Golden Oldies

Not So Simple

Although it may appear simple, running a secondhand store is no cinch. The major mistake most entrepreneurs make, says Shaffer, is not starting with enough money. "Some of them think they can go in with nothing," she says. "But you have to have enough to survive for three to six months without money coming in from your venture."

A second major requirement is keeping costs low. Choosing low-rent locations and doing most of the work themselves helps many entrepreneurs, says Shaffer. Not all manage it well. "I know shops that come out with net profit of anywhere from 18 percent to 50 percent," says Shaffer. "But some are at 7 percent."

Computerization is another key, especially for consignment stores, which may deal with thousands of items from hundreds of consigners. The price, date received and other information about each item must be carefully tracked if consigners are to be paid properly and the owner is to keep fresh merchandise in house.

"The stores making money have computer systems," says Shaffer. "It not only gives a good image to the store but also cuts down on overhead because a lot of stores find they don't need an extra employee."

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This article was originally published in the October 1996 print edition of Entrepreneur with the headline: Golden Oldies.

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