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Being Paid for What You Know

Being Paid For What You Know – Business of Doing Business – The Journal of Antiques and Collectibles – November 2005
By Ed Welch
Antique dealers make money in direct proportion to the knowledge they possess. In plain English, the more you know about antiques, the more money you will make.
The antique trade is so complicated that no one dealer can know everything about everything. The secret to success is to know everything about those items that you normally buy and sell. In order to do this, a dealer must buy an education and develop research skills.
It is acceptable for a dealer to look at an item and ask, “what is it and how much is it worth?” It is also acceptable for the dealer to purchase such an item. However, it is not acceptable for the dealer to sell that item until he or she knows exactly what it is and exactly how much it is worth.
In the early 1960s, I was an automobile mechanic. For those old enough to remember, I sold Atlantic Richfield gasoline. I had several employees and a profitable automotive repair business.
From a showcase in my waiting room, I sold small antiques, usually early firearms. My waiting room was furnished with antique furniture that I also sold.
One day I replaced a muffler on a Buick that belonged to the Chairman of our local School Board. The muffler cost $18. The labor charge was $4.50. Two clamps and a muffler hanger added another $1.25. My gross profit on this job was $8.50.
My customer was extremely upset about the high cost of the work. He complained about the expense of the muffler. He complained about my labor charge. He paid his bill vowing never to visit my shop again.
I was upset for several days because I believed my prices to be fair. In addition, a few weeks before, I had sold to this person a country made Chippendale desk on which I made $150. This man is now retired and works part-time as a greeter at our local Wal-Mart. Every time he smiles at me and repeats the greeting, “Hi Ed, welcome to Wal-Mart,” I want to take him aside and say, “thank you.”
I want to thank him for being one of the reasons I decided to sell my service station and become and antiques dealer. I would also thank him for the fact that as a school board member for more than 20 years, he did a fantastic job for our small town. Finally, I would like to ask him if he still owns that Chippendale desk. I would gladly give him a tidy profit to buy it back.
As a service station owner, I was well prepared. I had taken many high school and college courses on mechanical theory and automotive repair. I had taken courses in business management and retail sales. I knew how to make money running a service station.
As a full-time antiques dealer, I was an idiot. I paid too much money for items and sold them for too little profit. I refused to buy items that I could make money on because they were low-grade and I considered them to be beneath the quality of the antique business I was trying to operate.
When I sold antiques from my waiting room as a part-time dealer, I made good profit on everything I sold. As a full-time professional dealer, I was responsible for making enough money to support my family. This I failed to do for several years. I worked extremely long hours for very little money. I bought and sold many items every week. However, after paying business expenses, my labors did not produce enough profit to support my family.
An old-time dealer from Dover-Foxcroft, Maine came to my rescue. He had been a customer for several years. He knew that I was not doing well as a full-time dealer. One day, after making several purchases, we sat at my kitchen table eating strawberry rhubarb pie that my wife had just made and drinking coffee. The conversation turned serious when I told him that I was not doing very well as an antique dealer and was thinking about finding a real job.
He asked my permission to speak bluntly. Of course, I told him to do so. What else can a person do when asked such a question?
“Ed,” he said, “Your problem is that you work dumb, not smart.” He called my attention to a stained-glass window that I had just sold to him for $350. He asked, “Did you notice that this window is signed by the designer?” I had to admit that I had seen the signature.
“Did you look up the artist,” he asked. I had to admit that I had not.
“Do you know how much this window is worth,” he asked. I had to reply, “no.” He then informed me that the window was worth are around $3,000 and possibly more. He also stated that he would have paid between $1,000 and $1,500 to purchase it. He went on to say that he was not about to give me any more money now that I knew what the window was worth. He added that his advice was more valuable than any amount I could possibly make on the window. I remember him saying that I could continue to work dumb or I could educate myself.
Keep in mind that at that time there were no trade papers running articles about the history and value of antiques. Research involved spending long hours in museums and libraries. Research involved attending auctions and shows to gather first hand information on selling price. I never did find out how much money he got for the window. He died several years later. He was a customer until the end. I hope that he never got another deal that good from me. However, I am not certain.
I paid nearly $30,000 a year to put my oldest daughter through college. My two younger children chose to go to state universities and their college education cost much less. Still, the cost of a college education for three children was close to $200,000. As a parent, I am fortunate that my children now have jobs that are challenging and rewarding. I have friends in the antique trade who have spent much more than I educating their children.
The cost for an antique dealer to educate himself or herself about a new product is between $3,000 and $10,000 depending on the type of antique or collectible studied. Collectibles are cheaper and easier to learn about. The cost to study an antique can be expensive.
In 1982, I took a trip to Tettau, Germany (Bavaria) to visit the factory that makes Royal Bayreuth China. I spoke with the owners of the factory who were descendants from the original founders (1794). I was given a tour of their factory. I was allowed to take notes, speak with employees, and I was encouraged to try to perform some of the steps needed to produce a piece of china. I tried to apply handles to cups and teapots. I discovered that this process requires great skill. I did much better at molding plates and platters.
I was given free access to their private museum in which they keep examples of everything they have ever made. I was given records and copies of their bottom stamps that they change every three months. I was taught how to interpret the changes in their bottom stamps. With this information, I can date most any piece produced at this factory to within three months. I spent nearly a week working and studying at this factory. I also visited other porcelain factories in Germany, France, and the UK. The total cost of this educational trip was less than 20 percent of the cost of one year at a private college.
I no longer deal in porcelain. I quit doing so when this field became overpopulated with collector/dealers and hobbyist dealers driven by emotions and willing to pay increasingly higher prices for items they wanted for their collection or inventory. Nevertheless, the payback for this education has been considerable and continues to this day. Every year I purchase several rare pieces at very favorable prices.
I have a good friend who has been to Poland three times to study Old Ivory China. She has written two books on the subject. I have not discussed with her the returns on her educational expenses. I do know that she has an active business in Old Ivory China. I would not want to bid against her at auction.
I have another friend who has more than 5,000 fountain pens in inventory. He also has file cabinets full of factory records and catalogs. How would you like to bid against him at auction?
When a dealer spends the money to educate him or herself about an antique, buying decisions cease to be emotional. An educated dealer knows the value, both wholesale and retail.
Educated dealers buy 99 percent of all sleepers. True, a dealer cannot make a living depending on finding sleepers. Still, finding sleepers can add thousands of dollars to the bottom line of any antiques business.
I paid $157 to buy my last sleeper. I sold this item for $1650. The dealer who sold this sleeper to me had a busy year. He bought the item as part of a large collection. He guessed at its age, origin, and value.
He made a mistake common in the trade. He sold an item he knew to be rare and unusual without taking the time to do research. His failure to do research cost him about $1,500.
The reality in the antique trade is that if you do not spend thousands of dollars educating yourself, you will loose many thousands of dollars selling antiques for less than they are worth. Worst yet, you will fail to buy the item in the first place and make nothing at all.

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