I guess I am trying to build something big, something special, something that can be found only in one place.
I am not trying to build a bullion flipping business. In fact, the exact opposite of that model.
Time will tell.
Let see were we are a year from now.
Jmlanzaf is giving good advice. I work in a completely different industry, and these are guiding principles anywhere.
I think lots people's comments about marketing and attracting customers are valid.
I would comment that there are dealers I buy from that have slow moving inventory. I check their websites a couple times per year. There are ones I check weekly because they are always getting and selling new stuff. As a collector, I wish dealers would keep smaller inventories. I am sick of sifting throw piles of dead weight every place I go to. The error business is a little different than the rest of the coin world. I still pray that other dealers start adopting a lower inventory, higher turnover model. It would make my customer experience much better.
You have $300k inventory. If you kept the next $30k that sells in cash, would it hurt your business, would anyone notice?
If you think it would hurt you and people would notice, keep building. If not, do that.
There is a likely a magic number for inventory where it won't make a difference...just find that number over time.
I do some business consulting and ask business owners what their retirement plan is. If it's inventory, I tell them to go through the above exercise and put the excess cash in an investment account.
@shorecoll said:
You have $300k inventory. If you kept the next $30k that sells in cash, would it hurt your business, would anyone notice?
If you think it would hurt you and people would notice, keep building. If not, do that.
If I kept the next 30k that sells in cash, no It would not hurt my business. No one would notice either.
But, In my mind, it would hurt what I am trying to build. I am still building my business. I want to grow my inventory. I would want to put that 30K into new inventory working for me. Cash does me no good, except for peace of mind. By putting that 30K to work, now my retail inventory value be above 300K, thus growing.
Go to my ebay link below. Look at my inventory. Tell me how to "flip" this type of material quickly? And then once I "turn" the coin please provide me with link to find replacement material.
Tell me you are not super impressed with my inventory. Criticize my inventory and tell me how to run my business better. I like to learn.
If you are trying to build inventory you are doing a good job. What is the ideal inventory number for you. $500,000.00, 1,000,000.00? Every dealer I know wants to move inventory. That is how they make money. You seem to want to build inventory.
To my mind build inventory = collector. Move inventory =dealer.
When I first became a dealer, I put out my personal collection and priced some of my best unique coins where some would say, was at a "museum" price and I was just a collector and did not really want to sell the coin. Many of those coins sold like hotcakes because of just how awesome the coin itself was which taught me a valuable lesson. Deal only in unique coins with superior eye appeal.
Are you nervous about running out of inventory? Are you nervous about not finding inventory? I t sounds as tho you have a good client base and you want to keep them happy. Just continue to do what you are doing,be patient,it's always good to sit on cash and wait for the next buying opportunity.
Your in a business that you enjoy and get paid doing it with no debt.
Don't over think it.
@shorecoll said:
You have $300k inventory. If you kept the next $30k that sells in cash, would it hurt your business, would anyone notice?
If you think it would hurt you and people would notice, keep building. If not, do that.
If I kept the next 30k that sells in cash, no It would not hurt my business. No one would notice either.
But, In my mind, it would hurt what I am trying to build. I am still building my business. I want to grow my inventory. I would want to put that 30K into new inventory working for me. Cash does me no good, except for peace of mind. By putting that 30K to work, now my retail inventory value be above 300K, thus growing.
Growing inventory is not the same as growing a business.
Inventory growth can indicate a shrinking business. [I'm not saying that's true in your case.] Inventory isn't sales. Inventory is what DIDN'T sell.
And putting 30k into inventory is NOT what most business people would refer to as "putting that 30k to work". Putting it to work means turning a profit. In a retail business, the only way to turn a profit is to turn inventory.
You should be measuring your business success/growth by the growth in SALES and PROFITS, not inventory. Inventory alone isn't bad, it is inventory relative to sales that's the issue which gets back to your turnover rate. If your sales have increased proportionally to your inventory, then kudos. If your sales growth is lagging your inventory growth, you should consider why.
Inventory isn't money being put to work. Inventory is money that is NOT working.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Well, my sales have had a huge increase in the last few years, year over year. Profits are just fine.
Remember, I am a solo operator, with no help, and my operating costs are extremely low. I buy right and add value with high-end professional photography. I started with nothing so I went for 0 to 300K.
Every time I increase inventory, I increase sales. Thus the want to keep increasing inventory.
@jmlanzaf said:
You can disagree if you wish, but what is the difference between no inventory and a stagnant inventory?
It's still all about the turn over rate. Otherwise, you're a museum.
If your two emails result in sales, then you ARE turning inventory. If not, you are still running a museum.
You really can't separate the turn from the "clients". Either they are buying or they aren't. If they are, you address turning inventory.
I agree with you that being known as an expert in a niche has value. I agree with you that having cool things to see has value. But the whole point of all of that is to generate sales.
As an extreme example, imagine I buy the 33 double eagle, the king of siam set and a 1913 liberty nickel. I then hit the show circuit. I can do the circuit for years and always have people at my table. But I have to have something at the table that i'm selling or i'm not really a dealer.
If you don't have a reasonable turn rate, you need to ask why.
Great point JM.
In your example i would also factor in the "opportunity cost " .
You would have dished out multi millions ( estimate 20 million cost ) of dollars for those coins and maybe held on to them for 10 years .
Today you can get about 3% in a Bank CD ( possibly more for millions of dollars ) .
In your example you would have lost ( or actually NOT made ) out on a few million dollars in income by just holding ( owning ) those coins in that 10 year period .
BAD DEAL IMO .
Totally agree .If you do coins for a business the point is to sell and turn over inventory . There is a holding/opportunity cost involved and in some of the Uber rarities it can be profound .
Totally agree. That's why I added the addendum about the opportunity cost of the $25 million showcase.
Every now and then, a major dealer makes noise by buying one of the "name coins" for multiple millions. How many of those dealers still own those coins? I'm not aware of any. From the Liberty nickels to the 1804 dollars to the King of Siam set, they were all sold to private collectors after the fanfare died down, if I am recalling correctly. Why? Because the millions of dollars in cash are far more valuable to the business than the million dollar coins. And the million dollar headline is actually better than the million dollar coin in a vault.
It's also worth noting the auction houses. You'll notice that if you go to the Heritage site, it will include major coins coming up for auction mixed with prices realized for prior major sales. That is the way to make SALES success work rather than the need to flash current inventory. I don't have to have an 1804 dollar for sale to impress internet visitors. It is enough to show that I've sold 5 1804 dollars in the last 10 years.
I've always said that collectors should never be dealers, at least not in their specialty. They are too emotional about their collecting interest and it leads them to questionable business decisions: over-valuing coins, refusing to buy subpar but saleable coins, having a museum instead of a sales inventory, etc.
All comments reflect the opinion of the author, evn when irrefutably accurate.
@ErrorsOnCoins said:
Here is a coin that I just got in for which I Nuke bid to obtain. One of the many coins that blew my cash reserve this summer. I photographed this an hour ago. To my knowledge, It is the only US coin in any denomination to have a huge struck in Blue plastic. Truly a Unique coin in extremely high grade.
These are the types of coins in my inventory. I can never replace it with another one, altho I can replace it with another major error coin. This coin is so awesome, I will do a separate thread on it later.
Not to whiz in your cornflakes, but I have to ask why anyone would even want that much less pay big $$ for it. Bullet makers among other manufacturers sell their blems at a discount rather than scrapping them. Error coins aka mint screwups aren't for me. The broken in half Morgan is a cool item.
@ErrorsOnCoins said:
Here is a coin that I just got in for which I Nuke bid to obtain. One of the many coins that blew my cash reserve this summer. I photographed this an hour ago. To my knowledge, It is the only US coin in any denomination to have a huge struck in Blue plastic. Truly a Unique coin in extremely high grade.
These are the types of coins in my inventory. I can never replace it with another one, altho I can replace it with another major error coin. This coin is so awesome, I will do a separate thread on it later.
>
Not to whiz in your cornflakes, but I have to ask why anyone would even want that much less pay big $$ for it. Bullet makers among other manufacturers sell their blems at a discount rather than scrapping them. Error coins aka mint screwups aren't for me. The broken in half Morgan is a cool item.
LOL, yes just trash. I love that attitude as I buy super rare error coins from normal coin dealers all the time at a super low price because all they have is trash
The first time I went to a major coin show, I walked in and saw a sea a shinny Morgan Dollars. I thought to myself geez, these things are super common and they all look the same, how boring. I went home and sold my whole collection of Morgan Dollars within a month.
I bought error coins with the proceeds and started a business.
You obviously have no clue about the error coin market nor the mentality of error coin collectors.
@ErrorsOnCoins said:
Here is a coin that I just got in for which I Nuke bid to obtain. One of the many coins that blew my cash reserve this summer. I photographed this an hour ago. To my knowledge, It is the only US coin in any denomination to have a huge struck in Blue plastic. Truly a Unique coin in extremely high grade.
These are the types of coins in my inventory. I can never replace it with another one, altho I can replace it with another major error coin. This coin is so awesome, I will do a separate thread on it later.
>
Not to whiz in your cornflakes, but I have to ask why anyone would even want that much less pay big $$ for it. Bullet makers among other manufacturers sell their blems at a discount rather than scrapping them. Error coins aka mint screwups aren't for me. The broken in half Morgan is a cool item.
LOL, yes just trash. I love that attitude as I buy super rare error coins for normal coin dealers all the time at a super low price because all they have is trash
The first time I went to a major coin show, I walked in and saw a sea a shinny Morgan Dollars. I thought to myself geez, these things are super common and they all look the same, how boring. I went home and sold my whole collection of Morgan Dollars within a month.
I bought error coins with the proceeds and started a business.
You obviously have no clue about the error coin market nor the mentality of error coin collectors.
I do, but they are not for me. Not an area of interest for me. To each their own. Also agree that anymore a blast white set of Morgans is boring. Then again I wonder the same thing about some of the stuff I see at dealer tables at shows like a Morgan and a Peace and say an Ike dollar in a cheap plastic snap case and wonder who buys stuff like that and why.
@ErrorsOnCoins said:
Well, my sales have had a huge increase in the last few years, year over year. Profits are just fine.
Remember, I am a solo operator, with no help, and my operating costs are extremely low. I buy right and add value with high-end professional photography. I started with nothing so I went for 0 to 300K.
Every time I increase inventory, I increase sales. Thus the want to keep increasing inventory.
Again, I'm not saying you have a problem. I don't know what your numbers are. But you seem to be arguing against turn over. That argument won't hold.
And, to @mustangmanbob original post. You should be looking at sales/inventory not just sales and inventory separately.
A car dealership that has 2 cars on the lot and sells 1 per week that becomes a dealership that has 50 cars on the lot and sells 2 per week has not necessarily a healthier business.
This is not to say that more inventory is automatically bad. But you need to fairly value the cost of carrying the inventory. For example, having 300k in inventory is an invisible 15k-30k cost to the business that you are not valuing.
Again, I don't know your numbers, but if you end up with $1 million in inventory and make a gross profit of $100k per year, you aren't really making any money at all. You could make $100k per year by sitting on your butt and putting your million in a mutual fund.
Now, there are worse ways to make a buck. And you might prefer $100k from coins to $100k from a mutual fund. But what people have been suggesting is that you look harder at the cost of inventory and what the inventory is doing. If you have $1 million in inventory and $500k of it has been sitting for 10 years, you would be far, far, far better off with that $500k in a mutual fund and only $500k in inventory. And, again, I don't know if that applies to your inventory or not. Maybe all your inventory is of the same vintage.
It's okay to be a hobbyist. I am. A business person would cringe at my business model. LOL. But you seem to want to be a hobbyist dealer arguing that you've discovered a brand new better way to run a business. There are management books written on the automakers, Amazon, etc. all devoted to the virtues of the near-zero inventory model.
All comments reflect the opinion of the author, evn when irrefutably accurate.
@ErrorsOnCoins said:
I guess I have a hybrid coin business model.
When I first became a dealer, I put out my personal collection and priced some of my best unique coins where some would say, was at a "museum" price and I was just a collector and did not really want to sell the coin. Many of those coins sold like hotcakes because of just how awesome the coin itself was which taught me a valuable lesson. Deal only in unique coins with superior eye appeal.
And there's noting wrong with being a hybrid collector/dealer. Just don't try and tell the world that just-in-time manufacturing is a myth. LOL.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Go to my ebay link below. Look at my inventory. Tell me how to "flip" this type of material quickly? And then once I "turn" the coin please provide me with link to find replacement material.
Tell me you are not super impressed with my inventory. Criticize my inventory and tell me how to run my business better. I like to learn.
Again, you are asking us to supply a method to your flawed model. You don't need to immediately replace a sold item. There is no virtue in having piles of unmoving inventory. If you have piles of cash, you can make the buy when the opportunity presents itself.
Please, just answer two simple questions:
1. What is the advantage of delaying a sale?
2. What is the disadvantage of having a temporarily smaller inventory?
All comments reflect the opinion of the author, evn when irrefutably accurate.
Go to my ebay link below. Look at my inventory. Tell me how to "flip" this type of material quickly? And then once I "turn" the coin please provide me with link to find replacement material.
Tell me you are not super impressed with my inventory. Criticize my inventory and tell me how to run my business better. I like to learn.
Again, you are asking us to supply a method to your flawed model. You don't need to immediately replace a sold item. There is no virtue in having piles of unmoving inventory. If you have piles of cash, you can make the buy when the opportunity presents itself.
Please, just answer two simple questions:
1. What is the advantage of delaying a sale?
2. What is the disadvantage of having a temporarily smaller inventory?
I disagree with your "flawed" assumptions. I am not an Amazon nor bullion coin dealer.
To answer your loaded questions ...
1) None at all. But at what price? My coins need to match up with the buyer. You just can't sell this stuff to anyone. I am not going to give it away nor lose money on unique coinage.
2} None at all. Too much cash does me no good, I will just spend it going fishing for fish (2K earlier this month when I was cash-rich). Once again, every time I grow inventory, I grow sales. How hard is that to understand?
Go to my ebay link below. Look at my inventory. Tell me how to "flip" this type of material quickly? And then once I "turn" the coin please provide me with link to find replacement material.
Tell me you are not super impressed with my inventory. Criticize my inventory and tell me how to run my business better. I like to learn.
Again, you are asking us to supply a method to your flawed model. You don't need to immediately replace a sold item. There is no virtue in having piles of unmoving inventory. If you have piles of cash, you can make the buy when the opportunity presents itself.
Please, just answer two simple questions:
1. What is the advantage of delaying a sale?
2. What is the disadvantage of having a temporarily smaller inventory?
I disagree with your "flawed" assumptions. I am not an Amazon nor bullion coin dealer.
To answer your loaded questions ...
1) None at all. But at what price? My coins need to match up with the buyer. You just can't sell this stuff to anyone. I am not going to give it away nor lose money on unique coinage.
2} None at all. Too much cash does me no good, I will just spend it going fishing for fish (2K earlier this month when I was cash-rich). Once again, every time I grow inventory, I grow sales. How hard is that to understand?
Go sell bullion.
no wonder Jessp left
LOL. Don't blame me for his meltdown. Half the time I wasn't even talking to him, he was yelling at me for talking to other people.
If
If I may respond.
1: I'm not telling you to sell at any price. Although usually it is better to lose $10 today than make $10 2 years from now. I only raise the question because you keep raising the issue of "replacing" the inventory. There should be no fear of a sale today, even if it took 2 years to replace the coin in inventory. Cash is better than inventory, always, even if you are just fishing.
2: You seem obsessed with a supposed correlation between inventory and sales. They may not be correlated at all. For example, using made up numbers:
You had $100 k in inventory and were selling $100 k per year - so essentially every year all sales were new purchases.
Now, suppose you have $300k in inventory and you are selling $150k per year. It seems like "higher inventory = higher sales". But, it matters where the sales are coming from. Suppose 100% of those $150k in sales come from new inventory and you've got $150k in inventory that is years old. In that case, you don't really have a functioning $300k inventory, you have a $150k sales inventory and $150k in sunk money that's doing nothing. And, in fact, your inventory increase has nothing to do with your sales increase. What is fueling sales is that your NEW COIN PURCHASES went from $100k per year to $150k per year.
What is the inventory/sales ratio? That is the more important number. If inventory/sales is increasing, then you are accumulating inefficient inventory similar to the above example.
It is NOT better to have $100k in sales on $1 million in inventory than to have $50k in sales on $250k in inventory. It is not even better to have $100k in profits on $1 million in inventory than to have $50k in profits on $250k in inventory.
But again, I have no problem with you doing whatever you want to do. I just bristle a little when you dismiss mustangmanbob's brilliant exposition as a "different" model.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Looks to me op asks for opinions. Then tears them down. As usual and spams himself as most of the time, imo. Yes I have been self employed for over 35 years. Never talked about myself. Just went and did it. Have a nice weekend.
Please... Save The Stories, Just Answer My Questions, And Tell Me How Much!!!!!
@Dave99B said:
I got a "D" in my college Accounting 101 class, but this is a great read!
Dave
LOL. I don't know about accounting, but I think @mustangmanbob laid out the business side of it very well. [And in fewer words than I've typed. LOL.]
Here is the first line of mustangbobs excellent analysis ....
"How often does your inventory turn over. For example, if you sell 200 widgets a month, and carry 1000 in stock, then your ratio is (200 / month X 12 months = 2400)/ 12 month / year or 2.4"
I do not sell any widgets. There is no wholesale widget factory for me.
Go to my ebay link below. Look at my inventory. Tell me how to "flip" this type of material quickly? And then once I "turn" the coin please provide me with link to find replacement material.
Tell me you are not super impressed with my inventory. Criticize my inventory and tell me how to run my business better. I like to learn.
Again, you are asking us to supply a method to your flawed model. You don't need to immediately replace a sold item. There is no virtue in having piles of unmoving inventory. If you have piles of cash, you can make the buy when the opportunity presents itself.
Please, just answer two simple questions:
1. What is the advantage of delaying a sale?
2. What is the disadvantage of having a temporarily smaller inventory?
I disagree with your "flawed" assumptions. I am not an Amazon nor bullion coin dealer.
To answer your loaded questions ...
1) None at all. But at what price? My coins need to match up with the buyer. You just can't sell this stuff to anyone. I am not going to give it away nor lose money on unique coinage.
2} None at all. Too much cash does me no good, I will just spend it going fishing for fish (2K earlier this month when I was cash-rich). Once again, every time I grow inventory, I grow sales. How hard is that to understand?
Go sell bullion.
no wonder Jessp left
I wouldn't get too defensive. You asked for people's opinions and are getting them. Most of those opinions seem to be coming from a good understanding of business/economic fundamentals, but only you can figure out what makes sense for you.
I will say his questions weren't loaded questions. These are exactly the types of questions to ask to determine if your inventory is correctly sized for your business. The right answer for your business will be different from a bullion dealer.
I think it's also important to say now that is not always easy to put your money to work. Usually a lot of work is involved. Buying more doesn't help if you don't have any more people to sell to. In that case the solution to 'right-sizing' your inventory and growing the business probably has something to do with marketing, networking, and gaining more customers. All of these topics we're discussing can be simplified into numbers, but changing them takes a lot of hard work. If someone thinks they have too much or too little inventory, then they can set that as a goal for themselves to try to change it.
People are suggesting where you should try to go, without any details on how to get there.
@ErrorsOnCoins said:
I do not sell any widgets. There is no wholesale widget factory for me.
JMO, but I think you might be interpreting mustabgbob's use of "widget" inaccurately.
Yes, "widget" is a business term meaning "item for sale". It could be cars, guns, shoes, or even super, eye-appealing errors.
Clearly the OP does not fully understand the concepts that are being presented to him. That is fine, and understanding various business methods, theories, etc. is not required and what he is doing is working for him. But trying to explain things seems like trying to hammer a square peg in a round hole.
@Davideo said:
Yes, "widget" is a business term meaning "item for sale". It could be cars, guns, shoes, or even super, eye-appealing errors.
It appears he's interpreting "widget" to mean what it generally means on this message board- a common, easily found coin as opposed to a unique super eye-appealing error.
You DO sell widgets in the sense mustangman meant it. A "widget" is just an aspecific item for sale. Art IS a widget in the sense he was using it. If you substitute "coin" for "widget" it will read exactly the same.
All comments reflect the opinion of the author, evn when irrefutably accurate.
I fully understand widgets. Amazon sells widgets. The US mint sells widgets. Factories produce widgets that are all the same, thus the pricing model for widgets.
No one yet has explained exactly how that model works for my unique inventory.
Again, I have Never missed a single buying opportunity because of lack of cash.
I fully understand widgets. Amazon sells widgets. The US mint sells widgets. Factories produce widgets that are all the same, thus the pricing model for widgets.
No one yet has explained exactly how that model works for my unique inventory.
Again, I have Never missed a single buying opportunity because of lack of cash.
Everyone has tried.
You think the point is to immediately replace sold inventory. It is not. The point is to have the minimum inventory at all times.
Your large inventory does NOT solve the replacement problem. In the end, you can only sell what you buy. So if you have 5 years inventory, you don't have to buy for 5 years, but that doesn't change anything. In The end your goal is still to sell 100% of your inventory. You've just lengthened the time frame and ignore the costs
All comments reflect the opinion of the author, evn when irrefutably accurate.
I fully understand widgets. Amazon sells widgets. The US mint sells widgets. Factories produce widgets that are all the same, thus the pricing model for widgets.
No one yet has explained exactly how that model works for my unique inventory.
Again, I have Never missed a single buying opportunity because of lack of cash.
Every post about inventory turnover rate and the costs associated with simply building inventory have been attempting to explain how this model applies to you and everyone. Otherwise the Smithsonian would be an incredibly successful business because their inventory is amazing, unique, and effectively priceless.
It is correct that your specific inventory makes it difficult to adjust inventory, sales volumes, etc. However, the general principles still apply for the most part. Your responses that you are special and they don't apply come across to me as a lack of understanding. And further attempts at posters to clarify have been unsuccessful. Some posters have been very patient, though I would recommend that if you actually want to learn and have a discussion to not respond with things like "no wonder Jessp left", "Go sell bullion", or "Tell me you are not super impressed with my inventory".
To quote Yoda, "A painful read, this thread has become."
I've never understood why people would ask for input, then systematically refute everything that is offered. I will grant the OP that nobody knows his business as well as he does, and that some of what has been offered here isn't all that useful. Still, if things are so perfect, why ask for help? It seems to me that those who have offered advice have done so from a genuine desire to be helpful.
The most useful comment I've seen so far is that your selling prices are too low if inventory is flying out faster than you can replace it.
@Coinstartled said:
In a market where prices have declined significantly over the last 3 or 4 years, one suspects that there may be some trouble ahead for dealers with highly leveraged inventory.
The same reasoning can be applied to much of the collector base. To date, no one living in the US after the Great Depression has gone through an extended adverse economic environment. (At the individual level yes, but not the economy in the aggregate.) The 2008 "Great Recession" didn't last long enough. I expect that to change in my lifetime and probably sooner than most other do.
@ErrorsOnCoins You don't seem to like any of the answers people here are giving you, so why don't you tell us what you think the answer to your own question is and they can tell you if they agree.
It kinda reads from an outsider like you already had an answer to your own question and wanted verification. You aren't getting it, so now you're arguing with everyone and any time you see a comment you don't like, you click the lol link.
To be blunt I'm quickly losing my respect for you, reading how you're responding to all of these people who are trying to offer you advice that you yourself requested to begin with.
Now go ahead and click the little LOL box below.
Collector of randomness. Photographer at PCGS. Lover of Harry Potter.
With the utmost respect guys, I really appreciate all the feedback and have thought about most of it in depth.
I have always taken the path less traveled in life.
I do not want to be doing what everyone else is doing
To add: the original OP was about the advantage or disadvantage or using credit if needed. Others evolved the thread into mathematical inventory management principles that IMO do not necessarily apply to my business model. My personal experience differs from what they are telling me, that's all.
@ErrorsOnCoins said:
Upon more reflection, I realize that I am right about my business model, that is why I had / have a cash reserve.
I Buy any coin that fits my inventory and if I am building (business) cash then I am not Finding the inventory that I need to buy, that is how rare the material is that I deal in.
What about building customers ? That is the ultimate requirement .
So how are you doing that ?
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
@ErrorsOnCoins said:
Upon more reflection, I realize that I am right about my business model, that is why I had / have a cash reserve.
I Buy any coin that fits my inventory and if I am building (business) cash then I am not Finding the inventory that I need to buy, that is how rare the material is that I deal in.
What about building customers ? That is the ultimate requirement .
So how are you doing that ?
Yes, I have a very good and growing client base as in repeat clients.
Some very good clients buy coins from me before I get a chance to list them in public. They really appreciate that service as do I. I am helping them to build phenomenal collections that I am jealous of
Comments
"Costs include opportunity costs. "
I NEVER pass up an opportunity as I am an extremely aggressive buyer to build inventory.
jmlanzaf
I guess I am trying to build something big, something special, something that can be found only in one place.
I am not trying to build a bullion flipping business. In fact, the exact opposite of that model.
Time will tell.
Let see were we are a year from now.
Jmlanzaf is giving good advice. I work in a completely different industry, and these are guiding principles anywhere.
I think lots people's comments about marketing and attracting customers are valid.
I would comment that there are dealers I buy from that have slow moving inventory. I check their websites a couple times per year. There are ones I check weekly because they are always getting and selling new stuff. As a collector, I wish dealers would keep smaller inventories. I am sick of sifting throw piles of dead weight every place I go to. The error business is a little different than the rest of the coin world. I still pray that other dealers start adopting a lower inventory, higher turnover model. It would make my customer experience much better.
IG: DeCourcyCoinsEbay: neilrobertson
"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
You have $300k inventory. If you kept the next $30k that sells in cash, would it hurt your business, would anyone notice?
If you think it would hurt you and people would notice, keep building. If not, do that.
There is a likely a magic number for inventory where it won't make a difference...just find that number over time.
I do some business consulting and ask business owners what their retirement plan is. If it's inventory, I tell them to go through the above exercise and put the excess cash in an investment account.
If I kept the next 30k that sells in cash, no It would not hurt my business. No one would notice either.
But, In my mind, it would hurt what I am trying to build. I am still building my business. I want to grow my inventory. I would want to put that 30K into new inventory working for me. Cash does me no good, except for peace of mind. By putting that 30K to work, now my retail inventory value be above 300K, thus growing.
Here is a challenge for you...
Go to my ebay link below. Look at my inventory. Tell me how to "flip" this type of material quickly? And then once I "turn" the coin please provide me with link to find replacement material.
Tell me you are not super impressed with my inventory. Criticize my inventory and tell me how to run my business better. I like to learn.
If you are trying to build inventory you are doing a good job. What is the ideal inventory number for you. $500,000.00, 1,000,000.00? Every dealer I know wants to move inventory. That is how they make money. You seem to want to build inventory.
To my mind build inventory = collector. Move inventory =dealer.
You have an impressive collection!
I guess I have a hybrid coin business model.
When I first became a dealer, I put out my personal collection and priced some of my best unique coins where some would say, was at a "museum" price and I was just a collector and did not really want to sell the coin. Many of those coins sold like hotcakes because of just how awesome the coin itself was which taught me a valuable lesson. Deal only in unique coins with superior eye appeal.
Are you nervous about running out of inventory? Are you nervous about not finding inventory? I t sounds as tho you have a good client base and you want to keep them happy. Just continue to do what you are doing,be patient,it's always good to sit on cash and wait for the next buying opportunity.
Your in a business that you enjoy and get paid doing it with no debt.
Don't over think it.
Growing inventory is not the same as growing a business.
Inventory growth can indicate a shrinking business. [I'm not saying that's true in your case.] Inventory isn't sales. Inventory is what DIDN'T sell.
And putting 30k into inventory is NOT what most business people would refer to as "putting that 30k to work". Putting it to work means turning a profit. In a retail business, the only way to turn a profit is to turn inventory.
You should be measuring your business success/growth by the growth in SALES and PROFITS, not inventory. Inventory alone isn't bad, it is inventory relative to sales that's the issue which gets back to your turnover rate. If your sales have increased proportionally to your inventory, then kudos. If your sales growth is lagging your inventory growth, you should consider why.
Inventory isn't money being put to work. Inventory is money that is NOT working.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Well, my sales have had a huge increase in the last few years, year over year. Profits are just fine.
Remember, I am a solo operator, with no help, and my operating costs are extremely low. I buy right and add value with high-end professional photography. I started with nothing so I went for 0 to 300K.
Every time I increase inventory, I increase sales. Thus the want to keep increasing inventory.
Totally agree. That's why I added the addendum about the opportunity cost of the $25 million showcase.
Every now and then, a major dealer makes noise by buying one of the "name coins" for multiple millions. How many of those dealers still own those coins? I'm not aware of any. From the Liberty nickels to the 1804 dollars to the King of Siam set, they were all sold to private collectors after the fanfare died down, if I am recalling correctly. Why? Because the millions of dollars in cash are far more valuable to the business than the million dollar coins. And the million dollar headline is actually better than the million dollar coin in a vault.
It's also worth noting the auction houses. You'll notice that if you go to the Heritage site, it will include major coins coming up for auction mixed with prices realized for prior major sales. That is the way to make SALES success work rather than the need to flash current inventory. I don't have to have an 1804 dollar for sale to impress internet visitors. It is enough to show that I've sold 5 1804 dollars in the last 10 years.
I've always said that collectors should never be dealers, at least not in their specialty. They are too emotional about their collecting interest and it leads them to questionable business decisions: over-valuing coins, refusing to buy subpar but saleable coins, having a museum instead of a sales inventory, etc.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Not to whiz in your cornflakes, but I have to ask why anyone would even want that much less pay big $$ for it. Bullet makers among other manufacturers sell their blems at a discount rather than scrapping them. Error coins aka mint screwups aren't for me. The broken in half Morgan is a cool item.
LOL, yes just trash. I love that attitude as I buy super rare error coins from normal coin dealers all the time at a super low price because all they have is trash
The first time I went to a major coin show, I walked in and saw a sea a shinny Morgan Dollars. I thought to myself geez, these things are super common and they all look the same, how boring. I went home and sold my whole collection of Morgan Dollars within a month.
I bought error coins with the proceeds and started a business.
You obviously have no clue about the error coin market nor the mentality of error coin collectors.
I do, but they are not for me. Not an area of interest for me. To each their own. Also agree that anymore a blast white set of Morgans is boring. Then again I wonder the same thing about some of the stuff I see at dealer tables at shows like a Morgan and a Peace and say an Ike dollar in a cheap plastic snap case and wonder who buys stuff like that and why.
Again, I'm not saying you have a problem. I don't know what your numbers are. But you seem to be arguing against turn over. That argument won't hold.
And, to @mustangmanbob original post. You should be looking at sales/inventory not just sales and inventory separately.
A car dealership that has 2 cars on the lot and sells 1 per week that becomes a dealership that has 50 cars on the lot and sells 2 per week has not necessarily a healthier business.
This is not to say that more inventory is automatically bad. But you need to fairly value the cost of carrying the inventory. For example, having 300k in inventory is an invisible 15k-30k cost to the business that you are not valuing.
Again, I don't know your numbers, but if you end up with $1 million in inventory and make a gross profit of $100k per year, you aren't really making any money at all. You could make $100k per year by sitting on your butt and putting your million in a mutual fund.
Now, there are worse ways to make a buck. And you might prefer $100k from coins to $100k from a mutual fund. But what people have been suggesting is that you look harder at the cost of inventory and what the inventory is doing. If you have $1 million in inventory and $500k of it has been sitting for 10 years, you would be far, far, far better off with that $500k in a mutual fund and only $500k in inventory. And, again, I don't know if that applies to your inventory or not. Maybe all your inventory is of the same vintage.
It's okay to be a hobbyist. I am. A business person would cringe at my business model. LOL. But you seem to want to be a hobbyist dealer arguing that you've discovered a brand new better way to run a business. There are management books written on the automakers, Amazon, etc. all devoted to the virtues of the near-zero inventory model.
All comments reflect the opinion of the author, evn when irrefutably accurate.
And there's noting wrong with being a hybrid collector/dealer. Just don't try and tell the world that just-in-time manufacturing is a myth. LOL.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Again, you are asking us to supply a method to your flawed model. You don't need to immediately replace a sold item. There is no virtue in having piles of unmoving inventory. If you have piles of cash, you can make the buy when the opportunity presents itself.
Please, just answer two simple questions:
1. What is the advantage of delaying a sale?
2. What is the disadvantage of having a temporarily smaller inventory?
All comments reflect the opinion of the author, evn when irrefutably accurate.
I disagree with your "flawed" assumptions. I am not an Amazon nor bullion coin dealer.
To answer your loaded questions ...
1) None at all. But at what price? My coins need to match up with the buyer. You just can't sell this stuff to anyone. I am not going to give it away nor lose money on unique coinage.
2} None at all. Too much cash does me no good, I will just spend it going fishing for fish (2K earlier this month when I was cash-rich). Once again, every time I grow inventory, I grow sales. How hard is that to understand?
Go sell bullion.
no wonder Jessp left
>
Certainly not to brag nor spam.
Liberty: Parent of Science & Industry
LOL. Don't blame me for his meltdown. Half the time I wasn't even talking to him, he was yelling at me for talking to other people.
If
If I may respond.
1: I'm not telling you to sell at any price. Although usually it is better to lose $10 today than make $10 2 years from now. I only raise the question because you keep raising the issue of "replacing" the inventory. There should be no fear of a sale today, even if it took 2 years to replace the coin in inventory. Cash is better than inventory, always, even if you are just fishing.
2: You seem obsessed with a supposed correlation between inventory and sales. They may not be correlated at all. For example, using made up numbers:
You had $100 k in inventory and were selling $100 k per year - so essentially every year all sales were new purchases.
Now, suppose you have $300k in inventory and you are selling $150k per year. It seems like "higher inventory = higher sales". But, it matters where the sales are coming from. Suppose 100% of those $150k in sales come from new inventory and you've got $150k in inventory that is years old. In that case, you don't really have a functioning $300k inventory, you have a $150k sales inventory and $150k in sunk money that's doing nothing. And, in fact, your inventory increase has nothing to do with your sales increase. What is fueling sales is that your NEW COIN PURCHASES went from $100k per year to $150k per year.
What is the inventory/sales ratio? That is the more important number. If inventory/sales is increasing, then you are accumulating inefficient inventory similar to the above example.
It is NOT better to have $100k in sales on $1 million in inventory than to have $50k in sales on $250k in inventory. It is not even better to have $100k in profits on $1 million in inventory than to have $50k in profits on $250k in inventory.
But again, I have no problem with you doing whatever you want to do. I just bristle a little when you dismiss mustangmanbob's brilliant exposition as a "different" model.
All comments reflect the opinion of the author, evn when irrefutably accurate.
Looks to me op asks for opinions. Then tears them down. As usual and spams himself as most of the time, imo. Yes I have been self employed for over 35 years. Never talked about myself. Just went and did it. Have a nice weekend.
Ouch. LOL.
I like @ErrorsOnCoins a lot and respect his enthusiasm. I love that he loves what he's doing and loves what he's selling.
All comments reflect the opinion of the author, evn when irrefutably accurate.
I got a "D" in my college Accounting 101 class, but this is a great read!
Dave
LOL. I don't know about accounting, but I think @mustangmanbob laid out the business side of it very well. [And in fewer words than I've typed. LOL.]
All comments reflect the opinion of the author, evn when irrefutably accurate.
Here is the first line of mustangbobs excellent analysis ....
"How often does your inventory turn over. For example, if you sell 200 widgets a month, and carry 1000 in stock, then your ratio is (200 / month X 12 months = 2400)/ 12 month / year or 2.4"
I do not sell any widgets. There is no wholesale widget factory for me.
I wouldn't get too defensive. You asked for people's opinions and are getting them. Most of those opinions seem to be coming from a good understanding of business/economic fundamentals, but only you can figure out what makes sense for you.
I will say his questions weren't loaded questions. These are exactly the types of questions to ask to determine if your inventory is correctly sized for your business. The right answer for your business will be different from a bullion dealer.
I think it's also important to say now that is not always easy to put your money to work. Usually a lot of work is involved. Buying more doesn't help if you don't have any more people to sell to. In that case the solution to 'right-sizing' your inventory and growing the business probably has something to do with marketing, networking, and gaining more customers. All of these topics we're discussing can be simplified into numbers, but changing them takes a lot of hard work. If someone thinks they have too much or too little inventory, then they can set that as a goal for themselves to try to change it.
People are suggesting where you should try to go, without any details on how to get there.
IG: DeCourcyCoinsEbay: neilrobertson
"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
JMO, but I think you might be interpreting mustabgbob's use of "widget" inaccurately.
Rodney does what he wants every day. The intellectual expert works 9 to 5.
Rodney gets the girl. The intellectual expert does not.
Yeah, I saw the movie. I still think you are misreading mustangbob's intention.
Yes, "widget" is a business term meaning "item for sale". It could be cars, guns, shoes, or even super, eye-appealing errors.
Clearly the OP does not fully understand the concepts that are being presented to him. That is fine, and understanding various business methods, theories, etc. is not required and what he is doing is working for him. But trying to explain things seems like trying to hammer a square peg in a round hole.
I know exactly what a widget is.
Art is not a widget.
I consider my coins art.
It appears he's interpreting "widget" to mean what it generally means on this message board- a common, easily found coin as opposed to a unique super eye-appealing error.
You DO sell widgets in the sense mustangman meant it. A "widget" is just an aspecific item for sale. Art IS a widget in the sense he was using it. If you substitute "coin" for "widget" it will read exactly the same.
All comments reflect the opinion of the author, evn when irrefutably accurate.
The sweet spot is here in America, baby.
``https://ebay.us/m/KxolR5
Lol
I believe the correct answer is zero cash and as much debt as you can acquire in building the largest possible inventory.
All comments reflect the opinion of the author, evn when irrefutably accurate.
I take my own path in Life.
I fully understand widgets. Amazon sells widgets. The US mint sells widgets. Factories produce widgets that are all the same, thus the pricing model for widgets.
No one yet has explained exactly how that model works for my unique inventory.
Again, I have Never missed a single buying opportunity because of lack of cash.
I think that's the safest but some people are really fond of debt. They also tend to be the ones good at negotiating with creditors.
Everyone has tried.
You think the point is to immediately replace sold inventory. It is not. The point is to have the minimum inventory at all times.
Your large inventory does NOT solve the replacement problem. In the end, you can only sell what you buy. So if you have 5 years inventory, you don't have to buy for 5 years, but that doesn't change anything. In The end your goal is still to sell 100% of your inventory. You've just lengthened the time frame and ignore the costs
All comments reflect the opinion of the author, evn when irrefutably accurate.
Every post about inventory turnover rate and the costs associated with simply building inventory have been attempting to explain how this model applies to you and everyone. Otherwise the Smithsonian would be an incredibly successful business because their inventory is amazing, unique, and effectively priceless.
It is correct that your specific inventory makes it difficult to adjust inventory, sales volumes, etc. However, the general principles still apply for the most part. Your responses that you are special and they don't apply come across to me as a lack of understanding. And further attempts at posters to clarify have been unsuccessful. Some posters have been very patient, though I would recommend that if you actually want to learn and have a discussion to not respond with things like "no wonder Jessp left", "Go sell bullion", or "Tell me you are not super impressed with my inventory".
And maybe don't mind stiffing someone else with it should that become necessary.
To quote Yoda, "A painful read, this thread has become."
I've never understood why people would ask for input, then systematically refute everything that is offered. I will grant the OP that nobody knows his business as well as he does, and that some of what has been offered here isn't all that useful. Still, if things are so perfect, why ask for help? It seems to me that those who have offered advice have done so from a genuine desire to be helpful.
The most useful comment I've seen so far is that your selling prices are too low if inventory is flying out faster than you can replace it.
The same reasoning can be applied to much of the collector base. To date, no one living in the US after the Great Depression has gone through an extended adverse economic environment. (At the individual level yes, but not the economy in the aggregate.) The 2008 "Great Recession" didn't last long enough. I expect that to change in my lifetime and probably sooner than most other do.
@ErrorsOnCoins You don't seem to like any of the answers people here are giving you, so why don't you tell us what you think the answer to your own question is and they can tell you if they agree.
It kinda reads from an outsider like you already had an answer to your own question and wanted verification. You aren't getting it, so now you're arguing with everyone and any time you see a comment you don't like, you click the lol link.
To be blunt I'm quickly losing my respect for you, reading how you're responding to all of these people who are trying to offer you advice that you yourself requested to begin with.
Now go ahead and click the little LOL box below.
Collector of randomness. Photographer at PCGS. Lover of Harry Potter.
With the utmost respect guys, I really appreciate all the feedback and have thought about most of it in depth.
I have always taken the path less traveled in life.
I do not want to be doing what everyone else is doing
To add: the original OP was about the advantage or disadvantage or using credit if needed. Others evolved the thread into mathematical inventory management principles that IMO do not necessarily apply to my business model. My personal experience differs from what they are telling me, that's all.
I agree.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
What about building customers ? That is the ultimate requirement .
So how are you doing that ?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Yes, I have a very good and growing client base as in repeat clients.
Some very good clients buy coins from me before I get a chance to list them in public. They really appreciate that service as do I. I am helping them to build phenomenal collections that I am jealous of
My inventory brought me those clients.
Seems to me, inventory management could have an impact on the need (or not) for the use of credit.
Cash and inventory is optimal.
I like both.
I give away money. I collect money.
I don’t love money . I do love the Lord God.