Being a LEGO reseller can be extremely fun and rewarding. However, it can also be challenging. When thinking about how much time and money you want to invest in this venture, it’s important to start to think about what your time is worth. From there, you can begin to piece together the profitability of the venture. But how do you value your time as a LEGO reseller?
Return on Investment is most often used when talking about money investments. But we need to always remember that you are also investing your time. What is the return on your time investment in LEGO investing?
Mapping Out Your Hourly Worth
Before you start a reselling business it’s good to map out how you think your time should be valued as you start to create the business. This should be based on your earning potential in other areas that you could be spending your time. For example, if you currently earn $20 per hour in your regular job, then you can assume that your time is worth $20 per hour.
Next, you need to ask yourself whether you can earn this amount with LEGO investing or online reselling overall.
Although this business is e-commerce and reselling, it is also investing. Therefore we are waiting some length of time before seeing revenue come back to us. Don’t factor in the holding time when calculating your hourly pay – that is a different calculation (CAGR or IRR). For now we’re talking specifically about the work that you actively put in, and the money that it makes you.
In other words – for every hour of effort that you put into the business, will you earn more than $20?
Factor in the Growth
When you are just starting as a reseller and you attempt to determine what your true hourly wage is, don’t be surprised to find out that it is at a low number. As a new LEGO reseller, you may not be a mastermind of online arbitrage and you probably don’t have a network of fellow resellers or retail store managers that are willing to assist you along the way.
This means you’re in the trenches and will be doing a lot of work independently. Even though the hours you clock in may be long, you are learning and building relationships along the way.
However, as with starting any business, we need to view this as an investment. For the first year, our ‘pay’ will be low. But over the course of the next few years, it will steadily grow to a level that more than makes up for the struggle in the beginning.
This is the power of compounding your business. Therefore when figuring out your worth and applying it to your LEGO reselling business, it’s important to always remember that growth. Don’t look at the first month’s numbers and think that it’s not going to work.
As You Grow, Start to Aim Higher
For me, I try to make sure that when I’m working as a reseller that my hourly wage is a of $100 per hour or higher. That means if I purchase 30 sets at one time, receive and repackage them, and list them on the internet, my ROI on those sets should be a minimum of $100 an hour.
As I built my business, I began to see the real benefits of economies of scale. When you are doing things at scale, your profit per hour will skyrocket because you can apply the same work toward making more money. It doesn’t take much extra time to add more sets to your basket when checking out. Yes you’ll have more orders to fulfill, but it will be worth it.
The Real Benefit of Knowing What Your Time is Worth
You may be wondering why I even suggest doing this at all? Isn’t my hourly profit an arbitrary number? I don’t really earn this much per hour, because I won’t be getting paid until I sell the sets in 2 years time, right?
The real benefit is this.
Understanding how much profit you expect to make for an hour of work will help you in cutting down the tasks that fall below your threshold, thereby making you more efficient.
If you can make $100 per hour by sourcing products online, perhaps you will start to realize that the hour it takes you to drive to the LEGO store far away from your home to buy a few sets may not be worth the time. Or perhaps as you grow your business you will start to see that those weekly supply runs are taking up too much time, and start to figure out ways to buy boxes online or buy in bulk once per month.
The bottom line is – you will push for efficiency, because you will compare everything you spend your time on with your estimated hourly worth. It will push you to streamline processes, make improvements, hire people when the time is right, and grow your business in more effective ways.
Go out there and get it!
I hope you found this valuable. If so, make sure to check us out on YouTube, where we give tons of more experience and strategies for LEGO reselling and investing. Also, we have a free Facebook group – join if you would like to learn from like-minded LEGO investors.
Do you think it’s important to value your time? Let us know in the comments below!