Question for all the veteran dealers!!!

I am a profession coin dealer with a successful shop. I can tell you that going into a "coin shop" situation without a working knowledge of US coins and currency is like me going into the rocket ship business. Sure I can tell you how a rocket works...you know, fire comes out this end and the rocket goes vroom... but I couldn't tell you how to build one. I think a monkey can run a "cash for gold" shop... being a true coin shop on the other hand takes years and years of experience. Myself and my staff have over 125 years of combined coin collecting/dealing experience and we still learn new things every day that we use. I could not imagine doing this with only a business degree.

I also feel that anyone looking to have a B&M store in a couple of years will have missed the boat. The time is now and for the last 5 years honestly. I think that in a couple of years the market will be dramatically different.

 

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Welcome to the forum! and sometimes it is a tough love forum, but the majority mean the very best, and some hope to help you prevent errors they themselves have made. Knowledge is more the asset than any financial backing, and it is difficult to keep in the game. Some of us have been at it for half a century and still have to read and study all the time. Since money seems to be available, I would (1) Buy an established numismatic library, either through estates or auction. There are several numismatic booksellers. (2) Buy loupes, a stereo microscope, analytic balances, specific gravity apparatus, etc, and learn to use them. (3) Buy some PCGS and NGC graded key coins and also some fakes or altered., and learn to tell them apart (4) Start attending every coin club and coin show within your area, and take you loupe and study the coins your see (5) Take ANA classes on grading and counterfeiting ( the 2 factors most likely to determine your cash flow), (6)Join every coin forum you can for knowledge rather than just chit chat ( this is the best of course ). There of course are other suggestions, but these will pay off rather quickly.

On the progression from online to B&M stores, my personal opinion, is that "these times" are some of the exceptional years for precious metals, and collector coins. Today the San Diego Union, a midsized city's paper, had 4 1/2 pages of coin and bullion dealers of ads, containing one full ad in color, out of a total of 24 pages of Section A ( Main pages), and this can't continue. Sooner or later the PM and coin bust will come and many businesses will get low cash flow or will vanish. You will have to be in the high price/Heritage auction type of coins to continue well.

Best of luck to you
Jim

 

Guess you missed my Earl Weaver quote..........

 

Lots of good advice and I wish the best of luck. The one thing I will mention is cultivating friendships at the coinshows and other dealers. Then maybe you can join the dealer network - I don't know the ins and outs of it, but it is there.

 

"This kind of learnin' ain't taught in schools".

I'm just curious, what possessed you to choose coins as a business venture?? Aren't there any business ventures related to your apparent many years of schooling and education?? Just seems like an obscure business venture when you have no history or background in the content area...I'd stay away if I were you. JMO.

 

I agree with GDJMSP completely. No piece of paper or letters after your name make you able to be a coin dealer. The analogy to a neurosurgeon or any other specialistic field is a good and prudent one. People just get in their head that if there isn't a certification or a college degree then anyone must be able to do something. I liken coin dealers to seasoned apprenticed professionals who have put in the time to learn all they need to. Throwing money at the issue is useless.

 

Thank You GDJMSP ...I look forward to our first meeting with great eagerness.

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WarriorPoet,

Could you clear up one thing, Are you planning to be the dealer buying and selling yourself, or are you as I suggested planning on hiring the numismatic knowledge/talent and just being business management? It really does make a difference. If you and your partner do not have the numismatic knowledge yourselves and you plan to do the buying and selling, you will get your clock cleaned because it does take years to gain the type of information and experience you need. If you are planning on hiring good talent on the other hand then like I said earlier, you have a chance at making a go of it.

 

Nor any other venture which you are thoroughly knowledgeable of. Seriously, make your money at whatever it is that you are expert in. Even then there are no guarantees. Just basing it on a 35 year education at the school of hard knocks.

 

Aptly stated.

 

I am not a coin dealer, but always think people should follow their dreams. Sounds like you do not mind risk and have some money you can afford to lose. Best of luck to you. TC

 

Exactly....I agree 100%.

 

This has been an interesting read, to say the least.

My question would be this: why exactly did you choose a coin shop as your investment business of choice? I think the answer to your original question has a lot to do with this second answer.

I am not a coin dealer. I have, however, worked at coin shops, auctions, and flea markets off and on for over 25 years - so that probably gets me about 5% of the knowledge required to run a coin shop. I can say without a doubt, however, that if you are serious you should do this:

Listen to warnings given by people who have ventured down the path you are about to take. I feel like a great many of these posts here have been overwhelmingly negative for varying reasons. I can't pretend to know everyone's motivation for their replies, but I know mine. As a teacher, I enjoy helping people. So I'll be straight with you, as much as I know how to do.

Coin collecting (for the fun of it) as a hobby can be very, very competitive. Maybe in a friendly way, but frequently in a "I am a hunter armed with certain weapons, and I will do my absolute best to cherry-pick whoever I can to the fullest extent possible." kind of way. There are people out there who know their stuff - and won't say a word of this knowledge to you (as the coin dealer.) They will buy your rare variety for $20 and smile the entire time in the friendliest manner.

There are those that know a little about coins, and they will come to YOU for knowledge and recommendations.

Then there are others who will do everything they can to steal from you. I've met some really friendly folks at auctions...only to have the auctioneer point them out to me later as someone they have actually caught stealing from them.

Then there are the people who know absolutely nothing about coins. They will probably buy whatever you tell them to buy. I've seen people like this with TONS of money at auctions, paying twice book value for some easy to find commemorative coin that I could walk into every coin shop on any given day and buy for less than book value. Don't be like these people.

There are some of the people you will be dealing with as customers. If you are less prepared than they are...you WILL lose your opportunities for profits. If you're getting into coins for profit, I'd suggest advertising yourself like one of those "we'll buy your old silver coins" kind of people. As long as you keep track of all your expenses, inventory, and buy/sell ratios...you should make some money. Not as much, but there is money to be made. Which is why I run across so many of these guys around town - in person, on Craigslst, on eBay. The problem with them is that they are only concerned with the opportunity to make money off of people's ignorance. Please don't behave like this.

Surround yourself with intelligent people that you TRUST. Reward them for doing excellent work. Get rid of the people you are in ANY way wary of - because they could fill a gym bag with silver / gold coins (that you'd never know was missing if you didn't keep good inventory accounts) and walk off with $100,000 worth of coins in one go. So: be organized. Be smart about who you hire. Keep good records. Watch everyone that works for you, even once you trust them. Prime example: which famous coin collector was caught either stealing or switching out people's coins for less expensive versions? Can't remember...but this person was a TRUSTED and highly respected numismatist. So be prepared to be really, really thorough.

Keep in mind that asking other local coin dealers for help is like going to Best Buy and asking the manager "Hey, how do I start up a retail electronics store right next to you that will compete with you for business?" I agree that the best way to learn is by doing...but unless you find someone actually willing to show you the ropes...well, it's like someone said earlier, it's a tight-knit group. (It seems to be the same with the auctioneers I've known - they would absolutely ignore a young auctioneer who was just starting out, because he was now a competitor.)

Deal with people in a way you'd want to be dealt with. Be fair. Be honest. Don't rip people off. Yes, make money...but do it in a way so that you can sleep at night.

I agree with the advice given about educating yourself. Unfortunately, it's not an overnight thing. I've been collecting for most of my life, off and on, and there is still SO much I just have no idea about. I can sort through a bag of silver US or Foreign coins and pull out the ones that should be sold for more than melt...but as far as determining really good Chinese fakes, or identifying tokens...yikes. Paper money is an entirely different animal.

In other words, there have been a lot of negative posts. I think the primary reason is that you came across as being in a position of "starting from scratch" in your knowledge of coins/paper/tokens/pm. There is a HUGE amount of information here for you to learn. Yes, it is possible if you are determined and capable. But it will seem overwhelming once you dive in. If this is because you or your friend is interested in coins, and would love to do that for a living - then it won't seem like work. But if it's just for the money...

My advice, what they used to tell us in the Navy: Keep It Simple, Stupid. I'm not calling you stupid, but, to be honest, if you're starting from scratch, you are relatively stupid (I hope you get what I mean here) compared to the people you will deal with on a daily basis. Don't go spending all your money on graded key date coins, errors, varieties...until you know what you're doing, at least, in some way. READ a LOT. Buy coins based on prices that you will be guaranteed to make money. Get some good people to pick out the good stuff. Learn for yourself what the good stuff is. Learn what REALLY good stuff is (it's not that easy to find.) I've made money on coins in my lifetime. It can happen. But it's not as easy as it may look.

If I had a substantial amount of money, I wouldn't even start a coin business. I'd build a country estate that would house foster kids and abandoned pets and administer that...but if I had to start a coin business, the "coin/gold/jewelry buyer" route is the way I'd go, at least for about 10-15 years.

This has been my two cents worth. Hope it made some bit of sense.

 

Being a coin dealer seems like one of those things that anyone can do, but not everyone can actually do. Absoutely anyone (just about) could go on ebay and buy a buffalo nickel, only to turn around and put it back on ebay as soon as they get it. This is completely different from being able to make enough money to support a stores finances, let alone the owner and his/her family.

I have sold coins before and made a few dollars doing it, but i would consider myself more as a coin collector who will try to make money at his hobby.

I think it will be a very hard thing to just start a coin shop with no experience in coins, but i will not say that it is impossible.

 

I can't imagine anyone who just came into a large sum of money deciding to go into the coin dealer business, as opposed to all the other more sensible options that exist. There probably aren't many other businesses around that require such a high degree of knowledge, experience, and passion. I know some dealers and they love what they do but none of them owns a house or yacht in Palm Beach, and never expect to.

 

Take a table at a show - You will need 2 cases with lights. Start buying bullion coins and slabbed coins - focus on quality and eye appeal. Stay away from raw stuff for now. Once you get your case full start buying it right - below bid etc. Subscribe to the CDN, Greensheet, Coin World and get a red book. Some good books on grading are helpful too. David Bowers Book on How to be a Successful Coin Dealer helps. Don't advertise your a newbie. My assistant is an x stripper who danced at a club where I am VIP. I have taught her a lot and she is a really good buyer in getting it cheap as she works her charm on them. She is working towards a law degree and the other day got one heck of a rip in a buying deal.

It takes a lot of money to be a coin dealer but the biggest rule is buying it right. After several shows you should find out if the business is for you and if you can make money in it. Its easier to buy coins than sell them and make money. With gold and silver going nowhere but up it should be win / win situation for you. Watch out on numismatic coins as many have been stagnant for decades. I only buy them if its a steal say at 60-65% of CDN Bid from some walk in traffic at the shop. I have a huge stockpile of gold and silver coins which has fueled a profit explosion for the shop which pays off with the synergy of being able to buy it right when the right deal walks up. You will need to weed out the shop customers who you cant make money from (deselect) and concentrate on the ones where you can buy and sell at your price.

I would volunteer to be your consultant at a show but I run a shop and have a busy show schedule plus my consulting fee would be expensive. My advice start sharing a table with someone you know in the business. Perhaps a guy you may know from your local coin club who has lots of expertise but a little short on cash. If you buy some of his coins he probably will be more than happy to show you the ropes. This way you can pick up both expererience in the business and inventory at the same time and plan the infrastructure for your business.

With a few shows under your belt and some shop visits to scope out the competetion you should be about ready. The key is to buy low and sell high. For me its the thrill of the deal that fantastic buying rip or huge retail sale to a whale.

It does not take a lot of capitalization to do the show circuit and I highly recommend doing this for awhile before plunging into a major investment like a shop.

 

In my years of experience as a coin buyer only, I've noticed there are always two types of coin shops. The first one I believe anyone could open with absolutely no coin knowledge whatsoever. That is the coin shop that sells bullion and cheap junk. We know their business model works because we've seen their kind selling on tv and in magazine ads for years. This seller sells cheap merchandise to uneducated non-collectors for many times more than their worth.

The second type of shop is built for and around collectors, by collectors. It caters well to it's customer's needs because they understand the hobby beyond a business plan and know what their customers like. This shop doesn't have to rip off it's customers to make up for high overheads based on not knowing the hobby. These are the places that stay open for generations, unlike shop one that tend to be fly by night operations.

So yes, somebody could walk into the business and make money. It may be unethical and on the precipice of what is legal, but it's money in the bank. The question is, is that the kind of business you want to invest your money and time in?

I hope you shoot for the second shop. We have enough hucksters and fat shady's in this hobby to last forever. An honest and knowledgeable business is always in demand. Maybe we've seen enough people come through here with dark intentions that it has soured us to accepting the fact that it may be your intention to open a place we would welcome.

In any case, I wish you the best of luck. It's a tough business to break into, and even tougher to keep it going. Surprise us all.
Guy

 

Just to be a bit contrarian here. People always like to pretend that expertise and savvy are what makes for success, that is just ego balm. The main thing is luck. If you have good luck you will do fine, buy a bunch of proof sets for too much? With luck you will have at least one or two with no s mintmarked coins.

There are thousands of people out there with great knowledge who tried and failed to make it in selling coins, the ones who succeeded are the ones who were wet-kissed by lady luck.

 

It is just MHO but I think that trolls like to kick up dust storms from time to time.

That said, I agree with the advice given but I also understand that those who need advice are the least likely to listen to it when it is given.

Listening is a skill.