Just curious as to what it would cost, in today's market, to buy the complete stock necessary to open a local coin shop. (Did a search here, found some good discussion on business practices, but only one brief mention of the inventory value: $300,000.) So say you wanted to open a mom/pop type shop and were not there to specialize in anything (except maybe state quarters .) You just wanted to have a good selection of US coins from, say, the 1850's forward. Of course your inventory would be heavier on coins after 1900 just due to the cost factor. Not including bullion or gold coins. What would it cost to buy the necessary inventory of a "well stocked" coin shop, so that a collector could conceiveably come in and buy everything to have a type set back to around 1850? Just thinking of a shop that has a good cross section of all areas of interest in the US coin hobby. Thanks! Scott
I dont think there is a correct answer to your question. One of my favorite stores to visit has very little inventory. It pretty much is 3 show style tables (6') with 3 cases with coins in them. He cant get more then about 5 people in there and that would be packed. But he turns his inventory very fast. Everytime I go in I just missed a great coin that he knows I'd like. And while in the store and something nice comes in I ususally get it. He buys pretty low sends the not so nice coins to the melter and the rest moves fast cause he grades pretty tight and prices fairly. So I bet he has less then 10k in inventory there and has been open for years and years.
That is hard to answer. I've sat by the vault and browsed through boxes of coins at my friend's shop. Some boxes may only contain a few thousand in coins while others may hold several hundred thousand dollars in inventory...and the vault is full of such boxes. I would say to start like you mentioned as a turnkey, you're looking at well over a million easy. If you start from scratch and work your way up, considerably less. But, you did specify "well stocked". Guy~
A lot of shop owners want full value (or more) for everything they sell and if they are successfull will accumulate huge inventories over time. Most successfull shops though tend to maintain smaller inventories and try to move everything as quickly as possible even if they don't get full value or take a loss. $300,000 sounds about right to get started. A lot depends on your specific customers. You do need to satisfy the needs of as many people as possible who walk in the door and your success will depend largely on what those needs actually are. Your ability to be a good businessman is probably the larger determinant though.
One thing to consider also is what it costs to rent the shop. I have asked at a few places what they pay for rent. It runs from $500 a month to $2,500 for a large store. Then add your heat and lights. This is the stopper for me. I'd have to make at least a $500 profit monthly just to pay the rent. I think I would just be giving away good coins to break even. Then figure in insurance and that ended the idea.
Thanks for the replies. Yeah, the overhead is usually the deal breaker alright. I'm hearing over and over that you need to really move the inventory, which makes sense. Car sales, especially used, is another biz where if the inventory is not moving, you're sunk.
I was involved in an antiques/collectibles shop a few years back. Several of us shared space and had our own specialties. We shared the rent and the bills. We bought low and sold at very reasonable prices and were very successful. We saw high-end antique shops come and go because they weren't flexible with their prices. They were more like museums than retail stores. None of their stock ever moved.
Moving inventory is always the name of the game, pretty much whatever the business is. Think of it this way: Suppose you could sell one coin per week (this is just a hypthetical!) and make $100 on each sale, or sell one coin per day and make $25 on each sale? That's why it even makes sense to sell items at a loss in some circumstances, simply to free up the cash. What's the point of having a $100 coin sit on your shelf for five years, when you could sell it for $75, then use the $75 to purchase other items on which you can make a profit.
In this buisness selling is the easy part. I can make a phone call and sell my entire shop inventory in a day. Buying is where you make your money. And you have to have the capital available to purchased the "big stuff" when it comes in as you make more money on that stuff. Don't get me wrong walk in sales are important but I would bet that our sales to the general public are far less then %20 of our total sales. Traveling show dealers make up the vast majority of our sales. Whether they come into the shop or I travel to major shows to see them. They have big pocketbooks and are not afraid to spend money moving the stuff is important. An example of the big stuff. Yesterday I had a mostly BU roll of St. Gaudens $20's walk in... You have to have $30-50k on hand at most times... or you'll miss out. Our shop expenses are dramatic. Advertising, Rent, Utilities, Employee pay, insurance, Subscriptions to publications... these are all necessary and reoccurring bills. I would guess that those expenses cost us alone more then $60k a year with advertising alone at more then $15,000 a year. Not to mention things like show fees if you do them... travel if you do it...
Wow! That's high roller stuff for sure (to me, anyway)! So what dollar figure would you put on a nice inventory (minus gold, gold coins, or any bullion)? Thanks Scott
Right now the gold and silver bullion is what is selling... the rest of it is for all intents and purposes just sitting around lately. Personally our inventory fluctuates dramatically depending on the time of the year and our show schedule. Before a big show I'm going to have a lot of inventory... and after a big show of course much less. There are times where we don't have much inventory at all... I don't really want to get into specifics...
You'll also need to stock coin supplies, albums, books, etc. Probably another 20,000.00 or so in inventory.
Lets see, a little mom&pop shop.. 10-15K would do would be great for starters.. give it several months to see what moves then start thinking of bigger and better deals...
There are so many different possibilities and expenditures to consider in your question. For an example I used to know some time back a coin dealer that had a coin store. It was really small and he sold some other items as well. Not to many but enough to help out since coins are not always a really big seller all the time. His advantages were he owned the building, lived on the second floor. This means the water, electric, phone, gas bills were just part of the entire buildings total costs. His family worked there also so no salaries for employees, only a lot of complaints. Being that close to his buisness, he could make opening and closing hours as he wanted. No transportation to and from work either. Since it was an apartment type building, other tenants contributed to his income with thier rents. If you try going into such a coin store situation, you would have many disadvantages that someone like him will not have. And remember that all the profits of just selling coins and coin collecting items will have to pay for everything. Including your living expenses. The initial costs man not be to horrible compared to the constant output of money required to run any buisness. A few thousand in original merchandise is one thing but many, many thousands after that could end that buisness rather abruptly. I hate to sound pessimistic but over the years I've had so many friends start a buisness and watch it fall into nothingness.
That apartment loft above the store would be a great way to go; however, my wife would not approve! :crying: As I go into most small mom-and-pop shops, I just don't see much inventory--few coins to look at to consider buying. I'm sure the dealer could get any specific coin I asked for, but there's not much to look at in the display cases for impulse buying. I'm sure it's because they don't want to sit on inventory, which leads back my original question. I was leaving gold coins and bullion out of this equation not because they don't sell--just to make the estimate a little easier. I can price those easy enough.
