how to open a coin shop?

For those of you that actually own a store what advice can you give to someone thinking of opening a store in the next 10-15 years. I know it'll take awhile to build inventory to be able to open a shop but there's not a good anywhere around here and i know this is something I'd enjoy. When i see the stuff the gold buying place in town gets i think what a real coin shop would bring in. Any tips on buying?

Thanks in advance

Tommy

 

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Start by getting your degree in Business Administration. It would also help if your minor was in finance. Then about 1 year in advance of opening, start searching your real estate market for locations. You will need to negotiate the lease, buy fixturing, signage, insurance, etc... You will need to have a cash reserve of $100,000 PLUS your inventory. You will need that reserve to buy from your walk-ins and pay for incidentals, payroll, travel to shows, advertising etc....especially that first year of operation. Anything less than this will invite failure. And if the good Lord is willing, we won't be in a financial melt down, war or global social upheaval. Then post this question in the next 9-14 years and get more accurate information.

 

Are there special permits for opening a coin shop/precious metals shop as opposed to a regular store?

If you don't have to pay sales tax for coins and precious metals, how are taxes handled on the shops end? Is it a capital gain situation?

 

You might want to start with a shelf in another store. You can sell there and learn what sells and what doesn't. There are lots of group shops and places that will take coins on consignment. You don't have to be there, but you miss out on the buying opportunities as well.

 

"how to open a coin shop?"

Unlock the door...

Sorry, couldn't resist.

 

$100,000 plus inventory, wow that might take some time.

I'll have to check into the shelf thing that's not a bad idea.

 

Try a local flea market or antique store. They will often rent out a case for cheaper than then whole booth. Just remember to rotate your inventory often!

 

It's because of things like this that I ever remain the collector. Heck, it's just more 'fun' that way.......

 

Hey! That's my thunder!

 

I think you sit tight for two years, and see what plays out with the economy, inflation, and the dollar.

And the most financially conservative approach is to try to WORK part-time in a coin shop and see if you LIKE it. Pay strict attention when the owner is ----ing and ----ing about his expenses.

Even if I was 30, I wouldn't start ANY kind of bricks-and-mortar collectibles business for anything. You are trying to compete with the Internet, with its 100,000 vest pocket dealers. Everything's stacked against small business now.

And the trend is for local governments to require all kinds of record-keeping for purchases, just like a pawn shop, with the IRS always looking over your shoulder. I won't even mention security.

Sorry to be negative, but start-ups are exceedingly expensive and rapidly disappearing, and there are good reason why. The Internet changed everything, and when any Joe can check prices a dozen times in five minutes, the good buys get few and far between.

 

I'd recommend getting a job in an established store if you can . Still in todays day and age a lot of sellers don't own a brick and mortar . They sell via the internet on a website and by going to shows . That might be an easier way to get started . But still it's no easy task . Good luck in your endeavors .

 

A resale license

 

A good way to start is to start taking a table at the smaller coin shows and start working the circuit. You can work at buying and selling, build your inventory, develop contacts among other dealers all without the huge overhead outlay of a retail store. And you can also keep your regular job for income so the profits from the coins can keep being reinvested into growing the business. As your coin business grows you can either do more shows or start taking tables at some of the larger shows. If you don't take tables at the larger shows you can still work the floor as a dealer and the contacts you developed earlier will help you to be accepted as a dealer at these shows. Eventually if you do well your weekend coin show job will be producing enough profits that you can start drawing on them for income and swap over into the shows being your actual "job". This will mean a lot of traveling and working shows almost every weekend. At this point you now make the decision whether to open a retail shop, or just continue to do the show circuit. If you open the shop you will probably still do the show circuit to a fair extent as well.

As far as the taxes, if you are in a state that does not charge sales tax on coin you won't have to worry about that. Profits made on the coins i for a business is not treated as capital gains but instead is reported as profit and losses on Schedule C just as with any other business. If it was just your personal "hobby" then it would be capital gains. So keep good records just as any other business should. because that is one of the things the IRS uses to determine if it is a business or a hobby.

 

The main thing for any of that working smaller shows, getting a shelf in an antiques store, doing the internet all require the same thing...some kind of inventory. Make friends with all the dealers you can, talk to them, learn from them, buy from them. I've spent years cultivating relationships to the point where certain things come in and I get a phone call for the first look. That is something you need. Dealers with stores will get piles of fresh stuff that walks in the door, if you can get some of that from them you can build up an inventory rather quickly, if not you might want to find a company that deals in wholesale lots so you can build up. A modest inventory will lead to sales that help build the inventory.

 

Conder101 - full of good advice. But security, theft, bad checks, and stolen credit cards are a GROWING concern, because coin shows are highly vulnerable; less so than a coin shop, however.

You can't do coin shows by yourself, either. The spouse's job is to watch customers and the general area, handle the cash box, package the purchases, and run the cellphone, plus take over during bathroom breaks and gopher food.

Ten years ago, "maybe" a 1-man job; not now.

 

$100,000 in total capitalization is too low, in my opinion, and you may need to be much closer to $1 million for liquidity, inventory and funds to pay bills. Regardless, there are many every day risks and security features that most folks never think of when they dream about being a coin dealer.

 

I guess we are trying to tell you it's a high-risk, low-reward undertaking.

I personally believe that. But still attempt to work part-time in a coin shop to help make up your mind. Everything our government does, from paperwork to signage to tax treatment to regulations, frustrates and discourages small business, and it's not going to change. As the governments (both Federal and local) become desperate for revenue and control, look out.

In urban riots down the road, you'd be shot and your shop picked clean. You think I'm crazy? That's OK, no problemo, I understand. Just don't start a business that makes you a prime target, and your home-to-shop route a tempting ambush.

Find out this week if you need a handicapped-equipped public restroom, and signs in the most prominent local non-English languages. And whether your shop can even fly the flag of our dear country.

 

Oh yea, Uncle Sam. I've heard that about small business and how hard it is to start up. Ill have to check out an antique shop to see what it would cost to rent a display.

Id just like to be in the position to see what walks in the door everyday and to have first dibs on everything. I guess that's why the shops here have very little inventory, they just buy stuff that people bring in. They have no clue about coins and won't show you what they just got in until the owner sees it. After he sees it he takes it to a larger coin shop an hour south. Very rarely do I see him there with the coins.


How do you get people to know that you buy coins? Buying an entire estate and so? I've posted on CL but that doesn't seem to get much attention.

 

Have you tried an eBay Store? Perhaps this would give you experience to test the waters without having to worry about security. For me, the primary concern with a brick and mortar coin shop is security.

 

What you will see come into the door on a daily basis-

1) Silver plated spoons and knives that have no bullion value, but you will spend many minutes with each customer convincing folks you cannot pay them for the pieces.

2) Silverware with bullion value, but no real collector value. You will have to disassemble many pieces to determine what is silver and what is plated. Folks will balk at receiving only an offer based upon the silver value since it has been in the family for generations. You have no retail clients at all for this material and have to save it and then wholesale it in bulk for a few percent below current spot.

3) Circulated war nickels and Wheat cents by the bagful that you pay almost nothing for and sell in bulk a few times a year to wholesalers.

4) Worn silver coinage bought as junk silver and flipped to the next customer.

5) The oddball AGE inherited from grandpa.

6) Rings, rings, rings, rings, rings. Some stolen, some given as gifts, some from those recently divorced. You had better know if the stones are real, what type of stones they are and their quality or else they must all be treated as fake. You will also have to take apart and junk virtually all the rings to sell as bulk metal to a wholesaler.

7) Earrings. They will have to be declined or bought only to scrap due to local ordinances regarding buying and selling used earrings.

8) Metal detector and house renovation finds.

9) Requests for bullion.

10) Every other customer will want to pawn a cell phone, a digital camera or a laptop.

11) Scrubbed clean type bought online. You will be the bad guy who tells them that their F12, scrubbed white and hairlined to death 1875-S twenty-cent piece isn't worth the $450 they paid to a company selling them on cable TV.

12) State quarters and State quarter albums. You offer face value for AU coins and you earn a reputation as a crook.

13) Counterfeit Morgans, Trade dollars and ASEs walked in on the chance that you will bite.

Oh, yes, local law enforcement paperwork for all bullion-based transactions and this might take up a few hours a day based upon how much you buy or sell. Requirements that make you hold many bullion pieces for 30-or 60-days to make certain they are not stolen. It won't matter if you are armed to the teeth and that you never bring inventory home because folks do not know that or will refuse to believe it. You are a target. Your family is a target. Every customer who walks in is a potential threat to life and property.