Bucket vs. thimble – Warren Buffet quote

[aperture]

Warren Buffet quote: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” I have been looking for opportunities to collect gold from my store by the bucketful instead of the thimble. The work is all the same, but I am looking at making bigger purchases for bigger profits.
–I have a lower threshold now for not listing something that is not going to reward me well compared to my time invested
–I also have a lower threshold for buying something expensive that I can double my money on instead of something cheap I can get a 10 to 20-fold return on. Risks are higher – buy stuff for $100/item – I better not find myself sitting on it for years.

I think Jay and Ryanne brought this theme up frequently in past podcasts. I wonder what are folks experiences with similar experiments.

[Jay]

Yep, this has been my ongoing quest the past three years. How to make more money on items.

Here’s the challenge. What you describe means:
–you’re willing to spend more on an item, but it still needs to be affordable
–it must be in high demand and sell quickly
–the profit you make is very large

Items like these are very rare IMHO when out in the world. People know the high demand items and price them accordingly if they are even still for sale.

I think these items exist, but you must spend a lot more time looking for them. So that’s the other part of the equation that needs to be added. How much time are you willing to put in to find these high reward items? And can you find these items consistently?

[IndySales]

The opportunities for investments in high risk -> high reward items are there, you just need to be willing to accept that some will only break even or cost you time/money. Your bread-n-butter items can cover the loss, surely.

eBay parts/repair, online liquidation auctions, surplus, etc etc. In almost all these cases you’ll be gambling money on things that aren’t tested or photographed well. I frequently take these risks and only a couple of times felt disappointed with the items once I got them.

I also don’t mind lower margins if the item will sell faster, like a near-$100 item selling for $200 in a week. OK with me.

I’d be doing these investments more often if I had a truck and a small warehouse space. Sometimes really good items sell for extremely cheap just because the shipping logistics are nightmarish.

[Jay]

So here we add to the equation of “big money items”: a warehouse and a truck…which is not needed for bread and butter items. Both a warehouse and truck is a significant investment with ongoing costs.

I’ll change your quote just a little:
“The opportunities for investments in high risk -> high reward items are there, you just need to be willing to accept more costs that you hope you’ll make up on bigger profit.”

A “bread and butter” business is beautiful because the costs are so low to run the business.

[IndySales]

I have neither a truck or warehouse space, I just meant that there’s plenty of stuff that’s larger and logistically harder to ship going unsold for cheap that someone with an existing B&M space (pawn shop, etc) could swipe up and make bank on.

There are zero additional operating costs.

[Jay]

I’d be doing these investments more often if I had a truck and a small warehouse space.

I understood and was just saying you make a good point. There are opportunities for investments in high risk -> high reward items, but many of them mean there’s an investment to be made. Like for a truck and warehouse. Many of those high risk -> high reward businesses cant be done in an extra bedroom of your house.

[MDC Galleries & Fine Art]

We too for the last several years have been trying to raise the final selling costs of items in our store to a higher level. We all had a thread here on SL and Jay said he was targeting to do so back then. It is just smarter to sell less volume and have to ship less items to make the same or more money. Sort of “use your brain, not your back approach”.

Last week, we paid $180 for a vase that has 66% percent “solds” of a small quantity for over $400 ++. We will be listing at maybe $599, Make Offer, GTC, free shipping. Currently we have approx. 30% [367] of our store items out of 1,226 total marked at $50 or higher and of the total amount of the 1,226, 10% of our store items are priced at over $75 and approx. 6% are over $100.

Yes that is not the usual 8 to 10 times the money that we like to try to get for the less costly, run of the mill items, but to take $180 and then sell for maybe $425, we will take the $245 and run with it. We would have to sell and ship 14 items at $30 or about 28 items at $15 for the same kind of margin.

We will see how it comes. But we have paid upwards of $100 for some things in the past and hoped for the higher sale price.

mike at MDC Galleries and Fine Art

[Author]

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