Starting an eBay Business - 

Moving from your closet into the business world  

Starting an eBay Business is the next logical step if you've already mastered the basics of selling and you've gotten good at figuring out what will sell in an auction and what won't. Eventually, you'll have sold everything that you can from your own closets and you'll find that it's time to move on to selling things for other people or finding some good sources for wholesale products. Before you leap into signing up for an eBay store, sit down and plan out this next stage of your business development.

Yes, that's right - business development.

Congratulations, you're about to move from simply making money online to owning your own business!

Starting an eBay Business Right with a Business Plan

ARGH! OH NO!! Business-school speak!

Go ahead, get it out of your system now.

If you're quite done, relax, take a breath and pull out a pen and paper - you can do this! Remember, unless you're applying for a business loan, there's no right or wrong way of creating a business plan, except perhaps not creating one at all!

If you're going to get serious about starting an eBay business, you need to realize that you are in fact starting your own business. If you're going to start filing taxes differently (when you make over $600 in one year, if not before), if you're going to get a reseller's certificate, if you're going to be taken seriously, you need to know what you're doing.


Your business plan will basically lay out what you want from your business - laid out by monthly, quarterly, yearly and 5-year goal plans. Actually, the last one is optional - I usually do 3-year goals. Not only will you set goals, you'll come up with a clear road map for how you're going to get there each step of the way. This road map will be unique to your own business, but I'll give you some thinking points to get you started.

There's no real format that you need to do this in. I like using blank white paper and a nice pen, but that's just me. I also enjoy planning in the bathtub, but again, that's just me. Planning is, after all, my favorite part of owning my own business. What's important is that you take the time to thoroughly think through what you're getting yourself into and write down your road map.

Here's some questions to get you started:

• What do you want from starting an eBay business? Money? Brand Awareness? Do something you like? Make money from your passion?
• What will you sell? What kind of market is there for this on eBay? What about online in general? Where will you get your stuff? How much of a markup will you have after eBay fees and shipping? How much do you want to make on each item? How will you ship your stuff?
• How many items will you try to carry on eBay at once? Will you list in fixed-price or auction format? How much will this cost you (on average) each month? Which store level makes sense for you to subscribe to given this?
• How will you set yourself apart from other eBay sellers offering similar items and services? Will you have more accessible customer service? Will you have free shipping? Will you have quicker delivery? Will you have hard-to-find or unique products?
• Will you only sell on eBay or will you attempt to drive traffic to a non-eBay store through branding so you can capture customers on a cheaper system? Will it make sense for you sell on other eBay sites such as Half.com and eBay Motors?
• How will you keep customers coming back to your store? Newsletters? Specials? Discounts?
• How fast will you ramp-up your item listings and services? How much time do you have to devote to this enterprise?
• How will you manage your time and resources? At what point will you hire assistants and employees?
• Given all the above, and your local laws and taxes, what business structure makes the most sense to you?
• Will you need to get a reseller's license? What paperwork will you need to have before you can apply for one?
• Will you need to be insured and bonded? What will be required to make that happen?

Getting Paperwork in Place

Starting an eBay business is like giving birth - you're creating an entirely new entity separate from yourself, but (in my experience) it doesn't have to take quite as long. I live (relatively) near both a State and County records office, so I was able to get all my paperwork done in about two days of concerted effort. It was overwhelming and stressful, but I self-medicated with Ice Blended Mochas and made it through. Looking back, I'm glad I did it all so quickly - it made finding wholesalers much easier, they were eager to speak with me when I could include all my business paperwork as a PDF attached to my initial email.

I can't provide specific advice for every state, as I'm not a lawyer and I've only learned by trial and error, but if you're not selling something that needs to be licensed and bonded (like cars and such) it'll probably make sense to start off with simply doing a sole proprietorship. Because you're probably already selling and your now starting an eBay business, this can be the easiest way to transition. In most places this is very easy to set up (register a DBA name) and doesn't require any paperwork that would be better served having a lawyer look over it. Once you've got that in place and you're starting to see some cash coming in regularly, talk with your tax advisor to figure out what business structure would be best for your tax bracket.

Scanning your stuff into PDF is pretty easy and well worth from the very beginning of starting an eBay business because of the time that it will save you in the long run. I have my paperwork in two forms - one long PDF with all possible documents included and each document in an individual PDF document. This allows me to send everything quickly to wholesale companies who don't ask for specifics in their applications. It also gives me the option of sending just what they need if they do specify.
Finding a source for your sales

The source you use for your products depends on your intentions when you're starting an eBay business. If you love china dolls, hunting for them at garage sales and learning about them so you know what to buy will be a pleasure therefore starting an eBay business with garage and estate sales as your sourcing model is ideal.

If your goal is starting a successful eCommerce business and starting an eBay business is just your first step, the time it takes to hunt garage sales and learn the product line will be tedious and you'll never do it as well as someone whose passionate about it. Instead, you should consider finding wholesale sources for items that sell well and reliably year round on eBay.

If you like helping people and enjoy providing customer service but don't want to manage a specific inventory or warehouse, you might consider becoming a certified Trading Assistant with eBay that will open doors for you to sell other people's junk from their closets and basements. Most Trading Assistants charge a percentage of sale and take it off the top, which can be great because it requires no initial outlay of cash and you'll get your percentage before fees and such are taken out.

Like I said in my article on Learning to sell on eBay, if you're wanting to sell new things, I love Wordwide Brands for finding great sources of wholesellers and dropshippers. They have TONS of tools to help you learn how to set up an effective eBay business, research viable product ideas and find legitimate dropshippers and wholesale companies. The initial membership fee is well worth it, and unlike many of the other services out there - this one actually lives up to all the hype.

Managing the Books and such

I didn't do enough research into this when I was first starting an eBay business and got myself into some expensive trouble. Don't be like me! Since then, I've learned A LOT about bookkeeping. Mostly that it annoys me and I want it to be as automated as possible.

For sole proprietors who sell and buy exclusively through PayPal, Outright Bookkeeping is an amazing service. When I got into trouble with too many receipts and spreadsheets that weren't working for me, Outright reached into the darkness and saved me. (pardon the melodramatics) I wish I had know of them when I was first starting an eBay business but better late than never. Not only will it help you by automatically importing your sales and keeping track of your expenses for you, it will help you understand (roughly) your tax liability. I truly <3 Outright!

I'm currently getting ready to move to a new business structure and I'll be moving to Quickbooks at the strong (read: emphatic, vigorous, threatening) suggestion of my tax professional friends. They all swear by it, but I'll write my review in a couple more months.

My business is based on a reseller model, so I have to pay sales tax. I pay yearly at this point and I keep track of this still using a spreadsheet. I don't do a lot of in-state sales, so it's not a huge thing to keep track of.

Becoming an eBay Power and Top-Rated Seller

If you're starting an eBay business that you want to survive the long haul, you'll need to set your sights on becoming both an eBay Power Seller and a Top-Rated Seller. Why? With both of these accolades you'll not only get more conversions, you'll get better placement in search results and, best yet, DISCOUNTS on eBay closing fees.

The key to making both of these scores is to sell in volume (of dollars) and to be very pro-active in communicating with your customers.

Return from Starting an eBay business to the Make Money on eBay page