our products/services much higher than we do so now?  Yes, we certainly could.  Why don’t we?  There are a lot of reasons for these, but we will focus on two of these.

The vanguard reason for this is to have happy customers, which encourages repeated business and customer loyalty.  Secondly, there is a moral point of view in that although we do want to profit from business, we don’t want to fleece people, which is a delicate balance at times in business.  That said, what people considering ‘fleecing’ is entirely subjective, but the majority of people usually agree upon certain price-ranges before something just gets downright expensive.

Due to those reasons, we have each settled on our respective values for our business practices and what we are ultimately satisfied with.  This is ONLY a cursory glance of this notion, and can be gone into further detail later on, but it is mentioned simply to give a bird’s-eye view of the concept.

#5:  Make Sure You Consider A High-Value Or Rare Product/Service – A ‘Strong IP’ (Intellectual Product)

Let’s now consider the notion of having a high-value or rare product/service.

Having a high-value or rare product/service is something to take note of given that not all products and services, although sometimes exact in nature, are similar in the way their execution is carried out when infused into a business model.  As the first example showcased, two businesses can have the exact product, but the initial business values it much lower, thus nets less profit than the latter business.  Adding incredible value and/or rarity to the product/service only increases the profit, or the magnitude of the mistake made within such an example.

Expanding upon the notion of having a high-value or rare product, let us now contemplate what I jokingly call having ‘Strong IPs’ within your business.  The reason I have chosen this jargon specifically is because one of the greatest lessons I have learned from watching Nintendo as a company.

The lesson that I have learned from Nintendo is that they do not devalue their intellectual property (IP), which is the reason why (1) their products net so much profit, and (2) why their products maintain their value over time.

In the last few years, what I have learned is that even if you go back a decade or more, the products created by Nintendo, not only retain their value quite well, but in some instances increase in value with time.  This is one vanguard reason why having a strong IP and knowing what it’s worth is paramount.

Besides, since Nintendo creates the games themselves, they set the global market; the prices that individuals pay for Nintendo video games is nigh always the same across the board, and given how much Nintendo values their IPs, those video games rarely go on sale, thus securing greater profits in the long run.  To be fair, Nintendo also has high standards when publishing video games, whereas some other companies do not, which is why they can’t keep their IPs at such a high price point.  This is why it’s noteworthy to see Nintendo take their craft seriously, because not only do they carefully craft their IPs with careful consideration, but they deliver on the vision of having a high-quality product through and through.

Now, in my personal case, neither do the Bricklink nor Ebay stores have items that are created by me.  What I do offer instead as a smaller subset of the Square One Productions Ebay store are items that are incredibly rare.

Case in point, something I invest heavily in are rare video games and collector’s editions, Playstation 4 Collector’s Editions to be precise. From time to time, a particular game will get a physical Collector’s Edition for a video game that was never produced physically and only produced digitally; given that, the mintage of that item will be somewhere along the lines of 2000-3000 copies.  While that might sound like a lot of copies to some, when one realizes that there are nearly 100 Million potential buyers as PS4 owners, you realize that you have a very rare item.  It gets even more interesting from there though.

Most of those 2000-3000 copies will be purchased by collectors.  For example, let’s say that 50% of those collector’s editions are purchased by collectors, and I could make an argument that the number is much higher, but let’s roll with that number for simplicity’s sake.  If such is the case, then you now have only 1000-1500 copies available for purchase, if not much less than that.  (In my daily pricing research on EBay, I would say that the numbers is closer to 5-10% of that, but either way, you have an incredibly rare item, which only makes it that much more valuable.)

An unwritten rule that most resellers take is selling the item for double what you paid for it.  So if you paid $50 for a collector’s edition, selling it for $100 is not uncommon.  Even so, in my opinion, a mistake that some individuals do is pricing these items incredibly low; say at $75 or so.  While that might seem like a 50% profit if you were to take Ebay as an example, such is not the case for EBay keeps 10% of that, so the profit is only $67.50, or is it?  PayPal takes another 3%, which would is $2.25.  Now that ‘profit’ went from $67.50 to $65.25.

If the reseller had sold the item at $100, the Ebay 10% fee would drop the profit to $90, with PayPal taking its 3%, leaving the profit for the item at $87.  Although how each seller sells their item is obviously their choice, there’s an enormous difference between selling a product between $65.25 and $87 after fees.  While an item sold at $75 will net you a % 30.5 profit, an item that sells at $100 will net you 87% profit.  Those kinds of returns will snowball significantly, or at a snail’s pace, depending on which price point you pick and business model you choose to employ.

In the Square One Productions business, 80% of the products or so, perhaps a bit higher, all are priced ‘to-go’ at near the lowest price-point, with the rest of the items having much higher price points, the highest around in fact.  This is because when your item is limited, and cannot be created ever again unless by some unknown circumstance or ‘miracle’ later on, the value of that item is incredibly high [1].  This is why it’s not uncommon for some of the rare video games and collector’s editions that are sold to have a 3x-5x return, and in rare cases higher than that even.

Given all of that, knowing exactly where your product falls on the spectrum of rarity and value will net you significant profits in the long run and only make it easier for your business to succeed, or continue its success.

Final Thoughts

Please keep in mind, none of the above thoughts are shared as end-all-be-all ideas.  These thoughts are shared to offer individuals perspective for those seeking insight when perhaps considering starting their own business, or who know others that have done so or are planning too.

There are a lot of additional ideas that can be discussed, but these initial five were chosen given that they set a sound baseline for the next part of this series.

In business, like in life, there are unlimited options that individuals and business owners can undertake.  What options are chosen and what follows there in isn’t only directly related to the quality of research carried out within your business, but the perseverance and focus applied to each particular idea and/or venture.

The more focused and precise the actions undertaken, the greater the net benefits and profits that will accrue over time, and the more rapidly those benefits will manifest.  And in business, like in life, these benefits are what increase the quality of life, or business, which is why careful consideration should be given to it.

As such, each step that you take should not only be taken with incredible thought and mindfulness, but it should not be taken lightly, either.

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[1] The notion of rare video games, or games minted in limited runs, is not something new, although has garnered a lot of attention the last few years.  In fact, ‘Limited Run’, is the name of the company that I invest the most heavily in and support not only in my business practices, but for my personal endeavors as well.  As a small company that is doing what to keep physical media for game cartridges of video games in an age where most companies are seeking to make everything digital, I appreciate what they do heavily and will continue to support them for the rest of my life.
[2] Some of these examples were only delved into in a cursory manner, and could be expanded upon at length in the future.

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About The Author:

Zy Marquiez is an an author, business owner, CEO, avid book reviewer, inquirer, open-minded skeptic, and writer who aims at empowering individuals while also studying and regularly mirroring subjects like Consciousness, Education, Creativity, The Individual, Ancient History & Ancient Civilizations, Forbidden Archaeology, Big Pharma, Alternative Health, Space, Geoengineering, Social Engineering, Propaganda, and much more.