Monday, December 23, 2013

The Scariest Post I'll Ever Write

I hope this isn't the first post you read on The Vintage Show Off site!  This information is certain to touch off nerves and anyone not ready for this closer look at the financial side of being a vendor might never visit this site again.

DO NOT READ THIS POST UNTIL YOU ARE TRULY READY.  I have plenty of fun articles about booth decor and so forth.  The article is depressing most of the way through, but there is hope.  Vendors CAN be successful.  Examining where your money goes might help you see where you can save and increase profits.  If you really want to improve your bottom line, you should eventually read this post. Many vendors are not in it for the money.  If you are just having fun and for the most part, could care less about the money, feel free to avoid this article forever.

When I first worked this all out, I was shocked and amazed at my findings. I assumed that all my vendor friends would be interested and that we could all work together to figure out how to increase our profits.  WRONG!   Most of them avoided looking at my spreadsheets as if they had lethal bacteria on them.  I'm not joking.  I learned quickly that this information is not for everyone.  And I really do understand that.  Most of the vendors who avoided it were having fun.  This info is a bit of a buzz kill.

The vendors most interested are those who are wondering if they should stay in the business OR vendors who are VERY serious about trying to make more money.  Those in it just for the joy KNOW they probably shouldn't examine their profits too closely. 

Are you sure you want to keep reading?  Ok, then, here goes...

Since vintage goods are so popular, antique malls are popping up all over and being a vendor at one of them seems like a cool thing to do.  It seems so easy and fun at first glance.  Once you're in it, you realize that it takes a bit more work than anticipated, but it's definitely fun.  Few vendors think they are getting rich, but most think they're doing OK.

The biggest misconception I see - many vendors believe that the bigger the check from the mall, the more money they are making.  Sorry.  I beg to differ.  The monthly (or bi-monthly) check is NOT how you gauge your success!

Here is an example month for a fictitious vendor named  Matilda.

Matilda gets her check at the end of the month.  She grossed $2000. Woo-hoo! (For most vendors in a mall, that's a pretty good month. Many, many many vendors have NEVER ONCE grossed that much.

There are a few deductions already taken out.  The 10% store commission was $200.  The extra fee for all sales made with a charge card was $18 (actually a pretty low estimate on a $2000 month).  So the real check amount is $1782.  Matilda is thrilled.  Unfortunately, that's not her real profit.

Matilda's rent is $200 a month.  That leaves $1582.

Many vendors don't think beyond this. Ignorance is bliss.

There are plenty more not so obvious expenses.

For purposes of this example, we'll say that Matilda prices everything at double her cost ON AVERAGE.  (If she buys a chair for $10, she sells it for $20.)  So, we'll say she spent $1000 on her $2000 worth of sales.  Uh-oh. That leaves just $582 profit for the month.  That's a little sad for a check that looked so nice, but unfortunately, there's more to consider.

Most vendors are on the road a great deal finding those bargains.  Very few sell things that require no running around.   Gas money must be considered. And there are supplies to consider as well. Matilda paints and "fixes up" many of her furniture pieces.  Paint, sandpaper, new hardware, light bulbs, price tags, fabric, staples, markers, tools, etc.  A little here, a little there -  it all adds up!   Matilda spent around $200 for gas and supplies for the month.  Her profit is now $382.

Wait!  There's more.
  • Federal and state taxes.  All vendors are supposed to do this.  I paid my taxes and kept my records.  'Nuf said about that.
  • Accountant fees.  Even though you probably won't show much of a profit on paper, your accountant still has to be paid and just because you made no money doesn't mean they shouldn't either.
  • Theft and breakage.  It happens.     
  • Price reductions on things that sit in your booth too long.  (I'll never try to sell another coffee table.)
  • Price reductions on things customers talk you down on.
  • Some things don't sell at all.  You take a loss or in some cases, give up and take it to Goodwill.  Even long time vendors make mistakes.
  • Things you give to people you love.  I never really minded that, but it still needs to be taken into consideration when figuring profits.
  • Possible doctor bills - many vendors end up with shoulder, neck, back, and/or knee issue.  Eight out of ten of the vendors I know best went to the doctor during the last 2 years from something directly related to their booth business.
  • Months when your sales are really low yet you still have expenses.
So now you are at $382, minus whatever you came up with for those last bits.  Matilda figured out what she spent for a year on those extra things and then came up with a monthly average of $150.  That's definitely the figure I feel least confident about.  For some, it will be much lower.  For others much higher.  I also feel sure I am leaving out some incidental expenses.

Matilda's true profit on $2000 worth of sales is $232.  $232 measly dollars for all that TIME and effort!  $232 earned when the check was $2000.

Speaking of TIME, notice that hasn't been figured in.

Matilda spent time:
  • Working at the store - many stores require you to work at the store a day or two or else pay someone else for your day/s.  Stores that don't require you to work usually charge a little more in rent. 
  • Riding all over creation looking for treasures.  
  • Cleaning, painting, and re-doing.  
  • Making tags and pricing everything and writing everything down so she'd have good records for her taxes.  
  • Hauling things.  Hauled them home to work on them.  Hauled them to the store. Sometimes, she hauled them back home again - seasonal items or items that weren't selling and needed to be worked over.  
  • Running over to her booth to straighten up messes when something big sold.  She rearranged her booth when it looked the same for too long and sales slowed down.  
  • Last but not least - she spent loads of time cleaning up the messes she made at home working on all this stuff.  
Matilda figured she spent about 90 hours during the month (an average of 3 hours a day) working on things related to her booth.  232 divided by 90 hours = $2.57 an hour.  At this point, you may want to take a break from reading this post to go get out a hankie or some Pepto-Bismol.

Matilda could spend less time clipping coupons and save her family more than $232 a month.

I came up with the "Matilda" spreadsheet first, but I wasn't content to stop there.  Surely that was just a bad example.   I looked at a few other scenarios, reworked the spreadsheet adjusting figures to give the most accurate estimates I could for each expense and here are the QUICK results on those.

It's so easy in this business to fool yourself into thinking you're doing fine.  It's easy to forget those extra expenses.  Money for things like gas sometimes comes out of your home money (instead of your booth account)...  a little here and a little there.  Your time gets skewed as well. It's easy to lose track of just how much time you spend on things related to your booth.

I'm retired with a decent pension. The money I earned when I had a booth was not crucial.  My goals for having a booth had more to do with decorating my own house and having fun thrifting than anything else.  But since making a profit IS important for many vendors, I decided my findings were worth putting out there for anyone who  it might help.

For anyone reading this who is not a vendor, have a heart when you shop at an antique mall!  Vendors work really hard and put lots of love into all they do.   As you can see here, they are lucky to break even when all is said and done..

I welcome all comments, whether you agree or not. My comments are monitored due to a ridiculous amount of spam, but I'll let on-topic comments be posted as long as there's not something horrendously mean and nasty. I suspect there are plenty of ex-vendors out there who will understand the truth of this post.  My accountant has seen my spreadsheets and she agrees with their validity.

I would especially love to hear from people who played with their own numbers after reading this.  Expenses for each of us is different.  There are lots of variables.

Let's end on a good note -

As depressing as all this may seem, there are ways to make money with a booth.  Some vendors find  a strategy that allows them to acquire things to sell without investing quite as much time and/or quite as much money.  There's no one success formula I can give you.  It all comes to many factors coming together nicely.
Having a booth can be fun!   But make no mistake.  For those who don't really think it through, examine their books and figure out how to improve, it will just be a fun, time-consuming, messy hobby.  For all but a few, it is seldom lucrative.   If you NEED your business to be lucrative, think about where you can save money, where you can save time, where you can sell best...  Examine your bottom line and continually look for ways to improve.

And keep reading 
Vintage Show Off !

Update:   This comment had several valid points that are very worth considering.  I thought they should be added to the article so more people will see them -
My books are even more detailed than the scenarios you used and I can attest to the accuracy of your assessments and comments. I can also attest to how to use different kinds of offerings with different markups in order to maximize whatever profits you can. But here's a vital piece of information you left out. My husband and I use my business as a quasi tax shelter. Much of my business can be written off as a loss. The tax savings is astronomical. We saved over $3000 dollars last year alone. While you may not be making an actual income and profit, for someone approaching or already within retirement that savings to a household might be reflected in what you don't end up paying out to Uncle Sam. My daughters and I also end up with the best of the best in terms of décor.
It's just one more aspect to add to what was a wonderful article that I will definitely be sharing with other vendors. And just one more note. So many people are now doing this "for fun" that they often undercut the prices of people attempting to do this work and make some sort of profit even if just a small one. I wish people would really do the books and stop giving their work away at a loss. It really is impacting my bottom line.