Could one be a successful dealer with a sub $30,000 inventory?

2ltdjorn

At no time total inventory won't exceed $30,000 at any given time.

TPG COINS

Maybe 10 to 40 coins.

Focus on quality coin, quick turn over with compound returns.

jcping

Absolutely -)

TomB

It largely depends upon how one might define both "successful" as well as "quality coin". I typically have between 10-and 40-coins in my inventory and there are times when the total value isn't much more than $30,000. However, I can tell you from experience that most pieces that fall into the "quality coin" category cost more to obtain and I can also tell you that my experience with collectors indicates that there are more price buyers than there are quality buyers out there. Therefore, many times the equation might be-



"quality coin"="more expensive coin"="less turnover"

TomB

It largely depends upon how one might define both "successful" as well as "quality coin". I typically have between 10-and 40-coins in my inventory and there are times when the total value isn't much more than $30,000. However, I can tell you from experience that most pieces that fall into the "quality coin" category cost more to obtain and I can also tell you that my experience with collectors indicates that there are more price buyers than there are quality buyers out there. Therefore, many times the equation might be-



"quality coin"="more expensive coin"="less turnover"

TheDukeK

Better keep your costs low.

BStrauss3

So you are talking $750-1000 each coin. Most dealers are lucky to make $25 or $50 on sales of that magnitude at a show.

Say you need to make $50,000 / year - that's 1,000 sales or 40/week.

CoinRaritiesOnline

Try it for a while and see. I'm serious.

Elcontador

Don't think so. Everyone has access to current auction pricing, and the less expensive the coin, the more sales one can use for reference points. That means lower markups on your coins. Plus, unless you buy them from incredibly naive people, because of this, you are going to have to pay more for them. You have lower markup, and must have more turnover, which means more postage and shipping. And if you mark up the latter, you will lose business. Lastly, don't forget sales tax on most transactions to in state buyers, and most of them won't want to pay it.

kookoox10

As far as a dealer with only an online presence, then yes, it's very within the realm.

MrEureka

It's certainly possible. It's also possible that you'll go broke trying.

Too many variables to spell it out any more than that, without knowing more about your plans.

Danye West

You leave zero room for error.

blu62vette

I would think so, but there are only certain areas where it can be done. Also please define successful, we all see it different.

TwoSides2aCoin

Maybe, with a supplemental income. Maybe, if every dollar is reinvested and mom is cooking dinner. How is success measured ?

PaleElf

I think it would be tough full time, but would work as an online site for supplemental income. It will also take some time to develop a decent customer base, assuming you're not just going to throw it all on EBay.

halfhunter

I wouldn't give up my day job . . .



HH

topstuf

Do it with a 2 coin inventory and a great line of gab!

Coinosaurus

The amount of your capital is much less important than:

* how good your eye is

* how many connections you have in the biz (both for buying / selling)

* how hard you are willing to work

Bochiman

Maybe.

Doubt it would be easy.



I'm guessing you are thinking "classic" versus "modern".



All depends on how you buy and where you sell and to whom.

Quick flips, with reasonable profit margins, are probably necessary to be "successful", in many eyes...maybe even your own.....unless you are planning on mega-flips that take a long time but may net you a high multiple of your cost.



The modern flip game used to be good but now has so many players that I don't think it is that great of a thing to get into.



If you have a good eye, and from many of the coins you have shown, I think you do, and go to the right shows, and put in effort, I think you can do it.



Just that ebay and paypal eat up a good share of the profit, if you were planning on using them, but get you more eyeballs.

CertifiedGoldCoins

Originally posted by: 2ltdjorn
At no time total inventory won't exceed $30,000 at any given time....

You will (have to) learn a lot, take risks, and cover expenses and taxes. Unless you plan on working for free, or for fun, you will make money. Keep your day job, reinvest your profits in the same kind of stuff that sold well until your inventory exceeds $300,000. Or $3,000,000.

Otherwise, why bother?

BryceM

As a full-time occupation? Sure, as long as you live with mom & dad.







A more useful question would be, "Can a dealer make X per year, with a $30,000 inventory?"

keets

if you attend smaller shows, perhaps 20-30 dealers, you'll find that to be the new norm. if you look closely at those dealers you'll also find that the answer depends on how you define successful. things are currently slow and getting slower, the economy is really worse than many people suspect and that all squeezes this type of dealer. I don't think it's an exaggeration to say that most do $2000 or less at any show, many under $500. that means they can't have an sort of retail BM, must either be retired or work a standard job and be very careful about what they buy and how much they sell for. being very generous at perhaps 20% mark-up this type of dealer might make a few hundred at a Sunday show which means his net after expenses isn't very much.



I have always thought that to run any sort of coin operation means a minimum of $100k capital to even hope to be competitive. that also means such a dealer needs to be very careful about where he competes.



in a nutshell, to answer the very confusing question of "At no time total inventory won't exceed $30,000 at any given time" I would say no, but there are still many dealers trying to do it.

291fifth

Highly unlikely. Where are you going to get the coins for your "fast turnover"? You will also find that the expenses involved in selling are far higher than what you assume. Where are you going to find the buyers willing to pay premiums for your "quality" coins. All you would find at the local shows in my area are a bunch of price conscious cheapskates.

davewesen

What is your definition of successful dealer? and how/where would you buy/sell?

sellitstore

Absolutely.

It depends on how you do business.

I knew one dealer (now deceased) who never had an inventory and earned quite a nice living.

He just flipped deals, mostly wholesale lots bought from B&M dealers.

His motto was "Just make it go away", something easy to say but harder for us collectors to practice.

Anyone know who I'm speaking of? I'll bet some on this board knew him or did business with him.

CommemKing

Not everyone is looking to buy $1000+ coins. There's plenty of market for what your are talking about.

mustangmanbob

Are you going to add value or just be a parasitic conduit?

Example: cherry pick undergraded coin, MS63, resubmit and it comes back MS65: Value Added

Go through 40 rolls of X, pick out 2 coins, submit, they come back MS66 and MS66+: Value Added

Buy a coin off ebay for X, receive and relist for X + 30%: Parasitic conduit.

I have been selling on ebay for 15 years, and sell (the thing I sell so this will not be considered an advertisement) since 1981. I had a guy who bought lots of stuff from me off ebay, and I would see my same stuff 2 weeks later relisted on his site. Most came in lower that what he paid. This went on for about 6 months. This was when you could check who the sellers and buyers were. He was doing this with several different sellers, buying their stuff and reselling right back on the same venue.

He was gone in 6 months. I guess it took that long to run out of money.


What is your business model? I participated in COUNTLESS meetings while working for Amazon, and other companies. Cost of Goods Sold (COGS) reviews, turnover ratios, warehouse inventory, page views, views below the fold, click through to other pages, etc.

Assume 30K. What is your planned turns ratio (365 days / number of days to turn all inventory) (365 / 12 :all inventory clears in 1 month = Turns Ratio of 30.4) ( 365 / 93 (inventory turns in 3 months) = 4) In the 1980's, the American auto manufacturers turns ratio was between 2 - 3, ie parts to build new cars were in inventory between 120 - 180 days average. When Ford bought into Mazda, they found parts being delivered DIRECTLY to the assembly line, no inspection, no warehouse, no nothing, every 2 hours. Turns ratio for the entire plant was in excess of 220, ie, average part was in house less than 2 days. Ford knew they were toast at that point.

At Amazon, one of my jobs was manager of a production line, from incoming warehouse, manufacturing, pack and ship. The main product was a daily item. It ran for sale, for example, on Tuesday. Early Wednesday, a production planner reviewed the sales, determined what materials needed to be ordered, and placed the orders with our sub tier raw material vendors. This was done by 7 am. The production line went hot at 8:00 am, and worked on non daily items. By 9:15 am, raw materials arrived, and they were then sorted, kitted and palletized by required amounts, and delivered to the production stations by 10:15 (at the end of morning break). The daily item manufacturing began. Meanwhile, shipping labels were prepared for the daily item. sorted, and arranged for best flow. By noon, the first production units were rolling out, and the shipping area engaged. This continued until 4:45, the cut-off for getting items shipped that day. It was a stream of boxes filled with labelled packages, on pallets, and fork lifts running the pallets to the shipping area, and loading them on 53' semi trailers. When the a trailer was full, within 30 minutes, a FedEx tractor pulled up, dropped off an empty trailer at one of the loading dock doors, and took away the full trailer. Average of 4 - 8 thousand units a day. 2nd shift worked on non daily sales, too maintenance, and if it had been a really good day, more base line production.

So, short version, average item went from raw good at another company, on their inventory, to delivered to me, manufactured, and shipped, in less than 1 day. Total profits versus sales was not measured in %, but in multiples. That is how the stock price is over $700 a share.

So, back to you. $30K inventory: What is your planned turns ratio? Are you going to turn all 30K in a month, 2 months, etc.

What is your planned net profit. Your costs will be at least 10% to sell, and how much to buy?

What is your gross profit margin?

So let's say, turn inventory every 2 months, so net sales of 30K x 6 cycles = $180K

Gross profit margin of 40%, then 180K x .4 = 72K

Less costs of acquisition (8%) and costs of sales (10%) = 32K

Net profit before taxes: 40K

Self Employment tax 15% : 6K
Federal Tax (you don't think they don't notice): 25%: 10K

Net is 26K, Jelly Side Up.

Remember, paypal reports over 200 payments or 20K. There are a lot of surprised ebayers out there.

ricko

The business model you are describing is extremely tight.... and you may have underestimated expenses (as mentioned above). There is some sound advice from forum members - i.e. TomB, Keets etc. - and, being a former businessman, I recommend you reconsider your business model. For example, at that level, you will not have a store - that expense alone would sink you. Therefore, you need a market - i.e. shows, internet...- more expenses (travel, board, website, fees). Your market, at that level, will not include the casual collector, so limited turnover when your model would require high turnover. There is much more planning to be done.. Cheers, RickO

BillJones

If you have a proven track record that you sell the pieces that you consign, some dealers will let you take material "on the arm." I was in that position when I was dealer. I took as much as a $100 thousand in inventory from one dealer and consistently sold 95% + of it. This was in the mid to late 1990s when the market was not that great. If you are good salesman, and have a good customer base, you can do a lot with limited capital by using other people's money.

Of course you have to pay all of your bills promptly and keep up the pace. That can be hard for some people.

TopographicOceans

I'm not a coin dealer, but I play one on the Internet.

I do very little flipping and am mostly selling duplicates of my collection.
This is what I've done so far this year.
Basically I make money for eBay, PayPal and the Post Office and get to keep a few crumbs.

My LinkedIn stock today makes coin dealing pale by comparison

PaleElf

Originally posted by: TopographicOceans



My LinkedIn stock today makes coin dealing pale by comparison

VA, LNKD... Now if someone would just by out CYBR, I would be good for the year.

TwoSides2aCoin

My final answer: "anything is possible".

roadrunner

Originally posted by: 2ltdjorn

At no time total inventory won't exceed $30,000 at any given time.



TPG COINS



Maybe 10 to 40 coins.



Focus on quality coin, quick turn over with compound returns.

Might have been somewhat possible back in 2004-2008 when almost any coin was in demand and turnover rates were much higher. Not so much today. While this could be done today you'd be more a collector/dealer doing surgical strikes on "can't miss" coins. You might be lucky to make $3K to $8K per year on a few dozen transactions. But, you'd have to be extremely picky so that nothing you buy is a loser. Only winners allowed. It would take a lot of pavement pounding to turn up deals before others get there. While this may not be a living, it could be supplemental income for a part time dealer/collector and a way to learn more over the years.

LanceNewmanOCC

.

answering to myself is worth a lot.



under $30 is challenging. 2x that would make a huge difference.



just paying the bills/living isnt too bad. growing an inventory simultaneously strains the budget. if you collect as well, you better be a top-notch ballerina/wide receiver.



i don't drink, smoke, coffee etc so a lot is saved there.



gas is expensive over 30 days but so long as i buy/sell enough to justify, gotta keep doing it.



problem with smaller amount is overcoming living expenses. same as with a paycheck.



sitting online is cheaper by far but frustration, time etc goes up precipitously.



you gotta custom what you do and how you do it to your personality and goals.



gotta keep a few thousand around for unexpected things and there are plenty.



the longer you do it, the better should get you get.



knowing how long to sit on a coin deserves a small book unto itself.



a mentor once said, you need a LOT of sources to buy sell and it could not be more true.



having a spouse that is at least part-time changes a lot; perhaps helps from time-to-time.



MUST be built for entrepreneurship if it is done to live on. period.

.

TwoKopeiki

if you look closely at those dealers you'll also find that the answer depends on how you define successful. things are currently slow and getting slower, the economy is really worse than many people suspect and that all squeezes this type of dealer.

This.

ctf_error_coins

Are you looking to build a business or get income?

I started with Zero and flipped my way to 60-100+ K in inventory.

I did not take a salary for years as I was Building up inventory and unknowingly building up Inventory in the form of a personal collection which is now available as and for new future inventory.

I now take a Salary as needed.

PaleElf

Originally posted by: TwoKopeiki

if you look closely at those dealers you'll also find that the answer depends on how you define successful. things are currently slow and getting slower, the economy is really worse than many people suspect and that all squeezes this type of dealer.

This.

I think a lot of the low volume-quality dealer's are struggling with this right now, which is why you have recently seen posts referencing cheapskates, bottom feeders, etc. At the end of the day, the market determines the value.

Jinx86

I would say it all depends on your turnover rate. Wouldn't be able to hold any one pieces for too long. When I ran my personal Ebay store I had maybe $15K in inventory but great turnover, so I ended up netting 3-4 times that at the end of a year in sales.

Yorkshireman

Originally posted by: CA5MAN

I'd say yes, 30K is plenty with the right stuff. I'm not a dealer but play one in the internet too. Last month sold 3 coins, my cost was $35.00, + grading fees, Ebay gross sales was $5,885.

If that is the case , it does not appear that you bought the coins at a level unfair to the seller unless you inherited them. That, however, does not explain them $35 cost basis.

jcping

Originally posted by: CA5MAN
I'd say yes, 30K is plenty with the right stuff. I'm not a dealer but play one in the internet too. Last month sold 3 coins, my cost was $35.00, + grading fees, Ebay gross sales was $5,885.

You are doing great but maintaining $35 cost + grading fee and selling them for almost $6K is challenge. Once in a blue moon is possible but how many blue moon in a year

Shamika

Define "successful".

Some dealers may just enjoy the camaraderie of like-minded people and meeting new collectors so just covering their travel costs and a few meals is enough for them. Others may feel the need to clear six figures to be successful. Also, are you talking about vest pocket dealing? Internet presence only? Brick and mortar?

Cougar1978

Sure you can do that as long as you buy low and sell high and do not get buried in expensive shows.

However, its more difficult to sell coins than buy them. Being able to buy right is critical.

I would you try an online store and set up at some inexpensive shows. Better keep your day job.

Hopefully it will generate enough profit to support another one of your hobbies. Beyond that forget it. I would try to have an inventory of around 100 pieces, enough to fill up a case at a show. Currency can help fill any gaps. The market is horrible right now as we have entered the summer doldrums. If you can't sell the small stuff the big stuff will not sell either. Big ticket coins riskier, are harder to sell, and potential loss is high. Leave those with the big money highly experienced dealers. Cash should be a large part of your total investment in the business. It takes cost plus about 40% to make it in the coin business. 10c on the dollar does not cut it. I don't do coins over $300 unless gold coins with lots of BV.

You will need to live really cheap - in a trailer or with mom and dad. Getting married unless she is rich and will finance the business may not be in the cards at this time. A new wife wants a house, car, and kids. Hope your working on your MBA.

You can do an ebay store and select shows while you pursue a real career. Now if you have a million seed cash that's a different situation. I have used my coin business as a savings / profit vehicle for retirement in addition to financial investments. When you retire your coin business will supplement your retirement income.

My coin business is successful as it finances another hobby; beyond that really tough business. I remember joking with some dealers around me at a show one time and we all agreed it would be impossible for us to make a full time living at this and laughed at how noobs had such starry eyed goals. Beyond expertise it takes a lot of money and very little debt to be a coin dealer.

Shamika

Originally posted by: Cougar1978
You will need to live really cheap - in a trailer or with mom and dad. Getting married unless she is rich and will finance the business may not be in the cards at this time. A new wife wants a house, car, and kids. Hope your working on your MBA.

Cougar1978 - I don't know if you were being serious or just joking, but this really made me laugh.

WildIdea

I was thinking that 30k from scratch may be pretty hard to be able to compete with entrenched dealers on the show circuit. Once that is invested in inventory then what do you buy items with? Start off with 15k and buy with 15K? Getting money and coins fronted seems risky at best, so I'd avoid that. I don't think it's totally necessary to have a corporate mindset unless it's your primary income, then if 100 bucks is what you have make it work until it grows into what you need it to be as you go, or the scene swallows you up and spits you out, whichever comes first. People will buy and sell things with you based on you're personality alone, must be present to win!

I was thinking for myself, that starting with a lifelong accumulation of cherry coins worth X and X in bullion and 45 years of experience (20years so far, not sure if it's enough! Lol) as a buy in, then start with 30k on hand to make buys. Basically a retirement job as time debt ratio will be in the sweet spot by age 65, I hope. Those numbers prob won't mean squat 20 years from now (I'm currently 44) but the cost of goods now hopefully will make up for inflation. Buying items with disposable money now while I'm in my best earning years. Just spend the following years in life dealing/ selling coins off myself instead of leaving it all behind as a heir headache. Show reports make the coin life and trade desirable to me and full time participation in the world of coins seems pretty cool, and basically, the best thing I can imagine my coins doing for me. Besides enjoying them now. Kids can get some goodies but nothing like a massive collection, heck I'm gonna spend that money myself!

I love the comment about being a pos force in the hobby or a force feeding off of it. If you are open minded, listen, not overly critical and overall excellent to people, then the doors you need to open probably will.

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Justacommeman

Originally posted by: Shamika

Originally posted by: Cougar1978

You will need to live really cheap - in a trailer or with mom and dad. Getting married unless she is rich and will finance the business may not be in the cards at this time. A new wife wants a house, car, and kids. Hope your working on your MBA.

Cougar1978 - I don't know if you were being serious or just joking, but this really made me laugh.

I assure you he was serious



mark

Coin Finder

How do you define "success"?

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msch1man

30K sounds like a lot of money (and it's certainly more than I would have to invest in a business), but if you add up the the inventories of most of the dealers that I would consider "successful", you're missing a zero minimum.

Coinflip

I started with a few hundred dollars and flipped coins. I know dealers who maxed out credit cards and jumped years ago. Today I see them leading the pack and having much presence in the market. I continue to grow every year. All you need is vision,strength to learn and to just do it..limiting beliefs will get you nowhere

joebb21

I started my inventory with less than $5,000 being able to buy 1-10 coins at a given time

TwoSides2aCoin

Originally posted by: halfhunter
I wouldn't give up my day job . . .

HH

Amen. It's a great hobby, and a grueling business.