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The Right to Be Wrong in Business

The Right to be Wrong in Business – Business of Doing Business – The Journal of Antiques and Collectibles – March 2007
By Ed Welch
I jealously guard my right to be wrong. When I make a mistake, I do not give credit for that mistake to the government, a slow business cycle, social conditions, the political environment or the new dealer outbidding me at auctions.
I own my own business. When I have a good year, I take the credit. When I have a bad year, and I have had many, I deserve all the blame.
In 1968 I took a Dale Carnegie course, How to Succeed in Business. I have used many of the things that I learned in that course throughout my life. For example, how to deal with bad business decisions, mistakes, a slow response to new business conditions and stupid decisions. The most important lesson I took away from this course was the Rotten Egg Theory. The course instructor took all the negative things that can happen to a business and lumped them into one easy-to-understand category, a rotten egg.
QUESTION: What should you do when you lay a rotten egg?
ANSWER: Take ten steps backwards and admire your creation. Say, “Wow!” Say, “I did this all by myself.” Say, “It does not belong to the government, it does not belong to a bad business climate, it does not belong to my competition, it is my rotten egg. I created the entire thing all by myself!”
TAKE ACTION: Take nine and a half steps forward bringing a chair with you. Sit next to your rotten egg so that you can get a good idea of how bad it smells. Now, consider all the possible actions, and there are usually many, that you can take to get rid of the smelly mass. Finally, do not delegate the responsibility of fixing the problem to an employee or, worst yet, your spouse. It is your rotten egg. Clean it up yourself.
For more than 30 years, I have taught a business course, The Business of Doing Business in Antiques. I have given this course at the college level, at three-day antique shows and in group shops. In a few cases, I have given this course one-on-one to a new dealer. The courses that I teach in group shops are the best attended and most productive. The students are highly motivated and attentive. A planned two-hour class can last three hours or more.
Recently, I have been contacted by more than a few of my former students who are following my articles in The Journal of Antiques and Collectibles. Many of my former students are upset that the advice I give today is contrary to the advice I gave them 20 or 30 years ago. For example, years ago I advised new dealers to start their business at the mid-levels of the antique trade. If a new dealer started out at level five, he or she could buy merchandise from the four levels below them and sell to the five levels above them.
Twenty-five years ago, level five provided the best chances for a new dealer to learn about the antique trade while protecting that dealer from a major financial loss. Mid-level antiques have a mid-level price. Mid-level antiques cost from a couple hundred dollars each to a couple thousand dollars each. If a new dealer made a buying a mistake and spent $2000 on a worthless item, he or she would not be financially ruined after reselling the bad purchased at a loss.
Today, the mid-levels of the antique trade are overcrowded with hobbyist and collector/dealers competing against each other for a limited supply of merchandise. The result is over inflated prices for mid level antiques.
The best potential for making big money in the antiques trade today is at both ends of the trade, the cheapest and the most expensive. The reason for big profits at both ends of the antique trade is the same, a lack of competition. Few dealers want to be associated with or deal in low-end junk. Few dealers have the hundreds of thousands of dollars necessary to operate a high-end antiques business. If you want to make serious money in the antique trade today, buy and sell junk or buy and sell the very best.
As a teacher and as a business consultant, I have created more than my share of level-five dealers, group shops and shows. While doing so, I neglected or minimized the importance of all other levels of the antique trade.
A former student, and now good friend, is one of my harshest critics. He claims that I have been laying the same rotten egg for more than 30 years. He thinks that my approach to making profits in the antique trade is too narrowly focused. At one time, I espoused the merits of operating at level five to the exclusion of all other levels. Today, I espouse the merits of buying and selling at both ends of the antique trade to the exclusion of all other levels.
Years ago, I advised my students and clients to be adventurous. My advice was to buy things that you know little or nothing about. A professional baseball player with a 400 batting average is a superstar. Such a player strikes out 60 percent of the time. He looses more often then he wins.
I advised that at least 20 percent of a dealer’s purchases should lose money. If a dealer has a buying average of 100 percent, how can his or her business grow? Adventurous buying has pluses and minuses. The pluses include the discovery of new profitable items. The minuses educate the dealer as to items that should never be bought again and cost the dealer some, not all, the money spent on that item.
Today, my advice is to study and do research before you spend your money. Perhaps I have become too conservative with age.
My friend thinks it is time for me to take 10 steps backwards and examine my own rotten egg. He thinks that it is time for me to broaden my field of view to include more levels of the antique trade. He backs up his argument with the fact that 35 years ago he followed my advice and entered the antique trade as a level five dealer. He is still a level-five dealer today. He has a very profitable business. He admits that he has changed and modified his business practices and techniques over the years, but claims that he is proof positive that there is still large profits to be made at the mid-levels of the antique trade.
I published my first article in 1958. I was a teenager and I was convinced that I knew everything. As the years went by, I married, had children and worked to provide an adequate family income. I continued to write and began to teach. I modified my teenage opinion of knowing everything. I discovered many things that I know little about. Today, at age 65, I have come to the realization of how little I actually know. Maybe it is time to take 10 steps backwards and have another look at the ten levels of the antique trade.

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