Yard sale 101

Michael Smerconish: Yard sale101

By Michael Smerconish - Daily News
Philadelphia Daily News
Daily News Opinion Columnist

WHILE federal regulators spent last weekend unsuccessfully hunting for the cause of last Thursday's momentary financial meltdown, I was monitoring a classic American enterprise.

It featured a partnership agreement, product development and market research, not to mention an advertising plan, pricing strategy, concessions, negotiations and money-handling.

Unlike the current financial markets and their fluctuations, this one didn't require a Ph.D. in economics to follow. It was a yard sale run largely by our three sons, ages 9, 12 and 14.

Weeks ago, I'd proposed that they manage the sale with a twofold purpose: first, to relieve our garage and attic of all the stuff we'd accumulated but didn't need or want. And, second, to use it as a device to teach them some of the rudiments of economics.

Now that it's over, I think Wall Street can learn more from the boys than they can learn from Wall Street. The lesson would be about returning to basics.

First, the boys had to work out their partnership. Would they split the profits equally? Or was the eldest entitled to a larger share of the take? Would Dad get reimbursed for using his truck to haul the goods?

Second, they needed product. Good thing their "Uncle Pat," better known as "Cap'n Pat," was willing to rid his own garage of some items, including a vintage Coca-Cola sign. They had flowerpots, books, CDs, toys, a go-kart, two bikes and an old-fashioned radio.

THEIR market research consisted of visiting a few sales on the weekends before their own. At one, the homemade brownies seemed to do a brisk business. Suddenly, food became a consideration.

Marketing consisted of two newspaper ads and some road signage for the morning of the event.

As for the negotiating strategy, I recommended they cut whatever deals were necessary in order to spare us a trip to Goodwill. My wife and I promised to stay off the floor as best we could, leaving the boys to run their own show. That meant they'd handle all the money.

Immediately, the ethics of business confronted them.

While they were setting up the night before, a man arrived, newspaper ad in hand, saying his son was graduating from high school the next day. He was hoping to get a look at the Coca-Cola sign.

Was it proper to sell before the sale started?

The boys didn't hesitate. The sign went for full price. The buyer offered a $5 tip for allowing him to make the purchase, which only reinforced the boys' belief they'd sold it too cheap. "I wonder if he uses the line about the son's graduation the night before all sales," our eldest said.

The boys' grandmother had been generous in emptying her own cupboard. A blender I recognized from my childhood had an asking price of $5. I heard a man offer $2. One son countered at $3, but another shouted out $2.50, exposing frailties within the partnership.

The asking price on the go-kart was $50. There was an offer of $40 and a counter of $45, which closed the deal.

Dollar books were popular. So were CDs, flowerpots and framed wall hangings.

But not the lamps or the jackets. Ditto for the old radio. Electronics - the phone, TV and printer - were slow movers as well.

Interestingly, everyone asked for jewelry. The boys had none in stock.

And while the brownie idea had given way to hot coffee and cold water, neither moved on such a mild day.

The gross was $713 (split three equal ways). But they seemed to learn several business lessons aside from calculating their take.

Besides the product procurement, marketing and pricing, they also learned about shifts. One brother could take a break only if the two others were on the job.

They also paid attention to their client base. I let political correctness be damned as they observed that the nerdy Asian guy bought the video games, the gay guys acquired the empty Tiffany boxes, and the Hispanic family purchased some used clothes.

What's clear to me now is that garage sales are a slice of entrepreneurial Americana unspoiled by the masters of the universe on Wall Street.

In fact, here's hoping those operating in the world's financial capital take a lesson from the kids. Namely that they made money selling tangible items - bikes, flowerpots, lacrosse sticks and wrapping paper. Their products could be understood and purchasers knew exactly what they were getting - whether it was a used copy of Walter Isaacson's "American Sketches" or a slightly scratched Andreas Vollenweider CD.

For one morning at least, they were engaged in real work, facilitating a real exchange of goods.

I'm reminded of the words of Jack Bogle, founder of the Vanguard Group, the largest mutual-fund manager in the world. In his book "Enough," which is about to be re-released because of its timeless message, he lamented that this country produces fewer tangible products and depends more on pushing paper than ever.

"Over the past two centuries, our nation has moved from being an agricultural economy, to a manufacturing economy, to a service economy, and now to a predominantly financial economy. But our financial economy, by definition, subtracts from the value created by our productive businesses."

Bogle, a true captain of industry who seeks real measures of value and simplicity in financial markets and in life, probably loves a good yard sale.

Listen to Michael Smerconish weekdays 5-9 a.m. on the Big Talker, 1210/AM. Read him Sundays in the Inquirer. Contact him via the Web at www.smerconish.com.