I think this could be more of a :smx4: mistake than a serious one, especially as I was still "toying" with business and had no real plans yet.
But anyway ...
Five years ago when I was 18 I started importing plastic car models from Japan and started selling them to my friends. I thought I could sell more so I invested about 1200$ for stock, made calculations, set prices and started selling on different car forums. Soon I had a simple webshop and was selling through email. I was doing this for about 6 months when I started running out of money. I had no idea why as at least to my calculations I should be making money and even having some left. So I borrowed some money and fortunately made some money on december that year.
I soon got an accountant which helped me with my books. I still remember what he said when he finished my annual report - "it would be better to be home sitting than doing this". And he was right. I was making about 10% on 200$ monthly revenue which didn´t even cover the costs. Fortunately I changed my suppliers and I raised the margin to 50-100%. The profits grew but I had too little capital to buy more stock. I sold the business last year for peanuts.
I think it was last year when I checked my excel calculations from my first year. The mistake was with calculating shipping - I knew that the costs of the handling and shipping were about half of the whole amount. But instead of multiplying x2 for final costs I wrote x1,5. So instead of 50% I calculated the shipping cost me 30% of the whole amount. A simple mistake in excel cost me about 1 year in losses.
Lessons:
- Check your calculations!
- When something is going wrong, stop and check what is it and correct it.
- Hire a proffessional to help you with accounting.
- Don´t start a store with less than 10.000$ prepared for stock.
But anyway ...
Five years ago when I was 18 I started importing plastic car models from Japan and started selling them to my friends. I thought I could sell more so I invested about 1200$ for stock, made calculations, set prices and started selling on different car forums. Soon I had a simple webshop and was selling through email. I was doing this for about 6 months when I started running out of money. I had no idea why as at least to my calculations I should be making money and even having some left. So I borrowed some money and fortunately made some money on december that year.
I soon got an accountant which helped me with my books. I still remember what he said when he finished my annual report - "it would be better to be home sitting than doing this". And he was right. I was making about 10% on 200$ monthly revenue which didn´t even cover the costs. Fortunately I changed my suppliers and I raised the margin to 50-100%. The profits grew but I had too little capital to buy more stock. I sold the business last year for peanuts.
I think it was last year when I checked my excel calculations from my first year. The mistake was with calculating shipping - I knew that the costs of the handling and shipping were about half of the whole amount. But instead of multiplying x2 for final costs I wrote x1,5. So instead of 50% I calculated the shipping cost me 30% of the whole amount. A simple mistake in excel cost me about 1 year in losses.
Lessons:
- Check your calculations!
- When something is going wrong, stop and check what is it and correct it.
- Hire a proffessional to help you with accounting.
- Don´t start a store with less than 10.000$ prepared for stock.
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