Moving from Pastime to Business

How do you make the move from occasional seller to a full-time business? It's a matter of volume, yesbut that volume is predicated in identifying a constant flow of merchandise to resell, and in selling that merchandise at an acceptable profit.

The business of reselling second-hand merchandise is a real business, as you know from the proliferation of bricks-and-mortar flea markets, second-hand clothing stores, and the like. The only difference between you and them is that you sell your merchandise on eBay, rather than in a traditional storefront. Like the traditional second-hand merchant, you face the big challenge of finding merchandise to resell; it's only the way you sell that's different.

To build a business based on the second-hand reselling model, you have to put together a plan for locating merchandise for resale. You have to lay out a budget for buying second-hand goods, and then feed that merchandise into your eBay sales machine. You can't just hope to stumble over stuff to sell; you have to actively pursue second-hand merchandise to ensure a constant flow of inventory.

And when you obtain that merchandise to resell, you have to put it somewhere. Inventory management is a big part of running a full-time reselling business. You have to store all your inventory, as well as (in some cases) clean it up or fix it up for resale. You have to know what you have at any given point in timewhere it's located, how much it cost you, and how much you plan to sell it for. The more different types of items you resell, the more complicated this all becomes.

Occasional eBay sellers don't have this type of hassle. They don't have to section off part of their garage or basement to store merchandise that they plan to resell. They don't have to budget funds for purchasing merchandise, nor worry about how high they can mark up an item over the initial purchase price. They're just selling stuff for fun, and the money they generate goes straight into their pockets. You, on the other hand, need to funnel the profits from what you sell back into your business, to help pay for additional merchandise that you'll resell next week or next month. For them, it's a one-time thing. For you, it's a continuing business.

Where, then, is the line between reselling as a hobby and reselling as a business? To me, there are two factors. First, as a business, you're in business to make a profit; hobbyists are often in it for enjoyment, and any profit generated is secondary. Second, as a business, you invest the money you make in additional merchandise to resell; hobbyists simply keep (or spend) any money they happen to make. If you actually generate a profit and then reinvest that profit to buy more merchandise to sell, then you've moved across the line and are running a business.