Recently I was asked by
pcgsregistrycollector about becoming a dealer and how I like being on the dealer side of the market. I think this is an important topic so I'll give you my take on it (long version here). It has pros and cons, like anything else. *Just a short experience background on me - collector for 35 years, dealer for about 3 years.* So with 3 years in with my business, Integrity Rare Coins, here is where I'm at. I'll start with the cons.
One of the big cons of being a dealer is you will go thru coins fast, which means you won't always have an opportunity to really examine what you have. I used to attribute VAMs and other coin's die varieties to every coin I buy but now I don't get to do this as often as I'd like. I'm sure this cost me dollars sometimes but... That brings me to the biggest con of all and that is the time it takes me away from my family. Any business requires a time investment and time is, by far, going to be your most precious asset so making a plan with your loved ones on when this time will be spent is crucial. Sometimes, attributing die variety on a 1876 20c piece isn't important at the time.
Capital availability is a con for every business. No matter who you are, capital is limited and usually not enough. When you add risk to the situation, it becomes a bit more than some people can handle. ALL of your capital is ALWAYS at risk so risk mitigation is a plan you will need, especially if you will travel with large amounts of cash and inventory. I felt it necessary to purchase insurance for this, which is a con but I believe insurance here is valuable because it gives me better habits. For example, the insurance company says my inventory needs to be in my control, or an employees, at all times when I'm traveling. I can't stop at a diner for a bite to eat on the way home from a show, which would not be smart anyway, so the insurance gives me better habits in that regard. A very, very rough estimate for insurance cost is $1000 premium per $100k of inventory and this is paid each year to insure your inventory and shipping. So if you have $250k worth of inventory, and you ship about that amount each year, expect to pay about $2500 for insurance. I ship a lot and every item I send is now covered. Last year, I shipped about 400 packages with USPS alone and USPS "lost" 4 of them, or 1%. So theft and loss is a big con. Its heartbreaking when you lose a rare coin to theft, and it will happen so be prepared and you need to be mentally (and financially) capable of moving on from that loss as a business owner.
On the plus side, you get to buy a lot more coins so as a collector/dealer, this is super cool. Of course, this is based on whatever limited capital is available to your business. I was able to take a previous business and turn it into a coin business pretty easily so that was a blessing of capital to start with. A big plus is you get to decide what you sell. You can decide on a broad variety and sell any collectible coin or narrow it down to just 1878 Morgan Dollar VAMS (which would actually be a pretty cool business). Its up to you because its your business. Just know that it important to have knowledge of what you are selling so keeping it to what you are an expert in would be wise.
Another big plus is the relationships you will make. Relationships are the heart of a business and your business won't last without them. "Integrity" (see what I did there) becomes key here and you wont' last long if you don't' have it. If you have a complaint from a customer, make it a top priority to make it right, and make it right fast. It doesn't matter if they bought a $2 coin or a $20000 coin. Fix the problem. The last thing you need is something bad being spoken about you in the tiny world of coins we are in. Once you are blackballed, its uphill, in the snow, without shoes. SUPER IMPORTANT - you need to make friends with a local dealer that you share the same coin interests with with who has a lot of experience and LEARN FROM HIM/HER. You NEED a mentor in this business. Spending time with him/her is more important than buying coins, selling coins, or even reading books.
Whatever you do, make sure you do it right according to your states laws. Do whatever your state requires to run a business. Setup an LLC, get a tax cert and get licensed (if needed), and do your taxes. Keeping good records from the start will be HUGE later down the road. I like to use a spreadsheet and then print my inventory when I go to a show. I recently started invoicing every sale I make because if I found out there is a problem with a coin I sold (it was stolen, etc), I need to know who bought it so I can buy it back ASAP. Eventually I'd like this to be my full time business so I want to setup a strong foundation.
Of course there is A LOT more to it then what I wrote here but that's my 2 cents for now. Hope this helps!
Recently I was asked by [pcgsregistrycollector] about becoming a dealer and how I like being on the dealer side of the market. I think this is an important topic so I'll give you my take on it (long version here). It has pros and cons, like anything else. *Just a short experience background on me - collector for 35 years, dealer for about 3 years.* So with 3 years in with my business, Integrity Rare Coins, here is where I'm at. I'll start with the cons.
One of the big cons of being a dealer is you will go thru coins fast, which means you won't always have an opportunity to really examine what you have. I used to attribute VAMs and other coin's die varieties to every coin I buy but now I don't get to do this as often as I'd like. I'm sure this cost me dollars sometimes but... That brings me to the biggest con of all and that is the time it takes me away from my family. Any business requires a time investment and time is, by far, going to be your most precious asset so making a plan with your loved ones on when this time will be spent is crucial. Sometimes, attributing die variety on a 1876 20c piece isn't important at the time.
Capital availability is a con for every business. No matter who you are, capital is limited and usually not enough. When you add risk to the situation, it becomes a bit more than some people can handle. ALL of your capital is ALWAYS at risk so risk mitigation is a plan you will need, especially if you will travel with large amounts of cash and inventory. I felt it necessary to purchase insurance for this, which is a con but I believe insurance here is valuable because it gives me better habits. For example, the insurance company says my inventory needs to be in my control, or an employees, at all times when I'm traveling. I can't stop at a diner for a bite to eat on the way home from a show, which would not be smart anyway, so the insurance gives me better habits in that regard. A very, very rough estimate for insurance cost is $1000 premium per $100k of inventory and this is paid each year to insure your inventory and shipping. So if you have $250k worth of inventory, and you ship about that amount each year, expect to pay about $2500 for insurance. I ship a lot and every item I send is now covered. Last year, I shipped about 400 packages with USPS alone and USPS "lost" 4 of them, or 1%. So theft and loss is a big con. Its heartbreaking when you lose a rare coin to theft, and it will happen so be prepared and you need to be mentally (and financially) capable of moving on from that loss as a business owner.
On the plus side, you get to buy a lot more coins so as a collector/dealer, this is super cool. Of course, this is based on whatever limited capital is available to your business. I was able to take a previous business and turn it into a coin business pretty easily so that was a blessing of capital to start with. A big plus is you get to decide what you sell. You can decide on a broad variety and sell any collectible coin or narrow it down to just 1878 Morgan Dollar VAMS (which would actually be a pretty cool business). Its up to you because its your business. Just know that it important to have knowledge of what you are selling so keeping it to what you are an expert in would be wise.
Another big plus is the relationships you will make. Relationships are the heart of a business and your business won't last without them. "Integrity" (see what I did there) becomes key here and you wont' last long if you don't' have it. If you have a complaint from a customer, make it a top priority to make it right, and make it right fast. It doesn't matter if they bought a $2 coin or a $20000 coin. Fix the problem. The last thing you need is something bad being spoken about you in the tiny world of coins we are in. Once you are blackballed, its uphill, in the snow, without shoes. SUPER IMPORTANT - you need to make friends with a local dealer that you share the same coin interests with with who has a lot of experience and LEARN FROM HIM/HER. You NEED a mentor in this business. Spending time with him/her is more important than buying coins, selling coins, or even reading books.
Whatever you do, make sure you do it right according to your states laws. Do whatever your state requires to run a business. Setup an LLC, get a tax cert and get licensed (if needed), and do your taxes. Keeping good records from the start will be HUGE later down the road. I like to use a spreadsheet and then print my inventory when I go to a show. I recently started invoicing every sale I make because if I found out there is a problem with a coin I sold (it was stolen, etc), I need to know who bought it so I can buy it back ASAP. Eventually I'd like this to be my full time business so I want to setup a strong foundation.
Of course there is A LOT more to it then what I wrote here but that's my 2 cents for now. Hope this helps!