Questions for those who made the leap into a full time B&M shop.

guitarwes · August 18, 2011 6:10AM

There may be an opportunity presented to me to step into an established B&M shop in a fairly busy fast growing area. The dealer that is there now is wanting to move completely to another state and maybe open up a small B&M and sell the contents of his original shop (less inventory). Basically a turn-key kinda deal with the buyer stocking it with his own inventory.

For those who took the leap from a "regular" job to the B&M world:

How did you finance your startup inventory?
How did you get capital for new purchases? Did you have some investors with deep pockets?
Do you wish you'd have never done it?
Would you do it exactly the same as you did?
Would you do anything different that you did?

Answers, comments, and discussion would be very helpful. Thanks in advance.

COINB0Y · August 18, 2011 6:12AM

run away! IMHO, of course.

I believe prices will go even lower on hard assets, untill the point "the Market" believes the Clown and his ilk have no chance to get re-elected.

291fifth · August 18, 2011 6:16AM

Unless you are very well capitalized drop the idea. Just think of how much money is required to maintain an inventory of bullion ... and that is where the B&M market is today.

mrearlygold · August 18, 2011 7:23AM

Wes, sent it via pm

PerryHall · August 18, 2011 7:39AM

Many dealers use their collection as their inventory and use their house as collateral to get a line of credit.

coindeuce · August 18, 2011 8:34AM

Don't expect to work 8-5, 5 days a week. It won't keep you in business very long. And be prepared to effectively respond to those who appear spontaneously, seeking free appraisals because they are too lazy to educate and inform themselves of market value.

truthteller · August 18, 2011 9:03AM

<< <i>There may be an opportunity presented to me to step into an established B&M shop in a fairly busy fast growing area. The dealer that is there now is wanting to move completely to another state and maybe open up a small B&M and sell the contents of his original shop (less inventory). Basically a turn-key kinda deal with the buyer stocking it with his own inventory.

For those who took the leap from a "regular" job to the B&M world:

How did you finance your startup inventory?
How did you get capital for new purchases? Did you have some investors with deep pockets?
Do you wish you'd have never done it?
Would you do it exactly the same as you did?
Would you do anything different that you did?

Answers, comments, and discussion would be very helpful. Thanks in advance. >>

Several points.

1) Depends on if you want to be a retail selling operation or a buying operation. Retail is dead, wholesale buying of 90% or scrap gold is doing well. Prepare to buy at 50-60% of melt and have contacts ready to buy.

2) Security is problematic. Expect to be robbed and shot at some point.

3) Be patient. People want free education and sell you nothing.

4) Be prepared to work long hours.

5) Capitalization must be at a $500,000 minimum if you want to buy and sell gold/silver. Banks will not lend you big money on this type of business unless you have collerateral.

6) Getting licensed and dealing with bureaucracy can be challanging, buying scrap from the public has laws associated with it.

7) Overhead costs will keep you up at night.

8) Will you have a second job to support the B&M.

I had a B&M for two years. Great learning experience. Would never do it again.

TRUTH

PerryHall · August 18, 2011 9:08AM

Why not try selling as a vest pocket dealer and setting up a some smaller local coin shows to get a tast for selling?

Broadstruck · August 18, 2011 9:25AM

I just spent two hours in a local B&M with a dealer friend of mine and the phone never rang nor did another humanoid enter the shop.

coindeuce · August 18, 2011 9:39AM

I spent every day this week from 10 a.m. to 5 p.m. buying scrap gold and silver jewelry, krugerrands, gold and silver eagles, and gold maple leafs and writing purchase offers for large accumulations of Modern Mint product. During this time period I sold less than a half dozen collector coins.

coinkat · August 18, 2011 9:50AM

I have nothing to add other than be prepared for many different types of transactions- consider more than just coins and bullion

19Lyds · August 18, 2011 10:07AM

<< <i>I just spent two hours in a local B&M with a dealer friend of mine and the phone never rang nor did another humanoid enter the shop. >>

Please share your cherry picks!

timber100 · August 18, 2011 10:08AM

<< <i>I have nothing to add other than be prepared for many different types of transactions- consider more than just coins and bullion >>

My local B&M is more jewelry store than coin shop. He sells jewelry for slight markup over cost and does very well on gold chains, bangles, braclets, pearls, diamond rings, purses etc. as he easily beats the prices of all department stores and stores such as zales. He has 2 or three woman working the jewely part of the store and a few helpers doing the coins. Hardly any high end/nice coins in stock, most of his business is in bullion buying/selling. The coins are more of a sideline of the shop than the focus. Best of luck to you!!

Mission16 · August 18, 2011 12:42PM

It will change you.

DeepCoin · August 18, 2011 11:38PM

Fifty percent of ALL small businesses fail within the first year. Look at the fixed overhead you will have to pay, i.e. rent, insurance, utilities, etc. Now, are you ready to not make a profit for a good while? I taught Entrepreneurism at UConn for a few years and the key to starting a small business is to have a good model of your costs versus your potential revenue. Rather than just an idea, you need a comprehensive business plan that looks at everything.

Who will mind the shop when you travel to shows, will you advertise, when and to whom. I think you kind of get my drift. There is a reason that B&M stores are closing faster than they are opening. Also, the aforementioned security is an issue. Much to consider.

Capitalization is also an issue. What is your target sales market? Low end, high end, the middle... etc. If you are going to sell coins valued over $1,000 (a completely arbitrary number), then a decent selection of them will set you back a couple of hundred grand at least, just for inventory. Focus on the target market is the key. B&Ms typically do a lot of bullion buying and selling. Again, will you have the cash to buy 50 ounces of gold if someone walks through the door and will take your price? That means you need to have access to ready cash at all times. I would suggest a minimum of 50K.

This all gets very complicated over what seems to be a very simple idea. That is why a comprehensive business plan is the key. If you can answer all the questions, the you are prepared in a minimal way for what may be ahead.

Good luck with your choice.

guitarwes · August 19, 2011 12:22AM

Thanks for the comments so far. Believe me, this is not a "well that sounds pretty neat, I think I'll try it for a while" kinda thing. Since I got word of it through my other dealer friend, I've gone through every scenario I can think of. Being that my wife and I just opened up another small business this year, I've gotten my feet wet will all that is "behind the scenes" to running a business that the non-business owner doesn't see.

I realize the collector coin market in a B&M is about nill and that the bullion market is >90% of what most B&M's are doing right now. I have a good many connections for capital and sales of bullion. I realize the risk of security and am prepared to deal with that. I realize there will be slow days and fast days, just like any small business.

It's known to be a money maker and is in a great location to be a "buy hole".

guitarwes · August 31, 2011 1:41AM

any more comments? still contemplating this.

scotty1419 · August 31, 2011 1:53AM

Does the opportunity exist to simply negotiate a deal for a bulk of the inventory in some wholesale fashion? I think this would be the best option if pricing is reasonable.

TheCoinGeezer · August 31, 2011 1:56AM

<< <i>any more comments? still contemplating this. >>

If you are still contemplating going into a B&M situation primarily to buy and sell bullion related items, you are going to have a lot of competition, a high overhead, long hours, tax + local law/regulations to deal with - and that's just getting started.
Every Tom, Dick and Harry around here is buying PMs. We have a regular flea market every Sunday not far from here and there are numerous gold buyers there.
All-in-all, I would not be going into the B&M business in my area. Maybe by you there isn't any competition but I'd be very careful, seeing that you will need a few hundred thousand dollars to get started - and that ain't hay!

shorecoll · August 31, 2011 2:06AM

All the competition in my area are low-ball artists, they get away with it because a) many customers are ignorant and b) the closest non-rip-off is a 1-hour drive. If you are an honest dealer that works well with people face-to-face, you may do well even with competition.

If you haven't already, I would do some research at nearby shows and club meetings. I wouldn't stock $100k in Morgans if no one in your area buys them.

mrdq · August 31, 2011 2:23AM

dont do it dont do it dont do it dont do it dont do it dont do it

PTVETTER · August 31, 2011 2:29AM

I have been in busness full time for over 3 years and I mean FULL time working over 70 hrs a week no less than 6 days a week, and still waiting for my FIRST pay check.

Yes as someone said you need deep pockets to stay open with the given ups and downs in the market.

You can get a line of credit without too much problem but it's not a large one, just large enough to help with a day or three overlap.

Related cost are much higher than one can dream of.

I as still on business, but sometimes wounder if I did the right thing?

Questions for those who made the leap into a full time B&M shop.

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Questions for those who made the leap into a full time B&amp;M shop.

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Questions for those who made the leap into a full time B&M shop.