Several weeks ago, I had an opportunity to buy a Nintendo Wii at the suggested retail price. If I had taken advantage of the opportunity and immediately placed the item on eBay, I could have quickly netted a profit of $50 or so in a week with just a few minutes’ work, but it required me to have both $260 in liquid cash on hand (as well as the willpower not to open it).
A few weeks after that, a father of a friend of mine was looking to sell his baseball card collection, a big collection of Topps baseball cards from 1959 to 1965 that had sat in his own father’s attic for about forty years. They were in unbelievably good condition and he offered the entire collection to me for $1,200. Now, I am a vintage baseball card collector and I know very well that I could have had these all graded and sold them individually and made $3,000-4,000 in profit (there were a wad of excellent condition Mickey Mantles, two Pete Rose rookie cards, and many other delicious ones).
In the first case, I didn’t go for it because of the temptation factor – I knew I would be sorely tempted to just keep the Wii and play with it. In the second case, I had the the capital to buy the collection (he wanted cash, literally in the form of bills), but I was uncomfortable taking my emergency fund that low given that we’re moving soon and that my wife is due with a second child soon. So, I worked out an arrangement where I will make a bit of money, but nothing like what I would have made.
This leaves me with a big question: how can I put myself in a position to always be able to take advantage of such opportunities? Here’s what recent events have taught me:
Know how to network I generally think the generic view of the slippery-handed networker is pretty awful – I have little interest in it. Instead, I’d rather build long term friendships and relationships. If you don’t have a large network of friends and associates, short-term opportunities like these are much more rare, so the first step is to know how to build friendships quickly and ethically. The book Never Eat Alone offers some tremendous advice on how to get started with this.
Keep a large cash emergency fund In my eyes, if you have a very well stocked emergency cash fund, opportunities like these are a good reason to tap into it (but not to decimate it). In other words, view a portion of your emergency fund as cash you can grab to take advantage of an opportunity, then replace when you recover the funds from the opportunity.
Know what you know – and keep up to date on it I know home electronics well, I know vintage baseball cards, and I also have a pretty good knowledge of non-sport trading cards and comic books as well. Because of these interests – and my efforts to keep at least remotely up to date on them – I often see opportunities to make a profit in these areas. Even better, when acquaintances have questions in those areas, they often come to me for advice and potential sales.
Know where to go to resell the stuff you have I know quite well that if I come upon some good condition vintage baseball cards, it’s worth the cost to have them professionally graded. Then, I know several potential buyers for these items and, if all else fails, I can turn to eBay. In any case, I’ll always turn a good profit on such an item because I know what to do with it and where to go with it for sales.
Be very giving with advice in your areas of expertise This essentially ties together the ability to network with having domain knowledge in certain areas. Basically, when there are opportunities to discuss topics in areas where you have knowledge, share it and offer to share more upon request. For example, if you’re a home electronics guru and someone mentions upgrading a piece of equipment, mention that you’ve looked at the same thing in detail, drop your recommendation briefly, and tell them they can contact you if they want more help. It might just turn into a great opportunity for you.