Risk-taking can be synonymous with entrepreneurship. I’ve certainly learned from the risks that have paid off, but just like bad beats in poker, the easiest ones to remember are all the mistakes, flops, and failures. Read our epic fails below, and be glad this wasn’t you.
Spending Too Much on Inventory
I remember this like it was yesterday. My husband came home with exciting news: “We won The Trumpet Major at the auction today!” My response: “What???” We own a rare book company, and this was a book I was barely familiar with – aside from being by Thomas Hardy, and that the first edition was issued in 3 volumes by a London publisher, I really didn’t know that much about it. How much was this fantastic find? “$9,000!” I freaked out. This was a time when spending $9,000 on a single book was a huge deal, and especially since I wasn’t that familiar with it or knew the market for it. My husband assured me it was a steal at $9,000, and that we’d sell it for around $45,000, it being very rare, a high spot for this author, and in unusually fine condition. We couldn’t return it, so the best we could do was try to sell it…and wait…and wait…and reduce the price…and wait…and reduce the price some more…and I’ll cut to the chase—we still have the book. Buying this pricey book did set us back quite a bit, but luckily, that was not the only book we bought at that auction. Selling the other material really saved us from having to take more desperate measures to unload this one book. Buying a high-ticket item is always a risk until it’s sold, but since then, we do a lot more research on valuable material, especially before auctions, where it’s easy to get caught up in the moment and spend too much. We also continue to spread our investments among different types of material. For now, The Trumpet Major is still in our inventory until we meet the holy grail of Thomas Hardy collectors. And until then, I get to tease my husband about it endlessly.
Doing an Expensive Trade Show
Running an online business from our apartment, our running costs were very minimal. We had our rent, our website, merchant services fees, and that was really about it. But in the book trade, most of the buying and selling happens at book fairs and other trade shows, so we decided to take a chance and pay, what was a lot of money for us at the time, the booth rent for a weekend book fair. We were still a start-up at this point, with little capital and a small inventory, so it was a financial stretch for us and we were depending on making at least our booth rent and hopefully a little profit. Our total sales at that book fair? A whopping $8. It was so scary to us and such a waste of our valuable capital that we didn’t do another fair until three years later. We used that time to build our customer base, increase our inventory, and learn more about the purpose of fairs-- to network and buy and sell from colleagues, and meet collectors to discuss their collecting interests, regardless of whether they end up buying from you or not (but they usually do.) When we finally made our return to the trade show circuit, we chose fairs based on their reputation among dealers, and they have been much more successful for us. We now do about twelve shows per year.
Saving Money by Going without Health Insurance
Does skipping out on insurance payments of any kind save money? Sure it does, but only until you have a major accident. For me, it was being without health insurance when my appendix ruptured. Having to pay for this mandatory surgery was, of course, necessary because it saved my life, but it did indeed almost bankrupt us. Going without insurance of any kind is never really advisable, so play it safe and make those monthly payments.
Buying a Stolen Collection
About five years ago, we made a house call for an impressive and substantial collection of modern first editions—inscribed F. Scott Fitzgeralds, William Faulkner dust jackets in fine condition, rare early Hemingway. You name it, this collection had it. Nothing about this scenario seemed even the slightest bit fishy- the owner was extremely knowledgeable about his books, many still had receipts of purchase inside, and some of the books were his wife’s, which had been passed down through her European family. The man was a wealthy business owner living on the Upper East Side, the president of his co-op board, and his home was full of other antiques as well as books, fine furniture and antique cameras. The book collection fit right in. He also wasn’t in a rush to sell—we took about 100 books on consignment, and paid him as each book sold. Naturally, debuting a new and fantastic collection such as this, it attracted a lot of attention and we sold about 40 books almost immediately. About a month later, another bookseller, who also had purchased some of this collection, called to inform us that this man had been arrested for stealing these books from a Vanderbilt heir. What?!? We were stunned, absolutely mystified and in disbelief. Shortly after, the police arrived at our apartment and informed us that they had to seize all the books, and we were to meet with the DA who was prosecuting the case. After talking to the detectives for just a few minutes, they knew that we had no idea the books had been stolen, but we still had to retrieve all the books we had sold so they could go back to their original owner. For us, having to pay back our customers without getting our money back from the thief almost bankrupted us. Lucky for us, he was a rich thief who paid restitution to us in order to decrease his jail time. Since then, we make all sellers sign ownership affirmations, but when dealing in rare and antique collectibles, buying stolen merchandise is something that can’t always be prevented. And as a seasoned colleague of mine advised, “If you’re not failing, you’re not trying.” The fact that we, a young company with limited experience and resources, were able to get in on this collection at all was pretty impressive in and of itself. If we had said no for whatever reason, and the collection turned out to be legitimately owned, that would easily have been the #1 biggest mistake we have ever made.
If there was no risk involved in owning your own business, there would be no mistakes to make. But there would also be no learning and no rewards. If you’re able to learn quickly from your missteps and analyze what went wrong and why, your business should be able to move forward.
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