It's just business...

If you are like many new sellers, you quickly catch the "I want to do this full time" bug.  But as you see the sales dip and surge you start to question if it is really feasible.  You question if you really can make a full time living selling on ebay.  But before you throw in the towel from being to scared to jump, or jump too soon, there are some things you need to take into consideration.

First, there are thousands of people who make their living selling on ebay so it is doable.  But it takes a special breed of person to be able to carry this for any length of time.  The slow sales days can really prey on your sanity.  It's easy to get discouraged and begin to question if you made the right move.  Stress can be a real detriment if you don't take steps to control your business.  So what can you do to make it a little easier to deal with?  How can you keep your sanity in a business of extremes?  It's easy if you treat this like a real business.

One thing you need to do right from the beginning is to determine how much profit you need to make in order to be able to sell full time.  You also need a few months of a consistent track record on sales to ensure you are on the right track and doing things the way they should be done.  One good month doesn't mean you are ready to go full time.  Take the time to really analyze your business.  It's one thing to have $8,000 in sales and have a 60% profit margin.  It's a whole other ball game to do $8,000 in sales and have a 30% profit margin.  The latter will probably not get you to a full time seller.

Once you have identified what kind of profit margin you need, you still need to ask yourself if you will have access to the type of inventory you sell for the long term.  Is it something that will always be in good supply, or is it a time limited resource?  Are depending on one off items that are scarce?  These are important factors to consider.  If you run out of scarce or rare items to sell, your business just died.  Be honest with yourself.  Pretending you have access to all you need and not having it is a sure path to failure.

Next you need to set yourself up with a paycheck system.  Get yourself a bank account strictly for ebay.  All of the profits you make should go into this account.  Any purchases for the business should also come out of this account.  You want to have a nice revenue stream and you want it to grow.  Don't get caught in the trap of spending everything you make and counting on the next week's sales to fill the void.  You will get caught with your pants down sooner or later.  Be prepared with this step to mitigate any negative impacts a slow sales week would cause.

Now that you have your bank account set up, determine how much money you need to make on a weekly basis.  For me, it was replacing what I made at my real job.  This is going to be your paycheck each week.  Start with the lowest amount you can so you can use the excess funds to grow your business.  A basic rule of thumb is for every 500 items you have listed, your sales will increase by $500.  So if you have 1,000 items in your store, you should expect $1,000 a week in sales.  Some weeks will be higher, and some will be lower.  But the average should be about $1,000 per week.  If your margins are at 60% that translates into $600 profit per week on average.  You should be able to use about 20% of that to reinvest in new inventory.  You will not always spend that 20%, so any excess should remain in the account.

As you move forward you will see the amount in your business account grow.  This doesn't mean you pull out a lot of the funds simply because it is there.  You want to keep that as reserves for the weeks when sales are slow.  It's what allows you to continue to have a weekly paycheck that is always the same amount.  Let's do some numbers here.  Let's say you need $400 a week to make it.  It's tight, but doable for you.  At 1,000 listings, and a 60% profit margin that means you will have $200 left over each week.  You're reinvesting 20% of that $600 back into the business, so that's $120.  That leaves $80 a week left over.  Now at the end of the month you will have accumulated $320 or more depending on your purchases.  That's almost enough to give you an extra paycheck.  If you have a slow week, and your profits are only $300 you can fill in the gap for the other $100 from this reserve.  See how that works?  It make things a little less painful and relieves a lot of stress that you would otherwise have if you were taking 100% of the profits.

Run your ebay store like a business.  By following the formula above, you are running it like any normal brick and mortar business would run theirs.  Don't get comfortable and start taking 100% of the profits.  Sooner or later you will have those down weeks and not having the cash reserves to fill the void could spell the end of your selling career!