How can I tell when to go 'Full-Time' when selling on line?

On an on-line forum, the other day, I saw a question from a seller asking about when it would be feasible to go ‘full-time’ with his on-line business. That isn’t just a single number that can tell you that. Here are only some of the things you should consider.

Well one thing you must look at is not your sales figures, but your net profit figures. A person could sell $7500 worth of product a month, but because of high costs and expenses and a low profit margin they could be netting only $250/month. Not enough to quit your other jobs or businesses. Someone else could have $7500 in sales and because of high profit, low costs and expenses are netting $5000/month. That my friend is a livable income. If you don't think it is, try living on a SS check that is 1/4 of that and see how you feel.

Over the years as I have sought every idea possible for living and surviving on Disability pay, I've seen many folks bemoan the fact that although they earn $250,000/year they can't make ends meet. Well to begin with in their head they are thinking I make a 1/4 of a million dollars a year I should be able to afford ______ (fill in blank). the reality is with an income that high, they are forgetting the money they send to their Uncle Sam, the governor and mayor as well as to SS and Medicare, etc. They may only be taking home $180,000 or $70,000 less than they thought they were making. You must be clear in your head just exactly how much you are making when deciding if something has turned into a full-time job/business, and it takes lots of figuring to come to those numbers. Of course, you also must see an entire year's selling cycle to see the peaks and troughs of your income during the years. My best months selling months are January>April. My December sales are generally in the toilet as I don't sell items that are gift type things. I sell items that you can make gifts from so they should be bought out further ahead of Black Friday.

Lots of things to look at and figure out. How efficiently are you running your business? Are you spending money where you need to? For instance, I have bought items from people that have a hand scribbled address on the package, don't bother with a return address and no packing slip. Apparently, they don't want to invest $40 in a printer. Instead they send out packages that you have nothing in your hand to help remind you of the seller's name in case you want to buy more. Same with sellers that won't invest in a scale. Both items are business expenses and both will allow you to keep shipping expenses correct and help you promote your business. So, the person netting $500 a month might be able to change that number to a higher one depending on how he deals with expenses.

So, before jumping into thinking you can support yourself if needed on your on-line income, be sure you KNOW what that income is. Of course, you can also look at your own living expenses to see if you can chop things out if necessary so that you can live at lower costs as well and figure out how many months you can live off what is in your savings account. You don’t want to go full-time with $500 in the bank only to have a major selling slump with no income coming in for days if not weeks, or due to being dismissed from selling on the only site that you have and have poured all your energy into. Lots of things to consider before making the full-time plunge.

Bookkeeping and You

Much of my time in the past month or so has been taking up with sorting through piles of paper and doing taxes. Something I'm sure we all love to do. I got behind this year due to my poor health, but I decided that I'm not going in the direction any more. Losing and not tracking receipts can cost you money by making your income from being self-employed higher than it really was. Every year I try to find better ways of dealing with the paperwork involved with running 2 businesses that my husband has. It is tough. There is a lot to keep track of of the rules are ever changing.

When it comes to selling on line, or having your own business of any kind there are many things that you need to be aware of from the point of your own business being an idea in your head so that you can track expenses and then as you start selling, your income. While you may want an accountant or tax preparer to do your taxes, YOU need to be aware of the government rules  so that you save the proper paperwork to give to your tax person. They can't take a deduction for you is they don't have any paperwork showing that you paid for something.

Over the years on many forums I have seen many people that don't want to be bothered with tracking income and expenses because they don't think they are in a business, this is just a 'hobby' to them. However, what happens when that 'hobby' begins to take up 40 hours a week? It has gone past the point of a hobby and into the realm of being a job or your own business. Treating your hobby as a business from the beginning can help you keep more of your income because there are more deductions available to a business than to hobby income. The best thing to get is a current copy of IRS Publication 334 Read it. Don't understand it? Read it again. I have done my family's taxes for my entire adult life and I still have to read up on the rules and any changes. And yes, it is confusing but it doesn't mean you get a 'get out of jail free card' just because you don't understand the rules. The IRS doesn't care if you don't understand something, they expect you to follow the rules anyhow.

I'm not suggesting that you become an IRS expert, but that you understand the basics, such as what is considered an expense, what is income, and those sorts of things. Read through the Publication 334 paying special attention to chapters 6-8. Copy those pages out and go through them with a highlighter. Many rules are there for multi-million dollar companies and most of us who are making some money on line aren't probably going to get there, but we don't want to miss those deductions that we can take.

Now I'm taking my own advice and going back to my tax forms with 334 to be sure I did everything correctly.

Begin How You Plan to End

Begin How You Plan to End. What does this mean? It is simple. If you want a great ongoing success as an online seller you need to start out with that thought already in your head. It means you do the research ahead of time so that you are knowledgeable about what on line selling is all about, what a particular venue may require of you, having a firm knowledge of where you will source your inventory from, and be willing to charge the prices that make you a profit. By the way, profit (in my opinion) is not clearing $0.25 when all is said and done.

Over the years, those of us that have taken some newbies under our wings to help them have tried to get some of them to understand that the prices they are charging isn't going to make them any money at all other than the quarter I mentioned. I've even found sellers that were losing money when all was said and done! That isn't the point of selling on line! The point is to make money! We have frequently been told that they aren't doing this (selling) to make money. It is just a hobby. I can understand crafters that love to craft selling their finished articles to make enough money to finance another project or two. But I have a hard time understanding most of the 'hobby' sellers, selling what they do just as a hobby. I sell sewing patterns on line and have for years, I have run into other pattern sellers that list patterns for a tenth or less of what I sell mine for. Yet again with the excuse that it is only a hobby. I have proved through my sales that people will pay more for a pattern, so why not price them accordingly and make much heftier hobby money instead of pretty much nothing? If you want to sell on line as a hobby and you don't care at all about profit, please be considerate of those that sell on line to keep a roof over their head or food on the table, and don't sell at give away prices.

All this comes back to begin how you plan to end. If you can see yourself, or even if you don't have the self-confidence to see yourself that way yet but are hoping to do well, as a successful seller, think about what you need to do to get there. You need to learn how to take excellent photos of what you have for sell or else learn how to get someone to do it for you. You have to learn how to write good titles and listings, paying attention to spelling and grammar so that your listing looks professional. You have to learn how to write up your Terms of Service (TOS) so that you are fair to both your buyer and yourself, you have to be able to write up an About Us page so that potential buyers will trust you and see the link between who you are and what you are selling. You need to learn to spellcheck, proof read, and throw out the texting dictionary since believe it or not, not everyone has a cell phone and don't understand all those cutesy abbreviation. You want to write everything clearly so that they understand what you are selling even if they can't see the picture, and take your pictures clearly and well enough so that they don't really need to read the listing although you hope they will!

Set up a book keeping plan taking advantage of your computer. When I was first selling on line another seller admitted to keeping track of all her sales in a paper notebook! Use the resources available to you. Think up ways to promote your goods to your world wide market, not just the folks in your town. Think of what truly interests you or what you know a lot about when deciding what to sell, as that makes it much easier than trying to learn and understand a product that you don't understand what it is for and you have to write a convincing listing so that someone will buy it. Don't look at this as an opportunity to get rid of the yard sale leftovers that haven't sold at your last three sales. Unless you have researched the articles and know they should be worth something, don't bother trying to sell trash. Trash belongs in the trash.

We will be talking about all these issues over time, in the meantime put your thinking caps on and think of it this way. If you got hired as a lower level manager with a chance to climb the ranks to eventually be CEO of the company, would you come to work the first day on the job in dirty, holey blue jeans and a ratty T-shirt. If your answer is yes, this blog isn't for you. If your answer is a resounding no, then keep following. I will be posting as time allows since I am busy with my own successful business. 

Thought for the Day: Don't forget that the moment you start your business you have just become a CEO!