Full timers, need some input please on numbers.

[KShine]

I am not so sure about your plan - I understand that you will be initially selling other assets to buy the inventory, but in order to really make it work you will need to have it sustain itself.

Continue working in the "real" world, and continue selling LEGO - If the time ever comes that your true income from selling LEGO reaches your goal, then you can consider going full time. You will also have a large stockpile of inventory by this time - so if you were then to realize that going full time was a bad idea, you could always live off of the sales of that inventory as you looked to re-enter the "real" world.

[ravenb99]

Honestly, the capital required to generate $60k yearly after tax income on full-time lego sales in much, much higher than what you're estimated (if you estimated it at all, I'm not sure I see what you're counting on for purchasing sets and flipping them).   Bare minimum of $500k to start if you want assured income and sales right away.  I don't think $1M is too much, actually, for this to work out after all your fees and with selling prices that will generate consistent sales.  

 

At those investment levels, there are so many other options, including the good-old stock market that can be structured to generate the 5-15% return you'll be looking for, and with considerably less work and hassle.  There's some big-time sellers here, and very, very few that make it their only source of income.  For most of us, this is part-time, hobby-class level of investment.  I shudder to think if I had to turn this into the sole source of income for my family.  I'd find a hundred other things to do before trying to eke a full time living out of Lego reselling.  

​that number of capital is way over estimated for what is needed to hit 60k a year in profit.

Our LEGO sales for last 90 days 

 

2234 items $85,779 sales

we run right about 20% clear after fees / shipping.  LEGO is only a small portion of our overall business but we never run anywhere near 500k in inventory.  Not even a 1/3 of that.  

just for that quarter the estimated profit would be $17,155.  For ease of numbers if those numbers stayed the same for all 4 quarters you'd be at $68,620 in profit before taxes. Obviously 4th quarter will be much higher, usually double to triple the slower quarters.

Biggest issue you will have is sourcing that many deals / sales to keep the inventory up for a solid year.  This month we actually tried a more wholesale volume based experiment and hit 890 items with $51,643 in sales for the last 30 days.   Personally being one person I could not keep that level of purchasing volume up with worthy deals being harder and harder to acquire to keep that pace going year round.   

The inventory is always flipping so your overall capital is not readily rising much.  You're constantly buying as you are selling.  You would need at least 100-150k though to have any legitimate shot of doing these numbers.    You will need help of others to achieve that much volume of sets to reach those sets.  Most people will not be able to come close to doing it out of one area.

I have a few good friends on BPer and without them I would not achieve the volume of sales needed to make it worthwhile on a larger scale

 

 

 

 

[BrickLegacy]

Dave Ramsey getting some love on this forum.  If the mods would allow it, a Dave Ramsey Fan Club thread would be fun.

[Bold-Arrow]

U can clear 150k profit on a 450k inventory. Issue is that the proceeds will need to go into acquiring more inventory to sustain the momentum . U would also need a good mix of QFFL and long term hold inventory .  

 

[cntryislandboy]

bricklegacy, between you can me, if I followed Dave Ramsey's plan to a T, I'd have not one Lego brick, maybe that's my problem. 

[diablo2112]

​that number of capital is way over estimated for what is needed to hit 60k a year in profit.

Our LEGO sales for last 90 days 

 

2234 items $85,779 sales

we run right about 20% clear after fees / shipping.  LEGO is only a small portion of our overall business but we never run anywhere near 500k in inventory.  Not even a 1/3 of that.  

just for that quarter the estimated profit would be $17,155.  For ease of numbers if those numbers stayed the same for all 4 quarters you'd be at $68,620 in profit before taxes. Obviously 4th quarter will be much higher, usually double to triple the slower quarters.

Biggest issue you will have is sourcing that many deals / sales to keep the inventory up for a solid year.  This month we actually tried a more wholesale volume based experiment and hit 890 items with $51,643 in sales for the last 30 days.   Personally being one person I could not keep that level of purchasing volume up with worthy deals being harder and harder to acquire to keep that pace going year round.   

The inventory is always flipping so your overall capital is not readily rising much.  You're constantly buying as you are selling.  You would need at least 100-150k though to have any legitimate shot of doing these numbers.    You will need help of others to achieve that much volume of sets to reach those sets.  Most people will not be able to come close to doing it out of one area.

I have a few good friends on BPer and without them I would not achieve the volume of sales needed to make it worthwhile on a larger scale

 

 

 

 

​

Keep in mind, $60K after tax is about $100k pre-tax if self employed (at least in my state, 8% state tax).  Your numbers show $343k in sales to generate $68k profit;  this is wholly consistent with my estimate of  $100k in profit needing about $500k in sales/capitol.  $1M is conservative, and gives you the pricing flexibility to move product if the market turns south.  I still think my $500k - $1M in capital to generate consistent $60k/year after-tax income is about right.  

What I didn't account for is what you did: rollover.  If you can reinvest 3-4x times/year on your inventory, then you can reduce the capital outlay by that amount.  So yes, in that sense, my estimates are too high.  That's an error on my part, but it also counts on the fact that you can find QFLL opportunities that often that generate your consistent 20% after-fee return.  OTOH, if you have to hold sets longer term to generate profit, my $500k estimate is too low.  A 2-year hold to match EOL cycles will require you doubling your outlay to get that profit.  None of this is easy, not by and stretch.  This isn't a business for the faint hearted.

Edited April 28, 2015 by diablo2112

[Deez_Brickz]

​

Keep in mind, $60K after tax is about $100k pre-tax if self employed (at least in my state, 8% state tax).  Your numbers show $343k in sales to generate $68k profit;  this is wholly consistent with my estimate of  $100k in profit needing about $500k in sales/capitol.  $1M is conservative, and gives you the pricing flexibility to move product if the market turns south.  I still think my $500k - $1M in capital to generate consistent $60k/year after-tax income is about right.  

What I didn't account for is what you did: rollover.  If you can reinvest 3-4x times/year on your inventory, then you can reduce the capital outlay by that amount.  So yes, in that sense, my estimates are too high.  That's an error on my part, but it also counts on the fact that you can find QFLL opportunities that often that generate your consistent 20% after-fee return.  OTOH, if you have to hold sets longer term to generate profit, my $500k estimate is too low.  A 2-year hold to match EOL cycles will require you doubling your outlay to get that profit.  None of this is easy, not by and stretch.  This isn't a business for the faint hearted.

Hold on a minute. Some guy Dave says "set aside 20% for taxes. 

Why are you raining on his parade with this 40% talk. 

Over under of 12 months for the post from country saying "hay guys, need to sell all my inventory quick to pay bills. 

 

[brickpicks123]

You forgot the most important number here .. cost of goods sold. Your numbers will only work if you get your legos free .. otherwise I think you should calculate that into your equation. Very Unrealistic goal you have here to be honest.

[legone2]

I'm no expert, but my honest opinion: don't do it. 

A $60k income means $80k pretax profit (but after fees), which means you should realistically have an annual revenue of $200K at least. 

If you buy sets only during their last year of availability (assuming somehow you magically know their EOL), you will need hold them for 3 years (in order to achieve the above profit margin) before you can start selling and use the revenue to buy more. That means you will sit on $300K worth of Lego when you start selling.

And that assumes you choose mostly the right sets (very unlikely), and that the Lego reselling business is the same as it was in 2014 (even more unlikely)

Not to mention that that amount of Lego, by itself, will have an impact on the resale market that you're in (US?). Each year you will invest most of your $100K into the few sets that most other investors will buy, and that will affect the resale price of those sets.

Selling Lego full time will only work for very few people.

 

Edited April 28, 2015 by legone2

[cornstiffy]

Making a full time living doing Retail arbitrage is not for everybody.  I know we have a few on BP that do but its not the norm. I do not know any personally that do it full time. Being in the casino/gaming industry I do know many full time poker/blackjack players.  A few make a good or decent living at it while most go broke. Selling Lego exclusively to hit your goal will be extremely challenging.  My advice is be open to sell many different product lines in order to hit your goal. 20% profit after fees/shipping/cost of goods is very close to what should be expected.  300k in yearly sales is closer to what you would need pre-taxes. Sourcing that much Lego is a grind in itself and its very hard to do.  I have a condo in S.C. and a house in Central Fla. With multiple markets to buy from I still find it challenging to source Lego.  I have sold 250 Lego sets this year so far.  I consider myself a small time Lego seller so for myself I am more than happy with my sales volume. That is nowhere close to the volume needed though to do this full time with Exclusively Lego. Most of my sales are 2015 clearance or coupon or gift card buys with a few long term holds sprinkled in.  You will figure out very quickly that competition to source product from walmart, target, or toys r us is extremely competitive and every Tom, ****, and Harry is looking for the same product.  Same goes for the hot toys during Christmas. I have gone on many hunting expeditions only to come back with a empty vehicle.  Those suck and can and do wear on you mentally. The flip side is that you will have the good days as well where you fill the Car. Those are what keep you in the game.  

[redghostx]

Honestly, the capital required to generate $60k yearly after tax income on full-time lego sales in much, much higher than what you're estimated (if you estimated it at all, I'm not sure I see what you're counting on for purchasing sets and flipping them).   Bare minimum of $500k to start if you want assured income and sales right away.  I don't think $1M is too much, actually, for this to work out after all your fees and with selling prices that will generate consistent sales.  

 

At those investment levels, there are so many other options, including the good-old stock market that can be structured to generate the 5-15% return you'll be looking for, and with considerably less work and hassle.  There's some big-time sellers here, and very, very few that make it their only source of income.  For most of us, this is part-time, hobby-class level of investment.  I shudder to think if I had to turn this into the sole source of income for my family.  I'd find a hundred other things to do before trying to eke a full time living out of Lego reselling.  

I would miss your comments if you found 100 other things to do.

[justafrog]

OP - the goal of being in business for yourself isn't silly. Nor is the idea of using LEGO to do this.

It's just going to be extremely difficult... no, make that impossible  ... for anyone here, well-meaning or not so much, to give you the numbers that are going to work for you. Too many factors to consider, too many different ways and mixes of ways to make money selling LEGO.

Under DR's plan (yes, I'm a fan too, we're 7 years debt free now) you can run the business in a small way now, but even at this stage the business needs to be making some kind of profit that is more than you could get taking a second job - otherwise you should be liquidating all the inventory, LEGO and otherwise, to get you through steps 2 and 3, and then returning to the goal of starting a small business at that point.

DR's base 20% is a perfectly reasonable place to start - If you are aiming at $60K/year small business income and have a family's worth of deductions and tax credits, that 20% is likely going to be enough to cover your tax burden, and you will of course sit down with an accountant at some point and determine if your quarterly estimates need to go higher than that.

Most folks here aren't trying to do LEGO as a real business. A few are, and some number more are using it as a long term investment vehicle, which doesn't put them in a useful place for offering info to a small business owner.

Sitting down with a DR-approved accountant at this stage might be very beneficial -- they can give you some good starting advice, and you can determine whether you should be trying to do this at all in steps 2 or 3, or if it's best to wait until after.

My humble opinion. I'm not among the nay-sayers who think selling toys for a living is ludicrous. I'm doing it now, and did it with books before that and training dogs before that, so being an entrepreneur doesn't seem to me to be a silly or dangerous goal.

[DadsAFOL]

One other thought...  to get that big, you will need employees.  We've got about the equivalent of 3 full time employees right now (excluding me because I have a day job).  We're heavy on parts sales and light on set sales, although I'm trying to shift that balance.  To get to the point where you are clearing 60k, you might be working 100 hours a week.  Believe me, parting a set or pulling a crappy 50-lot $20 parts order when you're 12 hours into the day is as much a grind as it is to work for someone else.  Not saying this to discourage you -- just for you to consider it in your business plan that you might have expense for part time help when you get to a certain size.

[@rtisan]

It`s a huge risk, not a discouragement, just something to keep at the front of your mind. If you`re supporting yourself/family/etc and of course need a guaranteed income, you`re going to need a much bigger initial investment portfolio to begin with. When you do this part time on the side as perhaps supplemental income, you`re basically risking extra money, when you attempt to do this or anything similar for a living, you`re risking your livelihood. It shouldn`t be taken lightly, not saying anyone is, just saying though. 

Very rough estimate (very rough, really), but if you want to bring home $60k in a year in profit as income, you`re going to need to sell in the ballpark of at least $200-250k in sales. Your numbers of $80k are not realistic if you`re referring to sales. Remember, you have an initial investment of (X # of $) that must be recouped as part of the sales. Then you have selling fees (round up to 14-15% for Ebay and Paypal for example). People overlook this, it`s a common mistake, but a very dangerous one to make all the same. 

If you buy $50k worth of sets and sell them on Ebay for $100k. On paper, you might say you have doubled your money. Not so fast. Here is what it would actually look something like:

$100k sold - 15% ($15,000) in fees = $85,000.     $85,000 - 20% (for example) in taxes ($17,000)  = $68,000

There, you`ve got $68,000. Oh wait, not so fast, remember you put in $50k to buy those sets, so we must recoup the initial investment. 

$68k - $50k = $18k

You`re left with $18,000 cleared after an initial input of $50k. The general number tossed around here on BP and in this thread already is that 30% return is realistic. I agree, it absolutely is. You can see that right here, little bit more, but the above doesn`t take into account packing material or anything like that, so 30% is pretty close. Sure, you doubled your money in gross sales with 50K invested, but you have fees and taxes to account for. Not to mention any packing materials, tape, labels, printer paper, boxes, etc, etc. Very rough analysis but you see the issue. 

If you want $60k cleared after fees, taxes, etc, you`re looking at 250K a year in gross sales at a minimum, actually $350-400k or more, because you are not going to sell 100% of your initial investment. It doesn`t happen, sets will sit and sit at times and not sell, others will move very fast, you have to account for this. And that assumes you make 100% (double) off of your initial investment (which would be $125k) using the above analysis. 

It`s by no means complete, there are other factors to consider, and you could do it with less investment and a higher ROI instead, but if you want to quite or day job and be successful you`ve got to take a very long hard look at the numbers. Read what is written here and on the site, plenty of discussion around this topic of going solo/full time. You can be very successful, but it`s not easy, and you have to be very careful, otherwise a slight oversight could end up costing you quite a lot. 

Edited April 28, 2015 by @rtisan

[Sprocket77]

It`s a huge risk, not a discouragement, just something to keep at the front of your mind. If you`re supporting yourself/family/etc and of course need a guaranteed income, you`re going to need a much bigger initial investment portfolio to begin with. When you do this part time on the side as perhaps supplemental income, you`re basically risking extra money, when you attempt to do this or anything similar for a living, you`re risking your livelihood. It shouldn`t be taken lightly, not saying anyone is, just saying though. 

Very rough estimate (very rough, really), but if you want to bring home $60k in a year in profit as income, you`re going to need to sell in the ballpark of at least $200-250k in sales. Your numbers of $80k are not realistic if you`re referring to sales. Remember, you have an initial investment of (X # of $) that must be recouped as part of the sales. Then you have selling fees (round up to 14-15% for Ebay and Paypal for example). People overlook this, it`s a common mistake, but a very dangerous one to make all the same. 

If you buy $50k worth of sets and sell them on Ebay for $100k. On paper, you might say you have doubled your money. Not so fast. Here is what it would actually look something like:

$100k sold - 15% ($15,000) in fees = $85,000.     $85,000 - 20% (for example) in taxes ($17,000)  = $68,000

There, you`ve got $68,000. Oh wait, not so fast, remember you put in $50k to buy those sets, so we must recoup the initial investment. 

$68k - $50k = $18k

You`re left with $18,000 cleared after an initial input of $50k. The general number tossed around here on BP and in this thread already is that 30% return is realistic. I agree, it absolutely is. You can see that right here, little bit more, but the above doesn`t take into account packing material or anything like that, so 30% is pretty close. Sure, you doubled your money in gross sales with 50K invested, but you have fees and taxes to account for. Not to mention any packing materials, tape, labels, printer paper, boxes, etc, etc. Very rough analysis but you see the issue. 

If you want $60k cleared after fees, taxes, etc, you`re looking at 250K a year in gross sales at a minimum, actually $350-400k or more, because you are not going to sell 100% of your initial investment. It doesn`t happen, sets will sit and sit at times and not sell, others will move very fast, you have to account for this. And that assumes you make 100% (double) off of your initial investment (which would be $125k) using the above analysis. 

It`s by no means complete, there are other factors to consider, and you could do it with less investment and a higher ROI instead, but if you want to quite or day job and be successful you`ve got to take a very long hard look at the numbers. Read what is written here and on the site, plenty of discussion around this topic of going solo/full time. You can be very successful, but it`s not easy, and you have to be very careful, otherwise a slight oversight could end up costing you quite a lot. 

​Good post and makes a lot of sense, can I pick you up on one thing though, the tax should be calculated on the $85,000 - $50,000, so 20% tax would be $7,000, not $17,000, so increases the post tax profit to $28,000 in your example.

 

[Neosphinx]

Living the dream right...

I believe you should rather focuss on building down your dayjob. Work 4/5th and see if you can gradually build up an constant stream of income. Then if you are happy with what you make out of LEGO and others, work 3/5th and so on.

The problem with being independant is that you have no fixed income. What if the LEGO hype dies down the next couple of years? What if you have a few bad months and can't pay your rent (I assume you pay rent)? What if you loose interest? What if what if what if...At least when you keep your job and gradually start to earn more with LEGO and others, you can make the switch completely. But look at it as a multiple year plan.

What I am trying to say, and it has been said before, is that you should focuss on LEGO as a way to increase your monthly gain on top of what you earn for your boss. If you're not happy with your current work, change jobs. The benefits an employer can give you far outweigh the burden of 'earning someone else money' or 'not being able to be your own boss'.

Make a website. I have one for 100€/year (hosting and domain) and I just experiment with it. I write some in my native language about investment. add some other content and have a few items for sale on it. It gradually is picking up on hits on google. It's not a bad idea, but it all takes time.... and alot of it.

Qapla'

[Harry Blokker]

And what about the law Neopshinx. I still think it is illegal so sell sets that are current still in shops. As with boxes who are retired it is a collector's item like wine, stamps, coins... In Belgium there isn't a clear constitution. I see people on 2hand market selling sets that are still available... I don't think this is correct and is dangerous. I still see Lego as a hobby and when you have some knowlegde you notice that there is a collector's value so sometimes you build, sometimes you sell one... people who collected stamps in the early years payed 1 euro for a stamp and today they have a value of (for example) 100 euro. Well if you bought 4 of these you are a bad mother or father if you don't sell them...

[Sprocket77]

And what about the law Neopshinx. I still think it is illegal so sell sets that are current still in shops. As with boxes who are retired it is a collector's item like wine, stamps, coins... In Belgium there isn't a clear constitution. I see people on 2hand market selling sets that are still available... I don't think this is correct and is dangerous. I still see Lego as a hobby and when you have some knowlegde you notice that there is a collector's value so sometimes you build, sometimes you sell one... people who collected stamps in the early years payed 1 euro for a stamp and today they have a value of (for example) 100 euro. Well if you bought 4 of these you are a bad mother or father if you don't sell them...

​I think you may be on the wrong website if that's the way you feel. 

Also, you may not like the secondary market, but in what way would someone selling Lego be considered dangerous? Maybe for the post man delivering it to a house with a big dog, it could be.

 

[Neosphinx]

And what about the law Neopshinx. I still think it is illegal so sell sets that are current still in shops. As with boxes who are retired it is a collector's item like wine, stamps, coins... In Belgium there isn't a clear constitution. I see people on 2hand market selling sets that are still available... I don't think this is correct and is dangerous. I still see Lego as a hobby and when you have some knowlegde you notice that there is a collector's value so sometimes you build, sometimes you sell one... people who collected stamps in the early years payed 1 euro for a stamp and today they have a value of (for example) 100 euro. Well if you bought 4 of these you are a bad mother or father if you don't sell them...

For those people that sell only retired sets, they still need to put their gains on their tax form. I believe in the Netherlands, there is an amount (around 1000€) I think you can gain extra without having to pay taxes. Belgium is not so clear on it so normally everything you gain income from, you pay taxes on. For those that sell non-retired sets, ... they also should put their gainings on their tax form. It is hard to prove that someone just bought 5 LEGO sets by 'accident' and needs to resell them while they are still in shops or people that buy the sets knowing they will sell them. It will be up to the government to decide. Doesn't have me worried

[@rtisan]

​Good post and makes a lot of sense, can I pick you up on one thing though, the tax should be calculated on the $85,000 - $50,000, so 20% tax would be $7,000, not $17,000, so increases the post tax profit to $28,000 in your example.

 

​Ahh, yes that is correct. The tax is obviously paid on the return, not the initial investment (that is of course paid in the form of sales tax at the time of purchase). Thanks for catching that. 

[KShine]

20%-30% profit? I assume that must be the flippers talking. Those margins would require selling a very high volume - That is a awful lot of work to make a living. 

[Bold-Arrow]

20%-30% profit? I assume that must be the flippers talking. Those margins would require selling a very high volume - That is a awful lot of work to make a living. 

Not if you are doing fba 

[exciter1]

Not if you are doing fba 

​Does FBA provide you the product, or do you need to acquire it yourself?  Fulfillment is a very small part of the job.

Edited April 28, 2015 by exciter1

[Bold-Arrow]

​Does FBA provide you the product, or do you need to acquire it yourself?  Fulfillment is a very small part of the job.

It is not as hard as people are making it sound 

[Migration]

Sweet, another flipper v hoarder debate. Pass the popcorn.