“August 2002 – To pay for a new warehouse in Kentucky, Hsieh sells his San Francisco loft. By year’s end, sales hit $32 million, but there are still no profits.“
That’s a timeline excerpt from the June 2010 article in Inc. Magazine entitled, “Why I Sold Zappos,” written by company founder, Tony Hsieh.
Hsieh started the firm, which is best known for selling shoes online, in August 1999.
Just think: He put all of his money and energy into starting and building a business, and three years later, even with $32 million in sales, the company has not yet achieved profitablility.
If this is true for a company selling to a bigger audience than you’ve established, then something else is also true: your business is bound to experience the same no-profit problem.
The answer to the questions, “When will I make money?” and “When can I take money out of the business?” are different for all of us, but the answer in most cases is, “Don’t count on making money or seeing profits for at least 3-5 years and possibly longer.”
Gift baskets are an inventory-heavy business. You must buy a lot of product, along with everything else needed to set up, in order to get started.
Many of the products you buy sit on shelves until selected by customers, and some of the products won’t sell at all.
Profits are the holy grail for every business, and getting to that special place is an uphill climb for each of us. If all signs led to the climb being easy, you would have had no chance of entering this or any other business because the number of people entering the industry before you would have convinced you not to start.
Know your customers. Understand what they want, and buy the inventory they desire. Market faithfully. Take advantage of wholesale specials. Network as often as possible. All of this will get you to the profit line. It won’t be tomorrow, but it will come.
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