Ok, so I’m having a bit of a bad day. What better time to write about my epic failures?! Do you ever feel like you don’t have a clue how to run a business? Me too! I know, I know, you’re rolling your eyes right now because you’ve read my income reports. I am the first to admit that I have some things figured out- and these are the things that I freely share. There are parts of the business that are working for me and I have developed systems that can implemented and repeated over and over for fairly consistent income… but then there are the parts that I simply can’t figure out- Not for the life of me! If you’re struggling with parts of the business or if there are areas of business that seem harder than learning Chinese (If you are from China, insert the difficult foreign language of your choice) then this post is for you!Believe it or not, today I’m feeling completely inadequate and overwhelmed. It feels like the ability to run a business is beyond my intelligence, skill level and beyond my grasp. Usually in this business I stay positive, and stay focused on all of the success I’ve had and how far I’ve come, but these moments of felt inadequacy hit me every now in then. In fact, they hit me often enough, that today, I’ve even created a special category for this post- “business failures!”
EPIC FAIL! (Situation #1)
Do you see the picture above? Do you know that that is? That is the inventory that was sent back to me from Amazon because it did not sell over the course of a year! A YEAR! It may not look like much in the picture, but the car behind it gives away the true size of some of those boxes (and for the most part, the items inside are pretty small!) These came back to me in August/September (Amazon takes a while to ship them all back) as part of their “long term storage inventory clean up.” From here, it’s my responsibility to figure out what to do with all of these products- at this point, a lot of it is devalued and/or unpopular.
One of my team members is currently sorting through the products and creating a strategy to get this stuff moved- even if it needs to be sold in lots on Ebay! (at a massive loss!)
EPIC FAIL! (situation #2)
In addition to this weight on my shoulders, my insurance agent just called to help me enroll for new liability insurance and is asking me (very basic) financial questions about my business that I don’t know the answer to! I run a business!… and yet… I don’t have a clue about some of the current numbers or how to even find the data!
EPIC FAIL! (situation #3)
On top of this, for the past few months I’ve found it increasingly difficult to manage some of my team members due to inefficient (or non-existent!) systems I have (or don’t have) in place for time tracking, schedules and pay structures. I talk about outsourcing and I do it- heck, I even teach others about it in my ebooks!… and yet, this area of business is simply not where it could be- it’s not running as efficiently as I had imagined and I’m certainly not enjoying a “4 hour work week!”
MY #1 WEAKNESS IN BUSINESS
Why do I tell you all this? What do all of these things have in common? What can I learn from these frustrating experiences? I have horrible organizational skills! There! I said it! This is the unfortunate truth about myself that I would rather not face. When I do choose to face it, I am confronted with the possibility that my business could be be run ten times smarter, more efficiently and probably make ten times the revenue (and maybe would even allow me to “retire at 40!”) but alas, I am who I am and I have limitations- organization is a huge one- and it just happens to be an essential skill needed to run an efficient business!
Before I tell you my action plan (as if I actually have anything written down!) let’s back up. Instead of rambling on and on about all of areas in life and business that I could improve, for this post, lets focus on frustrating scenario #1 (boxes of products sent back from Amazon) and discover how I got here in the first place and then talk about what I did about it and what I might be able to do to prevent this in the future!
WHY THE MASSIVE AMOUNT OF UNSOLD INVENTORY?
So why am I getting boxes upon boxes of inventory back in the first place? Let’s look at potential reasons that this could happen to any Amazon seller:
1. Product being sold has no profit (competing products are selling for lower than you can sell for)
2. Product being sold has a good profit but a poor sales rank (low sales volume)
3. Product is priced out of the market (seller’s price is significantly higher than the lowest three sellers)
4. Product is new to the marketplace and adequate research was not done (product is not in demand)
5. Product is new to the marketplace and is in demand, but competition is too high
6. Product is new to the marketplace, has good demand and low to moderate competition but customers are unable to find your product due to inadequate promotional strategy
These are just some of the areas that prevent sellers from moving their inventory. Now, I had a hunch on why these products didn’t sell but due to my extreme disorganization, I did not know for sure. It turned out that my primary problems were #2 and #3 (poor sales rank and priced out of the market) but how did I figure this out?
HIRE SOMEONE SMARTER THAN YOU
Usually when I “outsource” I find someone who is willing to work for reasonable pay and I train them on exactly what I need. These are generally areas of the business that I’ve done the work in so I can explain exactly what I want. It turns out, if you hire someone to do something you don’t know how to do yourself, it’s very difficult to train them. Well, I did not learn my lesson quickly. Over the course of this business, I’ve hired 3 different people to “manage my inventory” when they did not possess the expertise and I didn’t know how to do it myself! In an effort to “save money” I ended up paying out for work that was essentially useless. I was giving these workers theoretical “methods” that really didn’t work! (are you STILL reading my blog in hopes of solid advice?!)
I finally “bit the bullet” and posted a job on Elance for an “expert.” I made the requirements very specific and inflexible (must have prior experience with Amazon sellers, must be familiar with Amazon’s systems, reports etc, must provide history of work etc). My goal was threefold:
1. I wanted to prevent this situation from happening again. I need to at least significantly reduce my inventory that has been sitting for six to nine months (the next “clean up” is in February).
2. I wanted to get a handle on the state of my current inventory- to know where things stand
3. I wanted guidance for managing the inventory going forward- basically instructions on how to run my own business (sigh)
The “job” I posted was so specific that I only received 3 applicants- 2 of which were not even close to meeting the specifications! The only person who met the qualifications requested was $500. I fought my urge for cheaper labor and went for it. It was worth every penny and more!
I was given regular reports as she sorted through the inventory and found the problem areas. The biggest issue found was the fact that I was not giving my inventory the attention that it needs. These days I focus my energy primarily on my wholesale and private label product while outsourcing nearly all of the work of my arbitrage and media items. It seems in doing so, I’ve really dropped the ball!
While I always find products with a reasonable sales rank, if I don’t watch them regularly and keep the prices reasonable, the items can quickly lose popularity and the sales ranks will reflect this. If I wait too long, I essentially miss my “window of opportunity.”
In my repricing software, I can set the “floor” (the lowest price I’m willing to sell at) and the “ceiling” (the highest price I’m willing to sell at). When I first started, I would set my “floor” near my cost of goods. I was continually disappointed that I would sell out nearly at cost due to competition driving the price down. I would then see that all the low ball sellers would sell out and the price would go back up- to reasonable market value. I learned quickly to keep my floor high. I started setting the “floor” just below the current price when I purchased the item in most cases. Well, it seems this was a case of the pendulum swinging too far in the other direction. In my effort to hold out for more money, I made the mistake of holding out too long! Once the item’s sales cycle is about finished, it’s very difficult to sell the product even at a price where you break even!
Interestingly, some of the items I received back actually still have great sales ranks! They were simply priced too high! Others started with a good sales rank, but have now plummeted in popularity due to holding out for the best possible sales price! The good news is, I can still sell the good sellers at a reasonable price. The bad news is, I paid a year’s worth of fees on these items and the unpopular items will likely need to be sold in bulk for pennies on the dollar!
Now for a very anticlimactic ending to my “epic failure” post! Where do I go from here? I don’t know. That is my honest answer. I was hoping to have it figured out, but I don’t. In fact, the reason I’m writing this post is to avoid tackling this item on my to-do list (sort through and manage inventory)- and yes, I DO keep an actual to-do list! I started this task today and was immediately overwhelmed. The girl who took on the job of managing and reporting on my inventory sent me all kinds of beautifully designed graphs, charts and spreadsheets. I’ve read her reports countless times and each time I become increasingly aware that she possesses skills and abilities that I simply don’t. Her recommendations for moving forward talk about things like “simply” filling in spreadsheets, applying filters and formulas, identifying problem areas, analyzing, calculating, bulk uploading and more, and none of it makes any sense to me-even when she’s explained the some of the processes in detail. My mind simply does not grasp it. I’m insanely jealous of readers who write me explaining all of the spreadsheets and data that they have filled in from their business endeavors. The truth is, I never even tracked my sales until I started this blog (and now I do it out of necessity to create my income reports!) Yes, this is incredibly embarrassing, but I’d rather be honest than mislead you!
My wife has slightly better skills in the area of organization than I do, but in talking to her, she felt overwhelmed as well and does not feel that she can handle the task of inventory management. I’m now thinking about hiring someone to regularly maintain this, but it would be nice if I could figure it out first so I could train someone.
The biggest benefit that I’ve received from hiring off elance was to see my long-sitting inventory moving again! The sale really picked up (of course, most of it sold at a very small profit or slight loss, but at least I’ll never see it again!)
I admit I feel a bit guilty leaving my readers like this, but this was the reason I titled this post the way I did (and yet you didn’t heed the warning!)
The good news (for you) is that you will know by February if I figured this out or not as that will be the time that I receive unsold merchandise back once again. Until then, I’m continuing to focus on what’s working and I’m trying to figure out the rest.
A couple things I would like to note before wrapping up:
First, “organization” is a pretty broad term. None of it comes naturally to me, but there are areas I seem to be able to learn the skills for and areas that I simply can’t grasp. This post refers mostly to the areas I can’t grasp which have to do with numbers and systems.
Second, on a related note, I mentioned in this post that I do keep a “to-do list.” This is not something I would “naturally” do, but I’ve learned over the years that this is essential for me and it’s one of those areas that I have learned some of the kills for! Years ago, I read “Getting Things Done” by David Allen and it completely revolutionized my world (I admit, it took time for me to integrate this system into my life, but I’m getting better and better at it (still not perfect- I don’t clear my inbox every day!) Wunderlist is an essential app for me and I have learned to rely on it. The app is based on the “Getting Things Done” system and is constantly being improved (and it’s free!) If I didn’t have a regular to-do list, my business would literally not survive! I would highly recommend looking into the getting things done system if you, like me, struggle in this area!
Usually this is the point where I say “if you want to learn from me, download my ebook” but instead, I would like to learn from you. If anyone has learned a simple system for regularly checking pricing, competition, sales ranks, inventory age etc on hundreds of items quickly and efficiently, I’d love to hear about it! As always, thanks for your support!