The Best of Ed Welch – Doing Business on Purpose
The Business of Doing Business in Antiques
By Ed Welch
One of the benefits of teaching is that your students teach you. When I began teaching “The Business of Doing Business in Antiques,” I believed that most people became antique dealers to make money. I soon discovered that making money was not the number one reason a person chooses to become an antiques dealer. In fact, making money ranks below the love of antiques, personal enjoyment, something to do that involves study and learning, building a collection, and the opportunity to travel.
I quickly realized that a person could have a highly successful business in antiques and never make a cent. A person in the antiques business for the purpose of building or improving a collection could be successful losing money if the overall value of the collection improved.
A former student and his wife travel the entire U.S. in a large mobile home towing their car. The money they make selling collectibles pays for much of their living and travel expenses thereby stretching their retirement income. Their retirement business is successful.
One of my students summed up my entire course with the following statement. “If you want to be successful, do the things you do on purpose.”
I recently received the following email from an attorney who regularly reads my columns:
Mr. Welch, I have read your articles in the Business of Doing Business section of the Journal of Antiques for a number of years. They are excellent articles. Have you considered writing a book to help people REALLY learn how to buy/sell/trade antiques? I think it would be a resounding success.
Also, I am an attorney thinking about slowing down soon. I have over the years bought and sold basic junk and antiques. I would like to learn how to be a better dealer and obtain proper knowledge in antiques but there doesn’t seem to be any formal ways to become educated. Do you know of any dealers who would “tutor” so to speak someone seriously interested in the antique business.
Once again – great articles.
Michael of Oxford, Mississippi
One of the questions this reader asked is why do I not write a book that can be used as a guide to operating an antique business. I have been writing for 50 years. My first article was published in 1958. I have not kept an accurate count but I must be approaching 2,000 published articles. I certainly have enough information for a book, but doubt that I will take the time necessary to generate a book. I would rather spend my time traveling throughout Europe buying and selling antiques.
The writer made a reference to “basic junk.” I would like to respond to this point. Most successful dealers deal in collectibles and basic junk. Collectibles and junk have made many dealers wealthy. I have a good friend who owns ocean front property in Florida, lake front property in Maine, and a townhouse in Atlanta. He spends the summer in Maine, spring and fall in Atlanta, and the winter in Florida. His wealth is generated by his willingness to deal in low-end collectibles and the things that do not sell at junk auctions. He buys the leftovers from low-end auctions and yard sales for pennies and sells these things for dollars.
His cash flow ratio is eight to one. In plain English, every dollar he spends on stock generates eight dollars in sales. It is impossible to have a cash flow ratio this high dealing in expensive antiques. You cannot make eight times your money on a chest-of-draws that cost you a thousand dollars. If your business does not generate a cash flow ratio of at least three to one, chances are you will work for no income or worse yet, lose money.
A formal business education is available near where you live. If you want to make money in the antiques trade, go back to school. Learn how to make a business plan. Learn how to modify that plan as circumstances change. The sale of antiques fall off in mid June, all of July, and the first two weeks of August. Do you know why? More important, do you have a business plan designed to minimize this reality? Strong selling months are March, April, October, and November. Do you know why? Do you have a business plan to maximize sales in these months?
A business education will teach you cash flow and cash flow ratios, the cost of operating a business including buying expenses, selling expenses, and taxes. A business education will teach you how to evaluate products, product supply, product demand, and product longevity. A business education will teach you how to evaluate customers.
Who will buy the things you want to sell? It is hard to sell a Cadillac to a farm worker who needs a pick up truck. It is hard to sell furniture to a couple putting three children through college. However, there are things that that couple will buy. Can you name three things that such a couple will buy? The answer to this question is easier if you are old enough to have children in college. If you are not old enough to have children in college, you can get a good idea of what parents of college students buy studying statistics related to that population. Statistics relating to specific populations are called demographics.
Study demographics: dem-o-graph-ics (used with a plural verb) – The characteristics of human populations and population segments, especially when used to identify consumer markets.
I wear a suit and tie when I sell at antique shows. I am clean-shaven, my shoes are polished, and my shirt is crisp and clean. On hot days, I carry extra shirts and change often. My customer base is college educated, most with their Masters or Doctorate. My target customer has enough disposable income to buy the things I sell. My merchandise is priced to its full value, sometimes more. I do not sell my good stuff cheap.
When you meet a person for the first time, as you approach one another, well before you can make eye contact, well before you are close enough to shake hands, your attire, your posture, and your stride are sending messages. Are they saying what you want them to say? Are they misrepresenting you? Are they telling lies about you?
Whether we like it or not, we are judged by how we dress. When I sell costly antiques, several thousand dollars and up, I must look like a person who is comfortable handling this kind of item. I have made thousands of sales of expensive antiques because I am dressed for the part. On the other hand, a flea market dealer selling low-end collectibles would be out of place in a suit.
Dealers in the trade to make money must carefully choose the types of antiques they carry and price levels of the things they carry. The ability to replace sold stock is a major consideration when deciding what to carry. The decision on what to buy and sell and how to identify and target potential customers is too complicated for a newspaper article. The best way to study this is by taking a course on the subject. You can also learn by carefully reading several of the many books on this subject.
Education costs money. If I wanted quick knowledge about the demand and selling price of antiques, I would study six to eight auction companies that sold the kinds and price levels of merchandise that I wanted to carry. I would look for business habits, consistency in advertising, consistency in price realized, attendance, badgering or excess chatter by the auctioneer, frequency of sales, types of sales, and anything else that caught my attention.
I would approach the owners of the three auction companies that I thought could best help me learn the antiques business with the following proposal. I would offer to work between 40 and 50 hours each week for one year free in exchange for the knowledge I would gain handling many thousands of antiques and collectibles. Of course, I could not work full time for all three auction companies. I would work full time for the company that offered me the best deal and try to work part time for one or both of the other two.
A crash course such as this will cost between $25,000 and $35,000 or more depending on your current income. Compare this to the cost of a formal college business education.
Regardless of the type of antiques business, money producing, collection building, retirement, or hobby, that business is more likely to succeed if the owner has set clear and precise goals and has developed a business plan directed towards achieving those goals.
As many of you are aware, our friend Ed Welch passed away in October, 2012. His wisdom and entrepreneurial spirit will be greatly missed. At the request of many of our loyal readers we’ve decided to publish some of their favorite columns from past years.