2054: [Part 2] 8 Small Business Mistakes to Avoid by Philip Taylor of PT Money on Improving Your Business

[00:00:00] Have you ever rearranged your furniture and discovered the carpet underneath looks brand new while the rest of it looks, well, not so new? It's time for a carpet upgrade. At The Home Depot, we have stylish choices at simple prices from all the top brands. Best of all, we can install it for you, starting at only 49 cents per square foot. So all you have to do is pick your perfect floor. Start your carpet project today at The Home Depot. How doers get more done. Exclusions apply for licenses. See HomeDepo.com slash license numbers.

[00:00:30] Girl, winter is so last season. And now spring's got you looking at pictures of tank tops with hungry eyes. Your algorithm is feeding you cut offs. You're thirsty for the sun on your shoulders. That perfect hang on the patio sundress. Those sandals you can wear all day and all night. And you've had enough of shopping from your couch. Done hoping it looks anything like the picture when you tear open that envelope. It's time for a little in person spring treat. It's time for a trip to Ross. Work your magic.

[00:01:00] This is Optimal Work Daily. 8 Small Business Mistakes to Avoid, Part 2, by Philip Taylor of PTMoney.com. Business Mistake Example While in college, I had the great idea to resell Lacoste polo shirts. I went to the University of Miami and I noticed while there that roughly 100% of the male students wore polo shirts.

[00:01:23] In addition, these students had a wide variety of colors and styles. So what better way to make money than by reselling expensive Lacoste shirts? After a few days of research, I determined the following. Back in 2006. 1. Lacoste polo shirts sell for $72 at every store across the country. It's rare for shirts to be discounted and the brands are very expensive compared to others like it.

[00:01:47] 2. People selling Lacoste shirts on eBay generally sold them for between $40 and $50. These people would sell one shirt at a time, never in lots, and only a select few would sell more than a dozen shirts a week. Not because of demand, but because of supply. 3. A lot of the shirts being sold on eBay are counterfeit. Lacoste polo shirts have a specific thread pattern, specific tags, and other markers to tell you if in fact the shirt is real or fake.

[00:02:14] That being said, the differences in quality are very minimal and almost impossible to spot as a casual buyer. 4. Retail markup from product to outlet is insanely high, so if I could find a way to buy at the production level, I could retire. My first trial run was the purchase of a lot of 10 shirts on eBay. I bought the shirts for just over $250 and then resold them individually on eBay for a total of $450.

[00:02:41] Take out my shipping costs, PayPal costs, and eBay fees, and I had a profit of $100. A small success, but I thought bigger. I asked around from sellers on eBay about where they obtained their supply. No luck. Then I found a website called TradeKey. This website puts buyers and sellers in touch at the wholesale level, and most of the registered users are international. The beginning of the end of the business.

[00:03:06] Luckily, or unluckily as it would eventually turn out, I found a wholesaler in Peru, which is where Lacoste shirts are manufactured, that was willing to sell me high quantities of Lacoste polo shirts at an excellent price of around $20 per polo, shipping included. Without considering the potential for counterfeit shirts, or safety in sending money internationally, with little guarantee that I would actually receive a product back, I ordered 200 polo shirts.

[00:03:32] Much to my surprise, the shirts arrived in a timely fashion, in a variety of colors and sizes, and passed all of the quality checks I could throw at them. My college apartment now had 200 Lacoste polo shirts available for sale, and I routinely had kids coming by dropping $40 or $50 for shirts they could buy at the store for $72. 100% profit was something I loved, and so I decided to go back and buy another big lot of shirts. This time, double the size. Go big, or go home.

[00:04:02] Even though business was good, it was slow. Miami isn't a large university, I think 12,000 undergraduate and graduate students at the time, and my clientele was drying up. So I took to eBay, and started selling the shirts there. My profit wasn't as large, with shipping costs, packaging costs, and fees, but it was still around $10 a shirt. Business was good, demand was good, and I seemed to have hit my stride in finding a way to make money without having to do anything other than being a middleman.

[00:04:31] The letter that changed everything. Then, things quickly changed. I received a letter in the mail, registered mail, never a good sign, informing me that what I was doing was quite illegal. Much to my surprise, I am unable to buy and sell Lacoste shirts regardless of where they are from. I need a license to sell a particular brand of merchandise, and Lacoste had found out I was undercutting their retailers and selling for discounted prices.

[00:04:57] And as it turns out, PT alerted me of legislation that could be passed which makes selling even your own individual items illegal. I was ordered to stop immediately, which I did. I was also ordered to turn over all unsold merchandise, which I did. It was only a few shirts by that time. In addition, I had to pay a settlement to Lacoste to avoid prosecution. I complied, and later I received a follow-up letter confirming that the matter was closed.

[00:05:22] My eBay ID was banned for life, and I know if I'm ever found selling Lacoste merchandise again, I'll be in big, big trouble. What not to do when starting a business? All in all, the experience was a profitable one, even after the settlement and turnover. It was also quite terrifying, as I was only 21 years old and already being sued. This experience did get me to start a lawsuits file in my strongbox, which is a little more full than I want it to be.

[00:05:49] My pitfalls in starting this small business lie squarely in my inability to do enough research about the legality of my business. I assure you I was well-researched in the mechanics of the business. And if nothing else, this venture taught me one of the more valuable lessons I've learned in life. If you decide to open your own small business in the future, I urge you to learn from my mistakes and triple-check with as many lawyers and legal minds as you can to make sure everything you do is 100% within the law. You can start by asking a lawyer on Just Answer or LegalZoom.

[00:06:19] You can get an expert's advice 24-7. Bottom line Mistakes will happen as your business grows. But the more you know, the more mistakes you can avoid. Learning from my mistakes or those of fellow small business owners can save you time, money, and heartache in the long run. Hopefully, our lessons learned can help you reach your financial and business goals that much quicker. You just listened to part two of the post titled

[00:06:48] Eight Small Business Mistakes to Avoid by Philip Taylor of PTMoney.com. Good sleep is everything. That's why Oli's science back support is made with a blend of melatonin and L-theanine for both kiddos and grown-ups. So when your mind won't switch off, you've got something that can help. Erasing thoughts and restless nights won't stand a chance. Find Oli's sleep solutions for the whole family at Oli.com. That's Oli.com.

[00:07:19] Ready to soundtrack your summer? With Red Bull Summer All Day Play, you choose a playlist that fits your summer vibe the best. Are you a festival fanatic? A deep-end DJ? A road dog? Or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play. Red Bull gives you wings. Visit redbull.com slash brightsummer ahead to learn more. See you this summer. And thanks once again to Philip for letting us share this post over the last couple days.

[00:07:50] And a bit more about him that I didn't tell you yesterday. Philip created ptmoney.com back in 2007 with the idea of sharing his advice on money, holding himself accountable while paying off over $75,000 in debt, and also to meet others who are passionate about moving toward financial independence. Well, he definitely succeeded because today he is fully self-employed and supporting his family using the income generated from his site and conference.

[00:08:17] He says that none of it would have been possible had he not taken control of his financial life and started building something of value for others. So again, you can learn much more about PT and everything that he does over at ptmoney.com. Okay, that is it for today. Hope you enjoyed the post and thanks again for being a subscriber, which is a big deal in terms of helping us keep this show going for you. So have a great rest of your day and I'll see you back here tomorrow. Where your optimal life awaits.