Lowdown

Founding Members: 2
Scale: Small-medium
Capital: ~$5,000
Hustle: Low
Break-even: 3 Months
Cash-flow positive: 1 Months
Risk: Medium
Ceiling: $5-10M
Geographics: Presence not required depending on niche
Business idea: High-tech services available the moment you log on.

Overview

How many times have you been thinking about an idea, only to be quickly stalled by a thought like “ugh, I’d have to find a [designer, coder, expert, etc.] to implement that.” Then the whole project is dead. Maybe it’s a Crystal report your manager wants done but it screws up your priorities you can never get any “real” work done. The problem with using outside consultants to do this work often seems like additional cost, but the truth is that getting outsiders to do small projects is in fact too cheap and difficult to spend time figuring out. Big retainers are just not realistic in these scenarios. Enter the real-time consultancy.

What if, when your manager needed a new TPS report, you could just direct him (or yourself) to the consultancy where, on demand, he could describe the report he needs in chat (or phone) and someone would be working on it immediately. Ongoing questions could be fed back to him and he could see work in progress and internal group communications. Because it’s a simple report, he is able to download the finished revised copy in an hour. This is something companies large and small will gladly pay $150/hr+ for, because there are simply no reasonable alternatives to get the job done. In fact, they save money this way.

The Job

The titled focus, “Tech Consulting” is way too broad. The first thing to do is decide on a niche that has a large potential market and can be effectively done in real-time. Highly professional entrepreneurs here will feel confident in being able to deliver very high quality on-demand even with complex projects. This ability is solid gold, and many companies large and small will pay whatever is asked to get it. On the other hand, if you are anything less than a serious expert with years of experience, common issues will sink you on day one. In this case you need to refocus your efforts to a domain that you can confidently deliver on. Here are some prime opportunities for this business:

• Web development – Ruby on Rails, LAMP, .NET, etc. If you can deliver db-driven web solutions immediately, even if not pretty, there are zillions of customers out there waiting to give you $150-250/hr.
• Graphic Design – Whether it is for interactive or print if you are a designer, there is a line out the door of small projects that will never ever be done if you don’t start this business. Every techie entrepreneur at some point needs some graphics done and gets terrified. Maybe he is an on-demand web developer and needs his project pretty for the client. Maybe this is a large company that just needs an ad graphic rearranged and doesn’t want to deal with their primary contractor. Maybe it’s a small company that can’t afford a big contract but won’t accept junk from most independent consultants.
• DB Admin – What small companies can afford a full-time DBA that knows what they’re doing? OK. Now how many need a DBA. Right. They could all use a few hours here and there. If most of their DBs die or need some sort of optimization, they have nowhere to go.
• Reporting – If you can make crystal reports, you can easily charge $100-200/hr for this. Most reports though, are needed immediately, so this is for you.
• UI Design – Make windows or web UIs (you don’t even need to be a graphic designer for this one). If you know what you’re doing and have some credentials, there are many UI challenged products out there that are looking for help.

The Market

The market is dependent on what you bring to the table. Because this is a new offering, market analysis is tedious and historically unreliable. We have attempted to estimate the market based on the little similar, existing demand out there: web based outsourcing. Here are numbers we were able to compile:

• ASP.NET/LAMP web development: Top 5 earners on guru.com registered $1MM in past year. Normal US-based consultant can expect to charge at least $80/hr for programming work.
• Windows developers are also bringing in at least $80/hr.
• Crystal Reports is the de-facto standard in database reporting, and custom reports must be made for most enterprise applications out there. The designer program itself has sold over 14 million copies.
• Graphic designers can normally expect to earn about $70/hr in major markets.

Of course this is a sad impersonation of this very cool business. The outsourcing sites require negotiation, are slow, and most importantly quality is questionable. The fact that you can start work immediately at least doubles what you can charge per-hour. Design for $70/hr should be charging $150/hr to work on-demand. If it needs to be done, it almost always needs to be done now.

Making it Happen

This business absolutely hinges on your firm building a solid reputation for always delivering top-shelf quality. Considering the focuses, of course the best option is one company that can do all of these things. Some uber-techies are super pro in all, in which case a single person could be booked solid while simultaneously developing a rock-solid reputation. However in most cases you’ll specialize and also bring on additional staff to ensure quality stays at the absolute maximum. We recommend starting in your focus and expanding as the business floods in. The biggest problem here is being able to handle the very big peaks that can come in up front. If it’s just you, how many projects can you juggle simultaneously?

Startup Plan

Start with one partner. Ideally this person complements your skills. If you are a programmer, get a designer. Otherwise, go for depth instead. You both rock at PHP? OK, you’re going to develop the premier LAMP firm on earth by delivering top notch apps on-demand. You just better know how you’re going to get design done when the project finishes and your client asks how they can make it pretty now. At the very least, have a great designer lined up that you can refer to. As you send them more business, hire them fulltime.

Step 1: Build the site

Setup a site that describes all this. Use a CMS like Joomla or CommunityServer (both are used by big companies). Buy an expensive template, and/or get a designer to make it look very modern and web 2.0. As all consultants know, this initial impression is everything, especially since you will be completely virtual. Get a ridiculously pro, sleek logo. You can always go web2 on it like us and just cheap out with a reflected text graphic. Don’t you wish there were an on-demand designer you could use for this? Wouldn’t you pay $150/hr to have it done now? Exactly.

Step 2: Figure out your comms

You’re going to need a live chat system to juggle multiple projects. You can’t effectively take inbound requests by phone for multiple people. There are a billion systems that are very good, but it really depends on what CMS you’re using. Liveperson has been around forever and is pretty good. You’re also going to need stuff to share documents and track to-dos, etc. Check out basecamp from 37signals. There are a few alternatives now, but this is still excellent for indies.

Step 3: Billing

You’re working real-time, you better get paid real-time. The meter starts after you present the rate, make a very rough estimate, and start working. This is not an old fashioned consultancy with paper invoices and 30 days payable. Get their credit card. Bill them automatically every 15 minutes to half hour. Use freshbooks to do the invoicing and CC charging. Build an app for this if needed.

Step 4: Get Work

Do all that normal web marketing stuff, but also get yourself into elance.com and guru.com and offer services there. The people shopping at those types of sites are going to be blown away by your offering. Eventually these sites will ban you because you’re going to steal their business. Be networky. Get cards. Do all that. Get blogged about. The adwords alone (like “crystal reports” “immediate” “on demand”) are going to swamp you.

The Numbers

You really want constant business coming in. When your workers are not on client projects they should be developing the very unique infrastructure. Basic numbers are like this:

Startup

• Web & logo design / template - $500
• Misc supplies (voip phone, biz cards, etc) - $500

Regular Costs

• Accounting system $50/mo
• Chat/meeting Communications $100/mo
• Hosting $20/mo
• Office services (phone, paper, etc) - $200

Revenue

• 2 workers, 30% capacity = 2 x 30% x 165 = 99hrs x $150 = $15k/mo
• Remaining capacity reinvested to infrastructure and marketing

Bottom Line Gross Profit $14k/mo

Conclusion

The big downside here is shared with traditional consulting firms: if you’re not working you’re not making money. This is not something you build and put in the store and sit back and collect money like with iPhone AppStore or real estate investing. That said, it is also like any business in that your intent should be to build it up to the point that other people do the work and you just hold stock. Geographics don’t matter because you don’t want to burden your clients (or yourself) with having to arrange in person meetings. Being able to start immediately allows you to do this from anywhere, and you don’t even need an office. Once you have several workers though, there is substantial incentive to have one for efficiency and training sake.

This is another one of those TrendGrinder concepts that can be started in just a couple of days by a couple of highly motivated people. The hours are NOT intense outside of regular start-up marketing, because although it is on-demand normal business hours can be kept. For a truly impressive offer, this can easily be scaled up to offer 24-hour work while you sleep products. This is where the Bangalore office comes in.

Have you ever walked down the street or passed by a particular store and thought to yourself “how or why is this guy in business”? There are literally no customers in sight and the business itself services what conventional wisdom would think to be a non-existent market. How are they paying the bills? Unfortunately, I ask myself this almost everyday as I walk through the streets of Grantville, a little-known part of San Diego tucked away on the edges of Mission Valley that seems to have been left for dead when the 80’s rolled around. It’s always an adventure walking through Grantville, you never know what you might find.

Yup, that’s right. You’re looking at a real life sewing and vacuum cleaner repair shop that appears to be left over from the 80s. While this might have once been a hot business idea for an ambitious young entrepreneur, the fact of the matter is that our buddies over in China have perfected the manufacturing process (and eliminated child labor laws) which allows them to produce and sell sewing machines and vacuum cleaners for a lot less then we can. As a matter of fact, I paid $40 for my vacuum cleaner 6 years ago. When it breaks, I won’t be getting it fixed; I’ll be throwing it away and getting another one for $40. Let’s examine one of these Grantville businesses a little bit closer to see how exactly they survive.

Overview

Here we have a prime example of a Grantville business; a rug washing company. It’s a fairly simple business model where customers can bring in their throw rugs and have them professionally cleaned. Their slogan is “lug your rug and save”. The slogan insinuates that customers can save a little money by bringing the rug into the plant themselves versus having someone come to the house and clean it or pick it up. These guys have been in business since 1946 and the spinning sign above is a testament to that as I believe those went out of style in the 60s.

Don’t get me wrong, I understand the value of this business. Some people have expensive rugs and once in awhile they need to be cleaned. My argument against this service is that anyone that would be willing to roll up a rug and drive it all the way to Grantville most likely wouldn’t spend a lot of money on a rug and would probably throw it away when it became dirty. However, we’ll give them the benefit of the doubt. Let’s see if we can figure out approximately how much money this company might make.

The Numbers

If you believe Manta then it looks like they make about $76,000/year in gross sales and have approximately 3 employees. A little quick math and those numbers don’t seem to work out very well for the business owner or the employees so they’re most likely incorrect. I gave them a call this morning and asked how much it would cost to get an average 6′x9′ rug washed. The receptionist then proceeded to ask me if it contained any human protein such as vomit or urine as they charge $10 extra for that. Luckily my rugs are all vomit and urine free.

The pricing breakdown is as follows for the 6×9 rug.

• Synthetic Rug - $44 - $54
• Wool Rug - $95 - $121

The synthetic rug pricing was fairly straightforward at $44 with a $10 vomit surcharge but a wool rug costs quite a bit more to clean. Like anything else that’s wool, it requires dry cleaning. On top of that, according to the friendly receptionist, many fine Persian rugs which are truely authentic are made using special exotic dyes which will require an acid wash before cleaning to lock in the colors and prevent them from bleeding. This is why the price varies so much for the wool rug cleaning.
During a visit to the rug washing plant I counted 12 average sized rugs sitting outside drying. I walk by this plant fairly often and I would say that on average there are 10 to 12 rugs outside drying at any given time. I assume these are all synthetic rugs as the wool rugs are all dry cleaned. There were also 5 or 6 small doormat type rugs drying but we’ll ignore those for this analysis as they only charge $20 to clean those. As far as the wool rugs go I’m going to assume they only clean 3 to 4 of those a day.

Conservative Monthly Gross Sales Estimate
synthetic rugs - ~$8800 (10/day @ $44)
wool rugs - ~$5700 (3/day @ $95)

Aggressive Monthly Gross Sales Estimate
synthetic rugs - ~$12000 (12/day @ $50)
wool rugs - ~$8400 (4/day @ $105)

Total Monthly Gross Sales Estimate - $14,500 - $20,400

With an estimated average annual gross sales of about $210k the owner should be able to pay 3 employees 40k/year and have around 90k left over to pay the bills. This still doesn’t sound like enough money to cover operating expenses AND make decent money for yourself so I did a little digging. The key to this particular business is the rent. There is none. According to city records the property belongs to a James Schwerma who, in case I didn’t mention it earlier, is the owner of the rug washing plant.

Conclusion

I have to admit, I’m actually kind of surprised at the revenue these guys might potentially be pulling in and I’m sure my aggressive estimates are probably still on the low side. While the rug washing business may not make you an overnight millionaire it is a viable business. Owning the property you do business on is a huge advantage as that eliminates one of the largest fixed operating expenses (outside of salaries) for most small businesses. Furthermore, being in business for over 50 years gives you some credibility and lots of recurring business. While I wouldn’t recommend opening up a new rug washing plant I think it’s safe to say that these guys will be around for years to come

Get out your stretchy pants and start practicing your One-Legged King Pigeons; we’re opening a Yoga studio. While conventional wisdom might lead you to believe that this market is completely saturated our research says otherwise. With a total industry worth $5.7 billion there’s always room for one more. With the proper location and demographic, this could be very lucrative. Besides, you get to look at hot chicks in stretchy pants all day long. Some people would actually pay to do that.

Overview

There’s always room for another Yoga Studio. In fact, according to the latest “Yoga In America” survey, spending on Yoga and Yoga related equipment is up almost 87% since the last survey done in 2004. The same study found that roughly 6.9% of Americans practice Yoga on a regular basis. Furthermore, nearly 8% of Americans say they are very interested in trying Yoga and another 4.1% say they would try it within the next year.
Much of this can be attributed to the perceived lifestyle that comes with being an active Yogi but there are other forces at work here. In a study done by the AAFP (American Association of Fat People??), they found that 58% of Americans are overweight or obese. That’s an astonishing statistic. The majority of Americans are fat–amazing. Because of this, Yoga has become increasingly popular as a low-impact, high calorie-burning exercise regiment recommend by doctors and nutritionists nationwide.

The Plan

Yoga studios are one of only a few retail businesses which require almost no fixtures of any sort. As a matter of fact, you basically need a completely empty room with some nice laminate flooring, a sound system, and a small reception area. The most important thing is going to be a good location and lots of visibility. You want people to know you are there. I would suggest spending the majority of your time hunting down a good retail store front on a busy street, preferably in an urban area. If you’re an existing Yoga instructor looking to branch out on your own it’s going to be even easier as you already have a group of students loyal to you.

The Numbers

Startup Costs

• Lease - 800-1000 sq ft studio - $3000/mo
• Yoga Mats - = $1000
• Commercial space renovation - $20,000 (probably overkill but better to be safe then sorry)
• Advertising - $10,000
• Sound System - $1,000
• Utilities - $100
• Working Capital Reserves - $40,000 (approximately 1 year with zero income)

Total startup costs - $75,000

Let’s take a look at an example and do some numbers.

The Market

Downtown San Diego is a perfect example of a growing urban location. According to sandiegodowntown.org the downtown population has increased nearly 20% since 1999 with an additional 10,000 condos coming online within the next 3 to 5 years. That’s a healthy growth rate which should be able to sustain new businesses for years to come.

In a quick Google maps search I’ve located three Yoga studios within the confines of what’s typically referred to as “downtown”. In theory, there should be enough active Yogis downtown to easily support 4 separate studios.

Location “E” is a category spammer and not even a Yoga studio so they don’t count. Right now we’re looking at B, H, and D. We’re going to make some assumptions based on the information from the articles I cited earlier.

Downtown San Diego Population according to sdlookup - 27,494
Number of active Yogis downtown - 6.9% of 27,494 = 1897

Typical rates for downtown Yoga studios are as follows.

• $14 for a single class
• $52 for 4 classes
• $96 for 8 classes
• $130 for unlimited classes per month

Let’s assume that only 20% of active Yogis carry a monthly unlimited membership. Two times a week isn’t quite enough if you’re hardcore so most people will pay the additional $34 for the freedom to go however many times a month they’d like. If you can muscle your way into the current market and steal 10% of it through creative advertising and hustling you should be able to collect almost $5000/mo in membership dues. That level of business alone will pay the bills and if you can generate 50 monthly recurring unlimited memberships that should gross around $6500. Once you’re comfortably operating in the black you can focus your attention on marketing and grabbing new customers as residents start filtering into the new condos all around you. Ultimately, your income will be limited only by the number of classes you can hold in a day and the size of your studio. In theory, a typical studio should be able to accommodate 200 members taking classes 3 times a week assuming you held 8 classes per day for 7 days a week with 30 students in each class. This could potentially gross about $26,000/mo. I’d wear stretchy pants for $26k/mo.

Time Requirements

At first you will be doing the majority of the work conducting several classes a day and handling all the administrative duties that go along with the studio. Expect to be working 10 hour days. However, I suspect that after you get to a level of 30 to 40 members you’ll be able to consider hiring an additional instructor willing to work on a per-class basis. This will ease your load significantly as each class you outsource will give you an additional hour to hour-and-a-half to yourself each day.

Conclusion

While the Yoga market is not something new, there’s still plenty of room for new players. With a relatively low barrier to entry and minimal capital requirements a Yoga studio is something that can be started with around $75,000 in initial capital (less if you’re an existing instructor with a fairly good sized student base). The key to opening a successful Yoga studio will be location and visibility. In other words, if you build it, they will come.

Imagine, a free directory of stuff you can have just by driving around and picking it up. You might as well turn your ability to drive and lift into a money generating hobby. If you get serious though, you can easily turn this into a real business. I’m going to tell you how a day of scavenging one day a week nets me $500 per month. Dominating several sectors can easily pay the bills and leave a healthy profit in most metro areas

There is simply a ton of free stuff out there. Recently I posted a free ad for this crap that I didn’t want to deal with moving. Within 45 minutes the scavengers came and stole off with it. I tried to make a time lapse of it, but it was gone so fast that everything is gone from one frame to the next! Someone’s trash is another–you get it

What to Look For

You’re going to want to go after the mid-size items, like TV’s, stereo equipment, computer equipment, and any mid-size item of value. For example, a quick search as I’m writing this article yielded these FREE items in my area:

• HP 19” monitor (worth up to $80 on eBay)
• Sharp 27” TV (sold for $50-70 on eBay)
• Rita Mulcahy’s PMP prep book (sells for $55+ on Amazon)
• 2 drawer file cabinet (worth $30-40 retail)

Employ different strategies depending on the size of your truck/van and your cash goals. Depending on what is available near you, what you have knowledge about, and how much you want to make, specializing will allow you to dramatically improve your ROI (on time and fuel). Here are the niches which work best:

1. Target nice or decent furniture, then consign it every Monday to a local auction to be resold. This one requires the truck and perhaps a temporary storage area. A tarp in the back yard works almost as well.
2. Focus on getting all the books you can get your hands on, then resell them on Amazon. Even a book that sells for 1 penny on Amazon nets you over $1 because of the shipping profit. Sell 500 books in a month, make $500+! (This is my focus)
   
3. Target free moving boxes, then resell them to local Public Storage or Shurgard storage centers that sell supplies, as some of them pay up to $1 per box! You didn’t even know you could do this but it is commonplace.
4. Target broken electronics (TVs are best), fix it (or pay someone to), and resell the working electronic. Become a domain expert in some sort of tiny repair. Many electronics have common failure points with predictable, and often miniscule, repair costs. I put a new $0.05 capacitor into a “dead” big-screen TV, and resold ir $300. You don’t need to be an electronics expert. Just learn the tiny bare minimum you need (like how to replace a CRT, or LCD backlight (or in my case measure a high-voltage capacitor) and you’re in business. Be resourceful.
5. Target office furniture, and fill a cheap warehouse space with the stuff you pick up. Office furniture is very high dollar stuff, and most small businesses either can’t or don’t want to afford it. They also won’t deal with buying from a bunch of unreliable sellers. They will love coming to your storage space that is open one or two days a week to outfit their whole office with used furniture. You’re only cost is time, gas, and storage, which should be less than $0.75 per square foot even in expensive markets.

Parts List

• Overalls (to help you get in the mood)
• Truck, van, SUV, Mini-cooper, Radio Flyer wagon, or Roller skates
• Phone with an Internet browser (or laptop w/wireless card)–just get an iPhone already
• The ability to lift at least 50 pounds or access to a Giant (you can always borrow a friend’s).
• Hands (or good prosthetics)

Logistics

In many cases, the address is listed, and you can just show up. In other cases, a quick email or phone call is all that’s needed. Call ahead whenever possible and act on the newest ads, preferably w/an Internet capable phone. You want to plan your routes efficiently to keep gas spending (and your time) down. Use Google maps to get a route from your Starbucks to the final destination, the use it’s add destination feature to figure your entire route. Click avoid highways if you decide to go at it during a weekday.

Just like any business you want to work in efficient, focused batches. In this case, you will batch your research and route planning, the actual pickups, and the selling. Because new ads are posted so often, the goal is to spend no more than 2-3 hours actually picking up, then stopping at the nearest Starbucks to line up the next 2-3 hours. Depending on your market’s density this will need some tweaking to keep you from overspending on driving.

If the ad’s contact is e-mail, don’t wait for a response. Say I’m going to come over at this time, and then just show up. Same goes for voicemail. You need to be very proactive to make this work in efficient batches. Shyness will get you nowhere. If you are not fast, someone else will be. If they respond while you’re driving, fine, but dictate the route on your terms. It is better to ask for forgiveness than permission.

Put on your cowboy boots and grab a couple of six-shooters because you’re going to be hoppin’ and shootin’ when the Texas tea starts raining down on your dog and fills your kiddie pool. Really. We’re about to explain how people across the country have become instant, albeit small-time, oil tycoons and are pulling in anywhere from $10,000 (Greg Losh is the one you may have heard about last month) to $100,000 (Bruce Holmes ) per month off a single, shallow well on their own property! Can you spot the industrial-scale well in this photo in downtown LA?
Read More…

When people hear about using auctions to make money, they normally think about using eBay to sell things to the public via auctions or fixed price. However, there are other ways of using auctions, and the one I’m going to discuss is going to live auctions to buy things for resale. Even with eBay and all the other Internet sites out there, auctions are occurring every week, month, and quarter in most parts of the United States, and there are still deals to be had when you buy the right products and resell them for their true value.

Start-up

The startup costs are practically nothing, depending on what resources you have available or can access, and what areas you want to specialize in as your niche. Therefore, instead of dollar amounts needed to start, I’ll talk about things you need to get started, and leave the estimations up to you and your situation:

1. A niche, or product specialty. Walking into an auction blind, thinking you can buy anything there and make money, is one of the WORST mistakes you can make. You need to have an idea of what you want to start buying for resale, and it should be something you have some knowledge in, or something you can study before buying. I started with comic books and collectibles, but as I went to more auctions, my niche grew and I tried different categories, with varying levels of success. This niche will NOT be your life, but you should start with something.
2. Reseller’s permit. Typically, this is free to get, you go to your State Board of Equalization and tell them you want to resell goods. This way, when you buy stuff at auction, you provide your reseller’s permit and avoid paying sales tax on the purchase. Trust me, this will add up, plus a reseller’s permit makes you more serious in the auctioneer’s eyes, and that’ll matter later. (I’ll discuss this later on.)
3. Access to capital, specifically liquid cash. You can start with $100, $1000, $100,000, or any number in between. I think my first auction purchase years ago was a $10 lot of coins I later resold for $175. The key here is to be able to access cash. While some auction companies take credit cards, cash is still king in the auction business, and since a lot of auctions happen on the weekends, when banks are closed and ATM’s limit you per day, you may want to have some cash ready to go.
4. Access to a truck and storage space. One of the reasons auctions are still popular is that payment is immediate and the goods have to be cleared out within 1-3 days of the sale. If you’ve ever sold goods online, you will know that this is not always the case with online sales. When you buy at auction, you will be expected to pay and haul it away; sometimes the same day, most times you have a 1-3 day grace period. Now, depending on what you buy, your car and house may be sufficient (let’s say you specialize in trading cards, small electronics, or rolled up lithographs.) but you may need access to a truck on occasion, and storage space to handle larger goods, like furniture, antiques, large electronics, or that large collection you got at a fantastic price.
5. Time. You will need to spend time before the auction, doing research and planning and having an idea of your available cash or resources. You will need to spend time at the auction, inspecting goods and placing bids for items. You will need to spend time after the auction, to come back, haul away the goods, store them somewhere and get them ready for resale. For each auction you want to attend, I’d expect to spend 4-8 hours total. As you get a few “regular auctions” under your belt, your time per week will go down, which should allow you to attend more auctions.

Watch Out!

Besides walking into an auction and bidding on something blind, without any inspection or research, these are the other pitfalls to keep in mind:

• You may attend an auction and buy ZERO items! People who invest some time may feel like they have to buy something to justify the 2-3 hours they spent at the auction, and will bid on anything. It is better to observe the bids and spend $0, than to invest money you have to spend time and effort to recoup at a loss.
• If multiple people are bidding on something, it’s a great deal no matter the final price. Wrong! Many people get caught up in auction fever , where the excitement and competitiveness of bidding makes people forget what a reasonable price is and they bid to win, thinking that if the other person is bidding, it’s still a value. Years ago at a police auction, I saw someone bid close to $100 for a used VCR, where they could spent less to buy a NEW one at Target! Also, you may be up against collectors, who are buying something for themselves and can pay more. You are buying for resale, so there has to be a margin when you try to resell it.
• Forgetting about extra fees. Most auctions charge something called a “Buyer’s Premium”, which is typically 10-15% of your bid. The auction house collects this for the service of reselling the goods in their place. Many people don’t factor the buyer’s premium into their bidding and end up overpaying when everything is included.

Getting Ready

If this interests you, the first step is to identify the auctions in your area. I start with the local newspaper’s classified ads section on a Sunday, and there is usually an auctions section near the Merchandise. Pay attention for a few weeks in a row, and you should notice a pattern. (Of course, do a Google search for auctions plus your city name, or add in the types of items you want to buy, like furniture or electronics) These are the three main types of local auctions:

• Weekly auctions. These people clean out estates, garage sales, and closed businesses every weekend, then auction off the items during the week, clear out the goods by the end of the week, and repeat the process. These can be an excellent source of products, especially if you get to know these auctioneers.
• Monthly/quarterly auctions. Some auctioneers hold auctions either every month or every quarter, when they have enough goods from local collectors that they have received to be sold. Almost all of these auctions have a website, so get on their mailing lists and let them notify you when they are about to have another sale.
• Government auctions. Whether it’s the local police, state government, or federal DEA, most government agencies have to auction off goods they no longer can hold, and that can range from bicycles to flat screen TV’s to Randy Cunningham’s $5,000 toilet seat. These happen every 3-6 months, and every agency sets their own place and time. Do a Google search for government auctions, police auctions, and similar terms.

The best thing you can do is use the Web as much as possible before you walk through the door. Almost every auction company has a website, so try to download the auction catalog in advance. Some sites just put up pictures, so try to decipher whatever you can from those pictures. With that information, go to eBay, Craigslist, Amazon, whatever, and figure out a range of prices for what those items sell for. Take that range with you to the auction so you know what to spend.

What to Do at the Auction

The next best thing you can do is attend the auction preview. By law, the auction company has to allow people to preview the goods. In some cases, it’s the 1 hour before the auction starts. Other companies have the preview the day before or the morning of the event. Go to that preview, pick up the items, look for scratches, dents, malfunctioning equipment, missing items in the lot, and the overall condition of the item. Ask to plug in any electronics and test all the major functions (on/off, volume, play, stop, etc.) as the previews are supposed to have auction staff present.

The hidden gem in many local auctions are the box lots, where the companies just throw a lot of stuff into boxes and sell them a box (or group) at a time. The quick way to value these is to identify the most valuable item in the box and bid like you are only buying that item. I saw a box with a shrinkwrapped I/Omega Zip drive go for $10. I assure you, the drive alone was worth more than that. Some people skip the box lots, and that is up to you. Ever since I found a Bose Wave Radio for $75 and flipped it for $411, I try not to skip the box lots anymore. If you get to the auction after the preview is over, you can still go through the Box lots as people are bidding, but it’s pretty crazy then, and you may miss something or get caught up and overbid. While there is gold in these lots, most of it is stuff you will have to sell for salvage or donate to someone else.

Register for the auction as soon as you can, so you can spend time identifying stuff and not filling out paperwork. Bring your ID, a pen or pencil, reseller’s permit, and cash, as some auctions require a cash or credit deposit before you get your auction number. Hopefully, with your number, you’ll get a list of items for sale. Keep this paper!

Tip : Bring some Post-It notes, and put your auction number on the note. Use that note to reserve a chair in the main bidding area. Once you do that, you can take advantage of the preview and guarantee a good seat when the bidding starts.

Once the bidding starts, write down all the final bids on your list of items, whether you win the item or not. Obviously, keep a separate tally for items you won, so you know how much of your budget you have left. You only have to do this for item categories you are interested in, so you can see later if this is an auction where people typically overbid or underbid.

As the bidding goes on, you should notice how certain people bid, whether they are up front or wait for the “going, going” call to throw up a last minute bid. Typically, about 5-10% of the audience places 80-90% of the bids. You’ll see a few wholesalers who buy anything that’s cheap, specialists who only bid on 1 or 2 niches, newcomers who bid on anything, and observers who wait for that certain lot. Don’t be afraid to make friends in the audience, especially if someone bought a huge lot and you want a part of it. I’ve gotten a lot of business cards for lots I bought where someone wanted a particular piece. Be warned, though, these people only want the best stuff in the lot, typically, and want to leave you w/the garbage. Never make a deal on the spot. Take their card, tell them you’ll see what you can do.

In another article, we’ll talk about the resale part, where you can sell on eBay, Amazon, Craigslist, or your own website. Auctions can be fun, and when done right, can provide a steady income.

Introduction

You don’t have to have a merchant account, deal with any billing whatsoever, support requirements are very limited, providing high service availability is not a necessity, and there is an extremely spendy built-in customer base that is easily marketed to. The guy who developed the relatively simple Labyrinth (Carl Loodberg) game is estimated to have sold over $100,000 in the first two weeks of AppStore’s open.

Steve Jobs, for all of his vision, missed the boat with the initial release of the iPhone. It was a great product and sold brilliantly, but in making the “perfect” phone he neglected to consider the abilities of the device he had created. The truth is, it is not a smart-phone–rather it is a very impressive handheld computer with a constant–albeit limited–net connection, that happens to have a decent telephone application.

As a career

This is as close and low-risk as TrendGrinder businesses get to being perfect. There is no hassle, it can easily be done solo and scaled easily, only minimal customer interaction is needed, you can do it from anywhere, you can do it on your own time, and it can easily pay $100,000 per year.

Other than the steep learning curve for Windows developers and lock-in with Apple, we just can’t seem to come up with any real and specific downsides to this business. Lets do the numbers.
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