Today’s entry is about selling something you don’t have, which sounds suspiciously like creating value out of thin air.
Guess what? BOTH are possible. Nay, I daresay it’s NECESSARY in Bizness… to be good enough that you can sell something that you don’t own.
Now before we move on..! It’s important that I mention that, while it’s a necessary business building skill to be able to sell something you don’t own, I am certainly NOT suggesting that you lie, steal, take advantage of people, or otherwise break the law or ethics.
Whew.
Not like George C. Parker, the man that was convicted of “selling” the Brooklyn Bridge an average of twice per week for 30 years. I read about this criminal on my Twitter friend, Ramsay the Blog Tyrant’s site.
The REAL shame of George C. Parker? He went through ALL the necessary steps to clinch a legitimate deal… rented office spaces with all the trappings, used legal documents …and some GREAT salesmanship, gaining the trust of decision-making people with money… but he din’t actually OWN the bridge. If he had only used those same skills in a honest way he could have made serious bank. Oh! And NOT end up dying in prison at Sing Sing.
Nope, when I suggest that you learn to sell things that aren’t in your possession, I don’t mean in an immoral, unethical, illegal manner. Read on:
You Don’t have to OWN a Thing to SELL it…
I’ve often stated on this blog that you only need two things to be in business:
- Access to a thing of value
- A way to communicate with people that value that thing
…that’s it. Note that I simply said, “Access” to the thing of value.
You don’t necessarily have to own that there thang to sell it.
Isn’t Selling Something You Don’t Own Illegal? Or Immoral?
Brooklyn Bridge for sale. Three easy payments and it’s all yours.
Nope.
Think about it: ever deal with a real estate agent? My dad was one. He is the most high-ground, straight-and-narrow, above-board, cards-on-the-table… and every other quaint colloquialism for “deadly honest”… man I have ever known.
But he didn’t own half the stuff he sold.
He acted on behalf of sellers to represent their homes to buyers and facilitate a deal.
Selling Short: What in Heck is That?
We’ve looked at the case of an agent acting in the stead of the actual seller to help figure out a deal. So we SHOULD be in agreement that that’s okay (say an unkind word about my Dad and we’re gonna have a conversation… AHEM). But here’s another setting:
“Selling short” in the stock and options markets means putting up an enormous amount of capital.. called margin… in order to secure a loan. Not a loan of money, but a loan of stock.
The ‘short seller’ then goes out and sells the stock on the open market and collects cash. He still has a debt; he must deliver the stock to the person or entity that loaned it to him.
It’s the reverse of that old chestnut “buy low… sell high”. A short seller sells stock that he doesn’t actually own with the intent to buy it back later at a lower price than he sold it.
Savvy stock market players sell things they don’t own on a regular basis
He wants to sell high… buy low 😎
If his stock goes up, he’s in trouble… he has to buy the stock at a higher price than he sold it in order to satisfy his loan. 🙁
In other words, he might make $50 by selling… have that $50 in hand… but then be compelled to buy stock at $60 and absorb the difference, a loss of $10 a share.
But..! If his stock goes down, he takes some of the $50 per share he has on deposit and buys it back at $40. The difference of $10 is his profit in this case.
Short Selling is Moral, Upright, Patriotic, and Supports the Stock Market
An accusing finger gets pointed at folks that “sell short” in the stock and options markets. Because they are effectively betting that a stock will go down.
It’s been said that short sellers are greedy opportunists preying on weak companies, hoping to bankrupt them and the American Way. That short selling causes weakness in the market and drives prices and our economy down.
Selling things you don’t own contributes to a healthy market
Actually, nothing could be further from the truth.
A short seller actually provides support to a weak market. How? Well, think about what drives prices… selling pressure makes ’em go down, while buying pressure makes prices go up.
- The short seller MUST buy at one point or another.
- He must “buy to close” his obligation at a high price and take a loss if stocks go up…
- …but he must also “buy to close” his transaction at a low price if he wishes to ever spend his profits.
In other words, no matter what… a short seller has to buy.
And buying pressure buoys up prices for everyone. Short selling is an activity that actually makes the stock market more liquid. It’s every bit as honorable as buying and holding stock like most people do.
Back to Market-ING, Kurt
So we’ve seen two ways in which it’s perfectly honest to sell something you don’t own.
How does this relate to YOU, dear Shoestring Stepper?
Learn to use Craigslist to test market your business idea. Build a buyer’s list from a free ad!
Well, a similar practice of “selling short” that works in stock market, works in bizness too.
My son Pierce recently discovered an “arbitrage” opportunity while looking for used paintball supplies on Craigslist and on eBay. He found that the same gun he could pick up on eBay for $40 (AFTER shipping) would sell here in Colorado Springs for $60. Not bad… that would be a 50% return on his invested dollar.
In fact, he had an agreement with a friend to buy a paintball gun he picked up this way when I told him, “Put it up on Craigslist.”
“But, DAD… Christian is buying it from me. I can’t put it up for sale.”
I said, “Why not? Son, that deal might fall through. You might not get three Andrew Jacksons from Christian but you MAY need to get other buyers.”
“Why do I need other buyers, plural?” Pierce wanted to know. “I only have the one gun.”
“Heh-heh… ” I replied, “… So?”
How to Validate Your Business Idea on Craigslist
I explained that first of all, your negotiation position is greater when you have more than one buyer. If someone (like his buddy Christian) is trying to talk you down, it’s a lot easier to stick TO your gun 😉 …if a lot of people want to buy it.
But much, MUCH more importantly..!
Putting an ad on Craigslist might flush out a whole boatload of eager, well-moneyed buyers of paintball equipment.
Lookee:
“I’m sorry, that’s been sold, but…” script. A sneaky, but legit way to build a buyer’s list
“Hello? Is this 555-9559? Are you still selling that paintball gun for $60?”
“Oh, I’m sorry! That gun has been sold. BUT… I’m always coming across great buys on paintball equipment and I’m sure I could hook you up. WHAT KINDS OF SUPPLIES ARE YOU LOOKING FOR EXACTLY?
(Cue maniacal evil genius laughter)
Listen: business is all about matching up folks that want stuff, with the stuff they want. Plain and simple.
Shoestring Step Two is Find Out The W’s: What people Want (and Why), Where to find them, hoW to communicate with and help them.
What I was encouraging Pierce to do with the free Craigslist ad… was to start putting together a Buyer’s List.
Then, armed with half a dozen or more rabid customers, a shopping list and the ability to buy in bulk, he could hook up each of the people on his list with exactly what they were asking for. He would have customers before inventory. Bloody awesome.
Mua-hahahahahahahaaa….
Why “Marketing” Oughtta Be Called “Finding”
I learned this amazing principle from Keith, my best buddy growing up. He stumbled onto this technique in the 80’s when he sold his Toyota Corolla in order to pick up a jetski. He had bought the car used in highly competitive Denver, Colorado… then sold it in small but growing Grand Junction, Colorado.
Something noteworthy happened: he sold that used car for significantly more than he had in it.
His newspaper ad kept running, though, and he kept getting calls…
(cue maniacal evil genius laughter again)
FOR SALE
Reliable car for transportation. Toyota Corolla.
Clean and available right now. Call Keith 555-1234
Please leave a message if no one answers.
Get that? He didn’t say anything about the mileage, color, or year. Freakin’ GENIUS. Those were all questions he could answer AFTER he had the car. Because he set the expectation in the ad to “leave a message if no one answers” he could actually get a few leads on his answering machine before acquiring the car he was going to sell them.
So he and a friend would make a trip to Denver every other weekend. He had a ‘real’ job for beer money… but buying cars in Denver and selling it in Grand Junction to prequalified buyers brought in tens of thousands of extra dollars. In the 80’s, that was a pret-ty okay side income for a 20 year old kid.
You can read more of this story in my post, “Bizness” is Simple and Easy When You’re Already Making Money.
So, back to various ways of selling stuff you don’t own.
If you think Keith’s Buyer’s List was a nifty trick, try this one on for size: ethically selling something that doesn’t even exist.
How I Pre-Sold an Information Product Which Went on to Make Millions
In 2002, I began actually using a system I had been developing to trade the stock market with little risk. In addition to using the system, I put up a simple website and blogged about my experiences.
Followers saw me do VERY well with purchases of companies like Yahoo and Amazon… and at the same time other companies that went down the tubes, didn’t hurt me. My system was such that I was guaranteed NOT to lose any more than 5% or so on a bad stock, even if it cut in HALF…
…but if the stock went up there was no limit to its possible growth.
Along the way, I learned a number of techniques for removing even the small, 5% risk after the stock behaved a certain way.
So just after I took a company…
(a real up-and-comer, name of EBAY)
…that I had invested in with a little bit of risk, and turned it into NO RISK play…
…just before an earnings announcement…
…one of my Subscribers wrote in and asked, “Have you written a book?”
“The Blueprint” sold by my first internet company, RadioActive Trading circa 2002. A trading system that limits risk while leaving upside potential open. Available at www.radioactivetrading.com
Ladeez and gents, THAT’s when you monetize your website. When consumers of your content start ASKING you to sell them more of what you are giving them for free, it’s about time to make an information product.
Which I did.
Folks, here is a part that may or may not amaze you: I put up a “ghetto” PayPal button and a table of contents, with the disclaimer that if I didn’t get enough orders I wasn’t gonna write the thing. But if you want to be included in the first printing… put yer money where yer mouth is.
I also mentioned that if only, like, five people ordered it I would refund their money by such and such a date. The intent was NOT to defraud anyone; it was disclosed that the book would be written if enough orders came in and refunds would be made if not.
Several thousand dollars later I began writing The Blueprint. Now that book and related subscriptions have sold millions of dollars worth.
Was there anything unethical or immoral about the way I did this?
Naw, shucks. Sure, The Blueprint did not (yet) exist. But so what? I had disclosed to everyone what they were getting into and didn’t hurt anyone. I would have refunded the money put up by the first few buyers, had I not gotten enough. But once over $2000 came in, I figgered it was time to get to work!
Most inventors and would-be entrepreneurs make a product, THEN try and find customers to buy it. That’s bass-ackwards if you ask me.
It makes a lot more sense to provide value to people (which I was doing by letting folks look over my shoulders as I traded the stock and options markets) for free and asking nothing in return. This builds trust, authority, and especially conversations.
And when your people tell you what they want to buy from you… you make exactly that, kick butt, take names, overdeliver, and make ’em loyal for life.
The Blueprint has sold over a million dollars in the last five years, including a relaunch in 2008 that brought in over $57.2K from just ONE webinar performance. And since its relaunch we have had hundreds of unsolicited testimonials, which adds to its credibility and ‘social proof’.
Not bad for a product that was sold BEFORE it even existed.
Okay, Steppers! Sound off in the comments, woudja? Can you think of other instances of selling something that you don’t own (yet) and how to introduce buyers and sellers? Would love to hear your input.
Keep Stepping,
Kurt
Twitter: linkpro24
says:
This article speaks volume. There are many Free Classified Ads platforms where you can buy and sell stuff online easily.
Im just starting my own business in resale and repurposing furniture. I can relate to almost everything you said. (except for stock markets. I have no clue about that world.) I actually have good methods and ideas, but I have a lot more to learning to do before I share amongst the class.
But I wanted to commend you for not turning into a “sheep”. I can hear your personality through your writing, which means that you didn’t “sell out”. You still have your voice. Just THAT right there is truly inspiring. Thank you for sharing.
Twitter: tecteem
says:
Excellent post dear! I learned a couple of new features so thank you for sharing this amazing article.
Twitter: tecteem
says:
Great Post and Nice Article. I had never known about this….I like it. Thanks for Sharing.
Twitter: coach2coachguy
says:
Excellent advice Kurt!
I recently found your excellent blog by visiting my Coach Gail Gardners excellent blog and read your awesome blog post there.
I too really appreciate your down to earth, tell it like it is teaching style!
And it’s easy to see why your stock investing strategies course did so well! Big congrats BTW!
You really explained the concept of going short in a brilliant, matter of fact, totally understandable way. Because as you are most definitely aware, the first few times, a newbie stock or commodity trader hears the term, and has the concepts explained to them.
It’s like hearing a foreign language spoken for the very first time!LOL!
Your simplistic, non complicated explanation, really conveyed the concept brilliantly! Great job!
Mark recently posted…Being An Entrepreneur: So You Kinda Of Sort Of Think You Understand What It Really Takes!
Twitter: blogtyrant
says:
Very cool article!
Thanks for the mention as well. Although I’m not sure about having the back link of “read about this criminal” going to my site. Ha ha.
Thanks again.
Ramsay
Ramsay recently posted…The Ultimate Guide on How to Get Testimonials (and Use Them Smartly)
Twitter: shoestring101
says:
Haha! Oh c’mon Ramsay, you’re not the criminal in question(are ya?) 😉
Hey I really did enjoy the detail on the George C. Parker story. It’s so much a cliche over here in the U.S., for example “If you believe that, I’ve a bridge I’d like to talk to you about”… no one actually knows or acknowledges that a man DID in fact ‘sell’ the Brooklyn Bridge a number of times.
Tragic thing is..!He possessed many, most, or ALL of the skills necessary to be a legitimate success. He understood a proper sales funnel, establishing trust, appearing and conducting himself professionally. What a shame he did not use his skills to create value for himself and others because he certainly had the knowhow. There’s no reason a man that pulled off such elaborate schemes should have died in prison.
Hey have you read about one Frank Abagnale, Jr. also from the U.S.? Now THERE’s a confidence man if ever there was one. And he (fortunately) came over to the right side of the tracks, providing REAL value with his skills to pay back and make up for the people he hurt. Check ‘im out if you get the chance.
Thanks for making an appearance on my li’l old blog Ramsay. You are welcome any time.
Keep Stepping,
kurt
kurtf recently posted…Just Because You Don’t Own Something Doesn’t Mean You Can’t Sell It
Twitter: ipjrobson
says:
I think the Craigslist idea is genius. I don’t known what I haven’t tried something like that before.
You could theoretically do it with anything.
I suppose people do get a bit of a strange feeling by selling something that they don’t own, but it does work. Just as you’ve shown here.
Nice work
Iain recently posted…Less is more: unshackle yourself and do more
Twitter: shoestring101
says:
What’s awesome about Craiglist…is…it…is…FREE.
I have used eBay and Fiverr before to test-market. Here’s an example post about that Fiverr pays YOU if you score; eBay is Not free, but it is cheap. And more appropriate than Craigslist or Fiverr for certain products.
For example, I priced my investment book by selling extra copies on eBay back in 2002. Wanna hear something funny?
I offered a money back guarantee. Noticed that the only returns I was getting was from folks that had paid in the $50 range for my unique trading system. Almost NO ONE that paid around $200 returned it, though.
I asked the $50 return guys why they returned and it was almost unanimous. Seems that the guys that paid less, looked at the size of my book and never opened it. HA! And the ones that paid more, took it more seriously, and I got scores of thank-you’s… especially when the market tanked in 2008.
Anyway, get over that funny feeling in your stomach when you sell something you don’t own. You DO plan to deliver if’n someone buys, and you won’t be making representations that aren’t truthful. I disclose when a product is ‘under development’ but when a buyer desires your solution so much he’ll take it without a lot of fancy wrapping, that’s when you know you have a winner of an idea!
Keep Stepping,
Kurt
kurtf recently posted…Just Because You Don’t Own Something Doesn’t Mean You Can’t Sell It
Twitter: shoestring101
says:
I can tell you what I’ve done; give a taste of your advice to a number of folks that want it, and do it for free. Not the whole kit and kaboodle; they won’t be able to implement everything you tell them anyway. But find out a pressing problem for your would-be clients… SOLVE IT… and sit back.
Ask for no compensation except for this: that they tell you what happened when they applied EXACTLY what you told them they should do.
If they do the one thing you prescribe to solve the one problem they made clear to you, and see the results they were looking for… BAM. You’ve just earned their trust. You have proven in a very real and tangible way that you have at least one answer for one of their problems.
Who do you think these ‘satisfied customers’ will come to when they need more? Because they will. Solving one problem helps you earn bigger problems to solve.
They say the farmer won’t buy the cow if he knows he can get the milk for free… I say that’s not necessarily so. I think at least sampling the milk is something any responsible farmer would do before buying that cow.
(SIDE NOTE TO FRANKENBERG FAMILY DAUGHTERS: that saying about the farmer won’t buy the cow is normally done to encourage women not to ‘give it up’ for free. Because then a fella won’t make a commitment and marry you. For the record, I STILL think THAT’s good advice. Ahem.)
But as far as landing paying clients goes, give one piece of advice for free that you know will work if it’s applied. That’s the only kind of advice you should give anyway, in any situation, or keep your mouth shut.
Ask for no compensation. That may seem counter-intuitive. But here’s the thing: you’ll get MORE than what you give, guaranteed. Even if that particular person that you’ve helped never pays you for that particular piece of helpful direction:
1) You’ll add to your repertoire of people that will give you a good recommendation or referral.
2) You’ll have the pride and confidence that goes along with helping any human being, any time… and that swagger will help you land paying clients.
3) If THAT client comes back to you, you have the justification to ask him or her to pay this time because you have helped them already and they know it.
4) You will have simply done the right thing; now kismet, karma… “the universe”… or, I personally believe that it’s the God of the Bible… will reward you. You’ll get paying clients from somewhere else simply because you deserve them. Give, and it will be given unto you. Good measure pressed down, shaken together and running over! That’s a guarantee I have in writing; check Luke 6:38.
Okay Iain don’t mean ta get preachy on ya. But help folks for free and I guaran-dang-TEE ya you’ll be on your way.
Keep Stepping,
Kurt
kurtf recently posted…Just Because You Don’t Own Something Doesn’t Mean You Can’t Sell It
Twitter: ipjrobson
says:
That’s a great idea. Giving people a taste of what they could get with you to wet their appetite sorta speak.
I tried the Craigslist (except with Kijiji) 10 people checking out the ad no leads yet.. It was really just an attempt to see what was out there.
I tried for something very specific, so I guess I was using a laser.
After reading your comment I attached a free video that if they apply the techniques in the video they can improve their explanations. So like the free taster.
Let’s see how it plays out.
Iain recently posted…MYF Approved weekly October 19: less is more, niche sites, and blogs
Twitter: shoestring101
says:
Yes Iain,
After we spoke on the Google-o-phone I suspect you are right; you were aiming your message as a laser, and very probably at the wrong target. Try the shotgun approach (cheap or free, bigger field, ask folks to raise their hand and say, “Yeah I’d like something free”) and see where the pellets tag something.
Once you know what market is responsive, you can hammer that niche.
Looking forward to your guest post Iain! You are certainly a thinker and contributor in this vein of thought, marketing on a shoestring. I can’t wait to read what you have to say to the followers of Shoestring101.
Keep Stepping,
Kurt
kurtf recently posted…Walk the Shoestring Steps with Me this Week: TUESDAY
Twitter: shoestring101
says:
Y’know? Just because the first draft of your marketing message doesn’t pan out, doesn’t mean you have a loser product.
It’s market, medium, message in THAT order (check my post on Effective Marketing on a Shoestring Budget, Part THREE). Meaning that the most important thing to look for is a rabidly hungry group of consumers for you product… your market.
Try posting your marketing message targeting other groups than the one you first targeted. See who nibbles.
Find out as much as you can about those people. Then use that intelligence to build a customer avatar.
Next, experiment to find the most efficient CHEAP or FREE media (Medium) to reach them.
Finally, tweak your Message.
I think you may have a winner. But if no one at all nibbles after a lot of tries, it’s time to move on to a product more in demand.
Keep Stepping!
Kurt
kurtf recently posted…Walk The Shoestring Steps With Me This Week: WEDNESDAY
Twitter: ipjrobson
says:
Yeah I think it was just a bit too specific right off the bat like you said.
I will have to try again and see what I can come up with.
Iain recently posted…MYF Approved weekly October 19: less is more, niche sites, and blogs
Twitter: shoestring101
says:
Whoops think my reply went to the wrong comment. Look for the one mentioning market, message, medium. I think it will be helpful.
KS,
K
kurtf recently posted…Walk The Shoestring Steps With Me This Week: WEDNESDAY
Twitter: StartupBros
says:
Another great post Kurt, I love your writing style! 🙂
Will Mitchell recently posted…Importers – Here’s The Real Reason Why You Can’t Find a Good Product
Twitter: shoestring101
says:
Awww yer too kind, Will! Love yers as well. I’ll head on over to StartupBros and take a gander at yer latest. Thanks for stopping by!
Keep Stepping,
kurt
kurtf recently posted…Just Because You Don’t Own Something Doesn’t Mean You Can’t Sell It
Twitter: Compellinadvert
says:
Kurt, came across your site from Ana Hoffman and must say am certainly impressed.
Wow should be the word.
As Sylvia will need to digest what you just shared, going to bookmark this article for reference purpose.
Linking sellers to buyers is actually a nice opp to make some cool cash.
I need to do more of this to multiply my side income, who knows it could become a steady income stream
Twitter: shoestring101
says:
Ah, a fellow subject of the Queen of Traffic! God bless Ana, she has been an inspiration to me.
Thanks for the “wow” but it just comes from nearly a lifetime of trial and error… and the WILLINGness to be taught after bangin’ my head against a wall one or two or TEN times too many 😉
Thanks for bookmarking. Shall I email you when an equally awesome post comes out? 😎
About side income… EVERY self-made millionaire I’ve had the pleasure of interviewing has had a regular income that they paid the billz with, and in addition a passion-driven biz “on the side” that later became the big success. It seems like a recurring pattern; you’re in good company.
Keep Stepping,
Kurt
kurtf recently posted…Just Because You Don’t Own Something Doesn’t Mean You Can’t Sell It
Twitter: bizplanmentor
says:
Ok Kurt, so it seems the rest of us regular ole preneuraholics have been building businesses bass-ackwards all along!
Make sales before you even build a business…
Get customers before you even have inventory…
Whoda thunk? (Now you’ve got me talkin’ all goofy!)
While the rest of us are scrounging around in search of funding to launch our biz, you’re already making money and you don’t even have a product!
Hmmm. Lots of food for thought here. Great examples!! I need to go back and re-read this and your previous post. Whewww. Good stuff Kurt.
Sylvia recently posted…CROWDFUNDING-Should You Drink the Kool Aid?
Twitter: shoestring101
says:
Preneuraholic?!?
Heh… I’ve been wondering what to call this condition.
I could quit anytime I want to… I don’t have a problem…
BWAHAHAHAHAHAHA!
Thanks Sylvia. Yes, I’ve decided that the things that deserve my time and attention are those things that 1) DRIVE me; or 2) are DRIVEN by others.
That is, I’ll do something I wouldn’t mind doing for free… for free.
But if I’m going to get paid, get paid UP FRONT knowing that the work is worth the effort.
When those two worlds intersect, it’s pure awesomeness. And I seem to run into that situation more often when folks are hungry enough to buy something before there’s a lot of spit and polish already… they just WANT the solution, I’VE got it… and can make improvements to the ‘bells and whistles’ along the way.
Make some bank FIRST people, THEN get more organized as you go along. Sounds like ready, FIRE! -oh, uh, aim. 😉 But it works and with a minimum of heartbreak.
Keep Stepping,
Kurt
kurtf recently posted…Just Because You Don’t Own Something Doesn’t Mean You Can’t Sell It