Last week, I had a garage sale so my son could experience a micro business in action.
A garage sale requires all the key skills needed for a startup: sales, marketing, negotiation, customer service, pivoting to match the market, revenue forecasting and managing expectations.
Our friends and neighbors donated used clothes, toys and household items. Prior to the sale, we discussed pricing and our target market. He reviewed and priced each item and I offer pricing recommendations for obsolete items such as VHS tapes and old clothes. Instead of spending money on an ad, my son made the garage sale signs.
When the day arrived – we were ready.
You Must Quickly Get Past Your Fear of Selling to The Public
Selling is the most important part of any business. I am not talking about hard selling tactics or in your face promotions. The selling I am talking about is making connections, building a network and letting people know how you can help. Every interaction counts.
I periodically read Mark Cuban’s blog and he often talks about the importance of selling. Without sales your company has little chance of surviving. Even if investors are willing to give you money, you will eventually run out of cash.
To be successful, you must be willing to talk with anyone and everyone about your concept. The best feedback often comes from individuals that are not in your target market.
My son did a great job talking with everyone that stopped by our garage sale; he answered questions and sold merchandise.
Think Fast On Your Feet – Make Decisions Quickly
During a garage sale, decisions must be made on the spot, no time for committees or brain storming session that last all day.
I have learned from experience that you sell 80% of the merchandise within the first two or three hours of the garage sale. If you have not sold your merchandise by noon, it’s not worth staying open.
Thinking fast on your feet is a requirement for launching a business along with the ability to make decisions quickly.
For several years, I faithfully read the daily blog postings by Mark Suster and Fred Wilson, both men are well respected venture capitalists and startup strategists. Fail fast is the rule. Mistakes help define where you are going and where you need to be.
Mother Nature and The Economy Do Not Care About Your Business
Within the first hour of our garage sale, a cold front [www.huffingtonpost.com/2013/03/22/punxsutawney-phil-2013-prediction-forecast_n_2932895.html?utm_hp_ref=green] moved through Dallas dropping the temperature twenty degrees with a strong north wind. My son became concerned that no one else would stop by the garage sale. He became frustrated at the weather and upset that all his hard work was for nothing.
Ironically, I had several sweaters for sale and these sold quickly as individuals passing through our neighborhood needed warmer clothes for work. I explained to my son that Mother Nature doesn’t care about our garage sale and that we must adapt to the new circumstances.
As a business owner, I encounter circumstances that are outside my control – like bad weather or poor economic conditions. We can chose to let these events side track our business or we can adapt and move forward.
Learning to Adjust Our Expectations
Before the garage sale, my son calculated our projected revenue and profit. Our only cost was the city permit. He was so excited and told everyone how much money we were going to make. He was mentally spending our profit. Just like the weather, we had several unexpected events in our neighborhood which decreased traffic and the likelihood that we would achieve his revenue projection.
The first couple of shoppers didn’t purchase anything because the prices were too high. I immediately reduced prices on everything as I knew we were competing with the dollars stores. I explained to him that to make money we would need to be very cheap on our pricing.
At first, he had a difficult time adjusting to the new reality and more realistic expectation. When the second wave of shoppers appeared and purchased merchandised he could see the reasoning behind my decision.
Adjusting our expectations can be difficult at times, especially when we become deeply invested in the end result. Many times we become married to an idea or revenue projection and fail to see the truth. I have learned that when something is not working you must step back and rethink the situation.
Know Your Market Early
For garage sales, there is no focus groups data, phone surveys or consultants to help you understand your market. Your information is obtained in real time and generally it’s the person standing right in front of you.
Will he buy at my price or not. Will I be stuck hauling this to Goodwill?
You must make market decisions quickly based on your past experience and what your gut is telling you.
Startups are similar in nature as you generally do not have the money for focus groups and I have learned that the best information is obtained directly from the target market. When I need real market information, I ask my neighbors, running buddies or individuals sitting next to me at Starbucks.
Take the time to understand your customers, visit with people and listen. Trust me, the information you need is close by it you take the time to notice.
Around 10:30 am we closed the garage sale, put the remaining merchandise in the car to be dropped off at Goodwill. We made enough money to cover our permit and to have a nice lunch.
My son was still disappointed that we did not make more money and is thinking about the next garage sale. He plans to find better merchandise, offer group pricing and make bigger signs.
I can’t wait to see what he does when he is older.