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Dealers, Where is the Sweet Spot between Inventory, Cash on Hand and Debt?

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 8:34AM

    "Costs include opportunity costs. "

    I NEVER pass up an opportunity as I am an extremely aggressive buyer to build inventory.

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 9:02AM

    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.

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    neildrobertsonneildrobertson Posts: 1,268 ✭✭✭✭✭

    @ErrorsOnCoins said:
    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

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    shorecollshorecoll Posts: 5,447 ✭✭✭✭✭

    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.

    ANA-LM, NBS, EAC
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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 9:38AM

    @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.

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 10:06AM

    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. :)

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    ironmanl63ironmanl63 Posts: 1,975 ✭✭✭✭✭

    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!

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 11:00AM

    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.

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    RedglobeRedglobe Posts: 809 ✭✭✭

    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.

    Rob
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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 11:29AM

    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.

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    BAJJERFANBAJJERFAN Posts: 31,694 ✭✭✭✭✭

    @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.

    theknowitalltroll;
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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 11:43AM

    @BAJJERFAN said:

    @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.

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    BAJJERFANBAJJERFAN Posts: 31,694 ✭✭✭✭✭
    edited July 27, 2019 1:22PM

    @ErrorsOnCoins said:

    @BAJJERFAN said:

    @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.

    theknowitalltroll;
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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 12:10PM

    @jmlanzaf said:

    @ErrorsOnCoins said:
    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. :)

    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 :o:)

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    BaleyBaley Posts: 22,663 ✭✭✭✭✭

    @jmlanzaf said:

    If you don't wasnt to change anything, why even ask the question?

    >
    Certainly not to brag nor spam.

    Liberty: Parent of Science & Industry

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    stmanstman Posts: 11,352 ✭✭✭✭✭
    edited July 27, 2019 12:26PM

    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!!!!!
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    Dave99BDave99B Posts: 8,957 ✭✭✭✭✭

    I got a "D" in my college Accounting 101 class, but this is a great read!

    Dave

    Always looking for original, better date VF20-VF35 Barber quarters and halves, and a quality beer.
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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 12:40PM

    @jmlanzaf said:

    @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.

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    neildrobertsonneildrobertson Posts: 1,268 ✭✭✭✭✭
    edited July 27, 2019 3:39PM

    @ErrorsOnCoins said:

    @jmlanzaf said:

    @ErrorsOnCoins said:
    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. :)

    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 :o:)

    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

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    MasonGMasonG Posts: 7,687 ✭✭✭✭✭

    @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.

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 1:46PM

    @MasonG said:

    @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.

    Rodney does what he wants every day. The intellectual expert works 9 to 5.

    Rodney gets the girl. The intellectual expert does not.

    https://youtu.be/YlVDGmjz7eM

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    MasonGMasonG Posts: 7,687 ✭✭✭✭✭

    Yeah, I saw the movie. I still think you are misreading mustangbob's intention.

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    DavideoDavideo Posts: 1,364 ✭✭✭✭
    edited July 27, 2019 1:31PM

    @MasonG said:

    @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.

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭

    I know exactly what a widget is.

    Art is not a widget.

    I consider my coins art.

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    MasonGMasonG Posts: 7,687 ✭✭✭✭✭

    @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.

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    TwoSides2aCoinTwoSides2aCoin Posts: 45,279 ✭✭✭✭✭

    The sweet spot is here in America, baby.

    Practice makes perfect & nobody is perfect. So, practice being nobody and be perfect !

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 2:09PM

    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.

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    ZoinsZoins Posts: 34,503 ✭✭✭✭✭

    @ErrorsOnCoins said:
    Personally, I am more comfortable with Zero Debt and a Cash Reserve.

    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.

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    DavideoDavideo Posts: 1,364 ✭✭✭✭

    @ErrorsOnCoins said:
    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.

    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".

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    BAJJERFANBAJJERFAN Posts: 31,694 ✭✭✭✭✭

    @Zoins said:

    @ErrorsOnCoins said:
    Personally, I am more comfortable with Zero Debt and a Cash Reserve.

    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.

    And maybe don't mind stiffing someone else with it should that become necessary.

    theknowitalltroll;
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    BryceMBryceM Posts: 11,941 ✭✭✭✭✭
    edited July 27, 2019 2:46PM

    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.

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    WCCWCC Posts: 3,326 ✭✭✭✭✭

    @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.

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    SiriusBlackSiriusBlack Posts: 1,120 ✭✭✭✭✭

    @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.

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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 3:13PM

    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.

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    bidaskbidask Posts: 14,057 ✭✭✭✭✭

    @ironmanl63 said:
    Sounds like you are a collector whose coins are for sale. Not so much a dealer. Do you want to go into debt for your collection?

    I agree.

    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.




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    bidaskbidask Posts: 14,057 ✭✭✭✭✭

    @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.




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    ctf_error_coinsctf_error_coins Posts: 15,433 ✭✭✭✭✭
    edited July 27, 2019 3:20PM

    @bidask said:

    @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 :o

    My inventory brought me those clients.

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    MasonGMasonG Posts: 7,687 ✭✭✭✭✭

    Seems to me, inventory management could have an impact on the need (or not) for the use of credit.

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    bidaskbidask Posts: 14,057 ✭✭✭✭✭

    Cash and inventory is optimal.

    I like both.

    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.




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