Wednesday, April 23, 2008

The Larger View ~ Part 1

This renamed (I hadn't realized there is a financial blog called the Big Picture, so I have renamed this thought stream) post is the first in a series that will appear once or twice a week discussing the pitfalls and pleasures of running an e-tail business today.

Anybody can start a business, people do it every day. It is even easier to start an online business. A tiny proportion of those new businesses succeed. An even smaller percentage succeed by sheer luck. The vast majority fail and they fail for many reasons but the main reason is that they do not have a viable or realistic business plan.

A large business that became successful by creating and implementing a sound business plan can coast along for quite some time without good leadership. Management policies that were set when effective leadership was in place will ensure smooth running. Eventually it will stagnate and decline.

A large business managed actively but without clear and defined applicable goals will deteriorate. A small business can become unprofitable very fast unless management is proactive.

These are facts that many eBay sellers are discovering the hard way.

What is the Goal?

Everyone starts a business with different hopes. Just about everyone wants to make money. Making money is not so hard. Making a profit is a whole different matter. Think about it.

We need to have a goal; without a goal we have no way of knowing where we are going. If you don't know where you are going how are you going to get there? Will you know the right way if you see it? Will you know if you have arrived? That is why you need a business plan, as you achieve your goals you add new ones, a planned and logical road map to success. If you reach a road closed sign you can use your business plan to find an alternative route.

The simple definition of Profit for many casual eBay sellers is "I made enough money to get this really neat (insert word of your choice here)!" You can laugh but you know it is true. A better simple definition would be Income less Expense = Profit

How do we increase profit?

The obvious answer would be to increase Sales, more sales = more money coming in + more work. That will not necessarily guarantee higher profit unless we also decrease the cost of sales or expenses. I believe the answer to increasing profit is to 'work smarter'. Ways to do that will be discussed in the next Big Picture post.

What does all this have to do with eBay?

One of the best posts I have ever read about eBay's current business plan comes from someone who posts as TheBigOldDog.

eBay has become just like any other monopoly: Arrogant, condescending, insular, capricious, predatory and oppressive.

John Donahoe's personality fits the organizations perfectly. He's a Stanford-Bain elitist who has nothing but disdain for eBay Sellers and the "junk" they sell. He's better than you are. You're too stupid to understand his brilliance and he has no problem saying it to your face as he has in the taped eBay events I've seen.

Sooner or later the financial results will begin to reflect what's being done to eBay and everybody will search for the reasons which are obvious to anyone right now who cares to look.

Meanwhile back at the store . . . while John Donohoe is busy being brilliant he is wreaking stress, havoc and devastation on thousands of small sellers. We need to pick ourselves up, move on and get out of the way so we don't get caught in the mess. We need to network, share information, and help each other because it is what will make us all stronger. People like you and I made eBay THE auction venue. We can do it again somewhere else but we should remember this time that strength lies in diversity and not create another monster.

Your comments are a vital part of this discussion, without comments it can't be a discussion, its a monologue. Monologues are boring to write and probably boring to read. You can comment as Anonymous or you can give yourself a new name, just set up a new Blogger account.

Next post . . . Alternative Venues . . . Loudfrog Y'all come back, and be sure to click VICTORIOUSLY on any interesting links in the sidebar!

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