How much money does it take to be a coin dealer?

ANACONDA

This is a question that I believe many people would want to know. While the inventory of various coin dealers certainly varies a huge amount, I ran a tape on Delaware Valley Rare Coin Company, Inc's price list and came up with a value of their total retail inventory of $514,325. That may be all the coins they have in inventory or they may have more. Also, this amount may include coins consigned to them.

(Delaware Valley Rare Coin Company, Inc. is a reputable firm that has been around for many years.)

ccmorgan

I think connections to get what your customers want is just as important.

ANACONDA

True.

Also, they listed about 200 coins so the average value of the coins is about $2500.

Longacre

That amount is probably in the ballpark (at least that is what I always assumed it would take to start up a pretty small business dealing in coins).

ArgentumRex

~$10 and a dream?

ccmorgan

<< <i>True.

Also, they listed about 200 coins so the average value of the coins is about $2500. >>


How many "high end"(above 10k)coins did they have?

topstuf

Depends on what sort of dealer. 70-80k will do it for a b&m startup. 40 oz of gold @ 670 = $26,800 and 1000 oz silver @ 13 = $13,000 and will cover most orders from walkins at least until the replacements arrive. Another 25k in rare coins = 65k +/-

Then enough capital to hold scrap for 30 days in most locales.

So 100k would be more than enough.... for STARTERS.

250k to 500k would ...START... a mail order RARE COIN ONLY feller on his way.

I remember when we started and a dealer friend told me that if I opened a coin shop, I would have ONE DAY in each month that would cover ALL the expenses. He was right.

Coors, keeping them expenses DOWN is good too.


edited to add that "rare coins" will be redefined in a b&m retail shop. I made a mistake having nice coins when the public that walks in wants birth year and proof sets.
I changed completely in the first month.
WHAT an awakening.

bidask

<< <i>This is a question that I believe many people would want to know. While the inventory of various coin dealers certainly varies a huge amount, I ran a tape on Delaware Valley Rare Coin Company, Inc's price list and came up with a value of their total retail inventory of $514,325. That may be all the coins they have in inventory or they may have more. Also, this amount may include coins consigned to them.

(Delaware Valley Rare Coin Company, Inc. is a reputable firm that has been around for many years.) >>

In addition to inventory, what do you think their cash on hand is, not including lines of credit?

IGWT

I'm not sure we can determine the answer to your question from a snap shot of a dealer's inventory. Now, if you'd share your monthly cash flow reports, balance sheet, and tax returns with us, we might learn something.

notwilight

<< <i>~$10 and a dream? >>



Yes, that is indeed a dream.

notwilight

<< <i>This is a question that I believe many people would want to know. While the inventory of various coin dealers certainly varies a huge amount, I ran a tape on Delaware Valley Rare Coin Company, Inc's price list and came up with a value of their total retail inventory of $514,325. That may be all the coins they have in inventory or they may have more. Also, this amount may include coins consigned to them. (Delaware Valley Rare Coin Company, Inc. is a reputable firm that has been around for many years.) >>



If they have all their inventory listed at one time with not overstock or duplication waiting for other sales then they are a very efficient dealer. --Jerry

topstuf

<< <i>In addition to inventory, what do you think their cash on hand is, not including lines of credit? >>



If you haven't yet met enough other dealers to have sufficient "pardner" money (if needed) you aren't ready to open ANYTHING.

Geoman

Totally depends on the type of business a coin dealer is starting. For example, a long-time collector turning part-time dealer could probably start with a little as $25,000 in inventory and $10,000 in cash. This would be the typical part-time dealer doing 6-10 local and smaller shows a year, selling on eBay, and also have a website for an online presence. So I would guess anywhere between $25,000 - $50,000.

If you are starting full-time, I would double that amount. And you would need a store-front. Maybe $50,000 - $150,000.

Another level up is the "rare" coin dealer, which are the likes of Anaconda, Legend, etc. Lots of money needed her I would guess (ie: >$150,000).

Just my guess...

MrEureka

I started with 5K in cash and coins and it was plenty. Of course I did business differently back then.

The bottom line is you can make a coin business work with zero capital or with $200 million. It just depends on the person and the plan.

oldcameoproofsguy

What about a nice ebay only shop for a part timer?

Edited to say: Sometimes I scheme about opening an ebay shop with 100% reinvestment for the next 25 to 30 years when I retire, then just sell the lot. I would try and make my inventory turn say a half dozen times a year. What level would I need to have to get a business like this to be lucritive, meet my ebay auction expenses and see reasonable growth?

BigBuffaloGuy

Depends on how big of a splash somebody wants to make, and how big of a risk somebody wants to take. The past few years, with the market being so strong, there have been a number of new faces in the business, and many more on ebay (which is a fairly decent place to begin to make new customers). One thing anybody thinking of getting in this business needs to realize is that the market is still relatively strong, so people in this business are pretty lucky at the moment, and most are making money. However, there is no guarantee that it will always be this way, and you really need to be skilled to get through the downturns in the market.

droopyd

<< <i>The bottom line is you can make a coin business work with zero capital or with $200 million. It just depends on the person and the plan. >>



Well, I think you need a LITTLE capital, but you're right, business ventures succeed or fail based on the knowledge (and perhaps more importantly the dedication) of the principal(s), their vision, and their ability to execute.

Also market conditions, but that's not really in their control.

bidask

<< <i>

<< <i>In addition to inventory, what do you think their cash on hand is, not including lines of credit? >>



If you haven't yet met enough other dealers to have sufficient "pardner" money (if needed) you aren't ready to open ANYTHING.[/q Other 'dealers' is not the source for partnering.

cheezhed

<< <i>How much money does it take to be a coin dealer? >>



A buttload.

keets

what MrEureka said.

i would think for the average type of collector to step out like this it would require far less than some of the previous estimates, but like Andy said, it depends on the person and the plan. i could personally not see myself attempting to open a shop plumb full of what it would take to serve the public walk-ins. on the other hand, i could reasonably see starting out with four figures to work with, enough set aside to meet living expenses for 4-6 months and then hitting the show/auction/shop circuit as well as any other sources that might help.

starting small and slow would be much more realistic than some "dreams" of making a quick killing. the big bad coin world is too competitive and the sharks already in the water are too smart for dreamers.

ANACONDA

How many "high end"(above 10k)coins did they have?

I see two listed, an 1801 Eagle in NGC AU58 for $24,500 and a high relief saint in 63 for $21,950.

ANACONDA

In addition to inventory, what do you think their cash on hand is, not including lines of credit?

If it's anything like mine, $62,000 would be cash on hand. (I just took the value of inventory relative to the cash I usually have on hand and multiplied it times the value of their inventory.)

This is of course just a hypothesis.

ANACONDA

The bottom line is you can make a coin business work with zero capital or with $200 million. It just depends on the person and the plan.

That is so true. I know a coin dealer who owned none of his inventory. He dealt only with coins that were consigned to him.

CoinRaritiesOnline

<< <i>I started with 5K in cash and coins and it was plenty. Of course I did business differently back then. >>




When did you get started, Andy?

Nineteen-Ought-Six?

MrEureka

I started in 1975. My overhead was $30 every two weeks for a bourse table.

Additionally, I believe I could restart my business today with only 5K (or even zero) and earn 65% of what I will actually earn this year. Capital is overrated.

roadrunner

I'm not sure that a Coin World price list of DVRC is an indication of what they truly own. I recall going through their inventory at a FUN show a couple of years back and they had far more material in their stock boxes than what is listed in advertisements. They had a number of marque coins back then that did not show up in the regular ads. I'd suspect they have multiples of $500K in actual inventory...unless they revamped their business plan over the past couple years. They employ a number of top salesman and buyers which also leads me to believe that $500K inventory estimate is a tad low.

I know a couple of wholesalers who carry $500K+ in their cash accounts and stock far less in inventory.

roadrunner

BobaFett72

$6,000 limit on your credit card and a friend at the mint lol.

Then you can flip first hags till the cows come home!

BAJJERFAN

I guess that one could always start out in biz using one's collection as inventory to get started. How many would be willing to do that?

MrEureka

I guess that one could always start out in biz using one's collection as inventory to get started. How many would be willing to do that?

I did. Of course I subsequently came to understand that most of my collection was cr*p, so I don't miss the coins.

mrearlygold

A good reputation and connections helps a lot.

JSsson

I have learned that the amount of money a dealer has is not an indicator of his honesty, success or knowledge. I know some dealers who are successful who do not deal in the high budget coins. There are also dealers who seem to start off with a lot of money to spend but only appear successful because their cash came from another source and not from their coin business. There are also plenty of dealers who are financially supported by other sources and buying on loaned cash or credit.

TwoSides2aCoin

<< <i>The bottom line is you can make a coin business work with zero capital or with $200 million. It just depends on the person and the plan.

That is so true. I know a coin dealer who owned none of his inventory. He dealt only with coins that were consigned to him. >>



I just mentioned this in another thread pertaining to coin sales on eBay.
I would imagine in this day and age, building the right inventory is paramount to succeeding as a coin dealer, though.

topstuf

<< <i>Capital is overrated. >>



Not at Topstuf Excess Capital Disposal Service (TECDS)

We can help. Call us now. Clear title not even needed.

AlaBill

Most small businesses are under capitalized. An alternative question is if you started with 1-2M in capital, for inventory, how many times do you think you could turn the inventory in one year? I you turned the inventory ten times per year you could have sales of 10M-20M and with a gross margin of 10-15% would generate 1.5-3.0M in gross profit. Is this possible?

bidask

<< <i>I started in 1975. My overhead was $30 every two weeks for a bourse table.

Additionally, I believe I could restart my business today with only 5K (or even zero) and earn 65% of what I will actually earn this year. Capital is overrated. >>

What if you stumbled on a collection offered to you for sale for say 1 million and worth it...could you raise the money with your contacts?

bidask

<< <i>A good reputation and connections helps a lot. >>

You have quite the inventory.

MrEureka

What if you stumbled on a collection offered to you for sale for say 1 million and worth it...could you raise the money with your contacts?

If I could sell them for more, I could finance the deal in 24 hours. Add a zero to the deal and it's 48 hours.

mrpotatoheadd

<< <i>I guess that one could always start out in biz using one's collection as inventory to get started. >>

That could be a good way to start out if you're not in a hurry and don't need the income to support yourself. If you've been collecting for any length of time, it's very likely you have coins from sets you started but gave up on and extras from sets you've upgraded. You can start out by selling them, to get the feel of things. As long as you don't try to sell thousand dollar coins right off the bat, any mistakes you make will be pretty much harmless financially (and the education will be useful) as the coins are a sunk cost anyway. As you sell stuff, you can take the money you make and reinvest it in more coins for sale. Using the knowledge you've gained from your first round of sales (what sells, what doesn't, and for how much), you should probably be able to pick out more coins to buy for resale with a bettter feel for what's likely to be profitable.

Lather, rinse, repeat- before you know it, you've got a pile of coins in your inventory. And you never touched your bank account.

amiller

The quickest way to make a small fortune in coins is to start with a large fortune!

LincolnCentMan

I've ran the numbers many times. And based on my comfort level, for me personaly, it would take 360K start up money for me to feel very comfortible with running a full time coin business. 60K would be for me to live on for the first year, the rest would be money to work.

-David

BAJJERFAN

<< I guess that one could always start out in biz using one's collection as inventory to get started. >>

That could be a good way to start out if you're not in a hurry and don't need the income to support yourself. If you've been collecting for any length of time, it's very likely you have coins from sets you started but gave up on and extras from sets you've upgraded. You can start out by selling them, to get the feel of things. As long as you don't try to sell thousand dollar coins right off the bat, any mistakes you make will be pretty much harmless financially (and the education will be useful) as the coins are a sunk cost anyway. As you sell stuff, you can take the money you make and reinvest it in more coins for sale. Using the knowledge you've gained from your first

,,,,,,,,,,,,,

In the course of amassing their collections, most collectors have some experience in buying and selling coins. Starting out part time and selling off stuff you have had for awhile should generate some profits. If you bought well, your coins should sell well. You need to have a customer base or be resigned to eBay and a web page. It also helps to have an eye for quality, but most important would be knowledge.

WTCG

I started buying coins on a serious level in 2001 using an initial cash amount of around $10,000. Before buying coins on my own behalf the total value of the coins I owned was less than $500.

In order to not occupy cash resources I try to limit my inventory value to below $500,000. Cash flow is important, and the amount of cash on hand can vary drastically depending on many different factors.

mrpotatoheadd

<< <i>Starting out part time and selling off stuff you have had for awhile should generate some profits. If you bought well, your coins should sell well. >>

If you started collecting long enough ago, you can sometimes even come out okay with your mistakes.

BAJJERFAN

<< <i>If you started collecting long enough ago, you can sometimes even come out okay with your mistakes. >>



UH HUH!!