About how much capital would one need to get a decent sized inventory to get started. I don't think I'll be trading lots of plastic off the bat. So just lower to mid range collector coins.
Where do you find most of your inventory. Do you go to larger shows or do you have wholesalers like Jason Carter(Carter Numismatics) supply you with coins. Are you able to buy @ blue sheet and sell @ grey sheet or better? I'm just wondering how much you are able to mark up coins and still be competitive for collectors to buy from you? And what is a realistic value for a dealer to be able to buy. I've been purchasing for my collection recently from auctions, and the auction market is strong. I like to collect Bust Quarters and Bowers had a real nice collection in the ANA sale. Most of the coins sold for over grey sheet, and some two times grey sheet. There doesn't seem to be any bargins in the Auction market right now. Which by the way the Auction business seems to be a pretty good business to be in.
Do you think it would be a mistake to hire someone to come in and run the place. Up until this last year I could make a lot more money trading stocks than coins(I'm a Nasdaq market maker) - I'm in the North Dallas bank building, LBJ and Preston if anyone wants to visit. I've thought of just waiting untill I'm through being a market maker and going and working for Heritage for a couple of years to gain experience. But if I keep putting it off I don't think I'll ever do it.
Do you have any advice or could you caution me to some of the pitfalls. Remember, I'm really not trying to make money, I'm just doing it for the fun of it. But I fiqure to pay someone, take care of insurance and utilities, travel expenses, etc ... I need to show a gross profit $100,000 and that might not be feasible. Let's see that would be making 10% on a million in sales. That seems like a lot to sell for a neighborhood coin shop. Any ideas would be welcome? Thanks,
A couple of other questions I forgot to answer. I buy most of my coins from other dealers and in building relationships with them, I can usually buy right and leave myself enough room for mark-up. If you do this, I would make certain it's done right and do it myself. What company do you work for as a market maker? I have many questions about that business myself. I think the best way to open a coin business would be to have a shop with an internet connection. That way you are exposed on all avenues.
Lots of questions. I'll start off by saying the first thing you need to acquire is knowledge about coins in general. You need to know how to grade accurately, what to buy, what is hot, and when to pay bidsheet and when to pay above bidsheet. Classic coinage like 1794-1803 Bust Dollars and early date Bust coinage and Capped Bust Gold always carry a premium above bidsheet due to their rarity and because they are difficult to find in lustrous, original condition. I feel that the AU 50 - AU 58 grades offer the best value for these coins. If you are not sure about grading these coins, stick to certified coins by PCGS, NGC, and ICG. Always make sure you buy the coin, however, and not the holder. When pricing the coins, most dealers use a mark-up of 10 to 15% over their purchase price. Bidsheet should be used as a guideline but not the end-all authority on pricing.
If I were starting a business now, I would probably need $150,000 in inventory at a minimum and I would try to stick to coins $1000 and up. The lower priced coins can be carried as well but they won't pay the bills. I would also build a serious client list and open a premier website, complete with high-res color photographs of each coin I am offering. One fine website to check out is www.buyuscoins.com. This will give you a good example of how to build your website. I am in no way affiliated with this company but I like what they've done. You mentioned working for Heritage or some other coin company to gain experience. This would work but remember that you will only be a commissioned salesman there and they carry larger mark-ups due to their own overhead. I would rather do things on my own and build up my own business over time.
Most people in the coin business do not make money selling coins to the public from their retail location; they make money BUYING from the public at their retail location. Also, most dealers have found the market in rare coin sales alone to be too narrow and have branched out to include other related services like jewelry or watches (Rolex etc). You will want to offer fee based income as well to suppliment your shop by offering appraisals for insurance and estates.
As you develop customers, you can fill their want lists by going to shows on the weekends. Selecting a location for a shop is important as well. Most find space in a bank building is convenient because of the security involved. Your customers can walk from your shop to their bank box without leaving the building. Security, Alarms, Safes and Insurance are all considerations you will need to contemplate. I know dealers that have lost their life even after giving the money away.
Just a few thoughts to get you started.
Good point. I know of many dealers who have lost everything due to robbery and many carry no insurance. Some of your top internet dealers don't even have a shop and keep their stock in a safety deposit box where they retrieve it as orders come in. They all offer approval services with established clients and this is generally a must when it comes to the more expensive coins. Noone wants to pay 25k for a sight-unseen coin and even photographs aren't enough at times.
Big D, do you want to be my partner, I was thinking along Main Street in Grapevine.
Also, I'm wondering how much money is left to be made from someone discovering in their attic a 1916 - D Merc and walking in and saying will you give me a quarter for this? I don't think there are too many unknown discoveries hiding in people's attics anymore.
Plus I couldn't look someone in the eye an offer than $20 for a $1000.00 dollar coin. Its just not in me. If it was worth a $1000.00 I would have a guilty conscience offering them $980.00. Although I've tried selling some nice PCGS slab coins to Heritage, they have no problem offering some discount to Blue Sheet. They try and fund their complete retirement on each trade.