Week 3: Forward Movement

This week went much better than last week; however, I failed to keep my production up to my desired standards. Due to work and various other things, I was barely able to keep production moving at a snails pace and completely failed to get a significant chunk of product to market after prices did manage to rebound.

All in all, a profitable week that I hope to expand on for next week, but we'll see how that goes as time continues to be precious.

Week	Inflow	Outflow	Actual Net	Expected Net
0	0	-77,836,602	-77,836,602	-77,836,602
1	29,389,995	-21,983,814	7,406,180	8,000,000
2	24,600,000	-39,243,550	-14,643,550	10,000,000
3	33,129,974	-5,490,829	27,639,145	45,000,000
4	45,000,000	-30,000,000	XXX	15,000,000
5	45,000,000	-30,000,000	XXX	15,000,000
TOTAL	87,119,969	-144,554,796	-57.434,827	XXX

I'm sitting on about $10M in sales inventory with another $25M in production ready to go for this week. Some corp members have begun moving into PI so my costs will turn into profits for them which is exciting. I hate seeing my hard-earned ISK vanish off into the market abyss. Hopefully the additional benefit will be improved supply stability for me so that I can push production up. My current production 'cap' is 100.8M worth of product/week but, as you can see in my forward estimates, I'm not even anticipating on hitting 50% of that. With just a few fixed cost additions, I can easily push that to 201.6M/week too. But there's no point in doing that if I don't have the supply to make it work.

Week 2: Bump-In-The-Road

Things got off to a good start last week, having a higher level of production than I anticipated with a higher sales price than projected. Of course, such good luck had to be followed by bad luck. The market price on my good has dropped significantly due to a seeming influx of product from someone willing to sell almost 20% below the average sales price from the last year. Thankfully, this seller has sold their entire supply so hopefully the price will pick back up. But until then, I'm sitting on $30M of product.
Of course, my inventory is awkward at the moment as I have an oversupply of about half of my goods, the right supply for about 1/3rd of my goods, and an under supply for the remainder.

Week	Inflow	Outflow	Actual Net	Expected Net
0	0	-77,836,602	-77,836,602	-77,836,602
1	29,389,995	-21,983,814	7,406,180	8,000,000
2	24,600,000	-39,243,550	-14,643,550	10,000,000
3	105,000,000	-60,000,000	XXX	45,000,000
4	75,000,000	-60,000,000	XXX	15,000,000
TOTAL	53,989,995	-139,063,967	-85.073,972	XXX

I'm expecting prices to recover this week and for my backlogged inventory to sell at my profitable price level. If not, I have enough liquidity to continue funding production and building inventory. My operation is still not large enough to have a significant impact on prices. My projections wouldn't be so far off if sales had happened. My inflows this week would have been ~55M for a net gain of +15M. We'll see how next week breaks.

Week 1: First Sales

I've just posted my projections for this week and logged on to find that my first set of units has already sold at a marginally higher price than I had initially priced out and I've got another small set up for sale. I've got a larger amount of ISK sitting in escrow than I'd prefer at around 30M. I set a number of my requests at a low point in the price cycle for my inputs and am sitting on quite a few orders hoping for the prices to drop back down to that level. As a result, I've spent quite a bit on purchasing goods at the current price to maintain day-to-day operations. Even so, I've sold a larger number of products in the first week than I anticipated at a higher-than-expected price bringing my inflow up enough so as to come out in the black in the first week.
Of course, my inventory is awkward at the moment as I have an oversupply of about half of my goods, the right supply for about 1/3rd of my goods, and an under supply for the remainder.

Info	Week	Inflow	Outflow	Net
Actual	0	0	-77,836,602	-77,836,602
Actual	1	29,389,995	-21,983,814	7,406,180
Projected	2	50,000,000	-40,000,000	10,000,000
Projected	3	75,000,000	-60,000,000	15,000,000

I vastly under-rated the speed that my production would get going, producing double the outputs in the first week than anticipated. I also vastly underestimated the speed at which I would need to replace my production supply. Due to these, I have accelerated my anticipated sales and cost growth rather significantly, resulting in a slightly less optimistic net profit projection than before. Prices on a couple of my under-supplied inputs are trending upwards rather significantly and I'm hoping to get some corporation partners to produce them and sell them to me at a price in-between the current purchase and sales offers. Such a deal would provide me with a marginally higher profit of as much as 1% per unit.

With my next post I'll be extending the table somewhat to compare actual performance against expected performance. In the meantime, you'll have to do the comparison yourself if you're interested in that kind of thing.

Week 0: Investment and Projections

As I've only started this process this week, I've got nothing but sunk costs, inventory, and projections to show for it.
I've got variable projected costs of about 48,000,000 per batch and a target of getting my first batch produced within a week.

Info	Week	Inflow	Outflow	Net
Actual	0	0	-77,836,602	-77,836,602
Projected	1	14,400,000	-2,376,000	12,024,000
Projected	2	28,800,000	-4,752,000	24,048,000

This is still a new venture so I'm not projecting very far. I've got a very heavy initial burden where I've placed purchase orders for enough materials to produce ~10 days worth of production. Of my investment, ~15,000,000 is for fixed cost structures and goods. Each unit of production costs approximately $1,000,000 on average, which indicates that my first full production completion should nearly pay off my fixed investments; however, I don't expect to complete production on this first set until week 3 or 4, depending on how smoothly things go. I hope to sell 12 units in the first week and 24 units in the second week, which is the basis for these calculations.

Note: Due to time constraints, this post is actually about 4 days late.. Hopefully I'll get better at this with time.

Eve + Economics

So, as a big fan of economics and market analysis and all of that stuff, I have begun playing a little game called Eve Online.

It's a space sandbox where effectively everything used within the game is managed and controlled by the players. As such, it has a vibrant and busy marketplace where many goods trade very quickly and where market efficiency can be quickly analyzed and reviewed for investment opportunities.

I've been scouting out the landscape for almost a month now, gathering information, materials, and creating plans. Additionally, I've put together a small sum of capital from which I intend to start my empire.

I've scraped together starting capital of ~120M ISK (the currency), about 20M of which is wrapped up in various equipment with the other 100M being hard cash.

From this 100M, I'm going to begin tracking the ever-moving value of the commodities that I purchase and sell using this opportunity and evaluating myself against the market.

I'll be approaching this from two main components:

1) Item Creation

I've identified some goods that I believe are significantly over-priced relative to the inputs. For these goods, I am investing a sum of ~60M ISK in creating a production pipeline that I expect to earn a return of nearly 10% per week. This market is large enough that my initial splash should not impact prices; however, I do anticipate that my return will decline significantly once I am more established and making up a more significant portion of the market.

2) Item Destruction

I've identified some goods that I believe are significantly under-priced relative to their inputs. Eve has a reprocessing mechanic that allows a player to break an item down into its components at a loss of between 45% and 60% of the items inputs. I did not anticipate to find items that were selling below 50% of their raw production cost (based on market prices). As this business will rely largely on volume, it will be phase two of my approach once I've got a strong level of initial capital.

I'll provide weekly updates on my cash flow and any adjustments to future cashflow expectations to help evaluate how the business is going.

Hopefully you'll find this as interesting as I do!.