So, You Want to be an Antiques Dealer? – Business of Doing Business – The Journal of Antiques and Collectibles -August 2003
by Ed Welch
The antiques trade is the easiest of all trades to enter. You do not need a license. No training or level of education is required. No major capital expense is necessary.
A person can go to a yard sale with $15 in hand, buy a few old things, and then proclaim himself or herself to be an antiques dealer. The one legal requirement is that a dealer must have a reseller’s certificate and collect sales tax on items sold to anyone who does not have his or her own reseller’s certificate.
Do you have a few old things that you can sell? Do you have a little extra money to buy more? Do you have your reseller’s certificate? Have you proclaimed yourself an antiques dealer? Usually, this proclamation is saved until a seller asks, “Are you a dealer?” The correct answer, if you answered yes to the other questions, is “yes.” Any seller can ask this question. We are not formal in this business. Having completed all the requirements, you are now officially an antiques dealer. Welcome to our trade.
Here are a few facts about dealers in our trade that you may find interesting. People become antiques dealers for many reasons. The most obvious reason, making money, is not at the top of the list. In fact, it is not necessary to make money in order to have a successful antiques business.
The hobbyists dealer:
Many individuals become antiques dealers after collecting one or more items. Most hobbyists’ dealers do not collect expensive antiques. Instead they choose items that fit within the family budget. Generally, they choose items that sell for less than $500 each. When the hobbyists’ dealer resells, profit expectations are low to moderate. Dealers of this sort find this a rewarding experience. They can enjoy going to auctions, visiting group shops, and attending shows. They meet and make friends with others who share a common interest. Socializing and companionship is often more important than profit. Any monies they make support their hobby.
The prestige dealer:
More than a few individuals become antique dealers for the prestige of calling themselves “antiques dealers.” Usually, such individuals have a considerable amount of disposable money that they can use to buy the finest examples they can find. Prestige dealers tend to buy easily recognizable antiques such as Chippendale and Queen Anne furniture, Chinese export pottery, and paintings by known artists. Such high profile antiques are difficult to find at so-called “wholesale prices.” Therefore, prestige dealers are forced to pay top prices when they buy then try to resell their purchases for more. Obviously, making money is not the prime motivating factor for such a dealer. Prestige dealers are in the trade for many of the same reasons that attract the hobbyists’ dealer. The major difference is in the dollar value of the item bought and sold. Many prestige dealers take extended buying trips, usually to Europe, searching for merchandise. The entire expense of the trip is a business deduction whether or not the dealer is able to purchase anything that generates a profit. Losing money and while traveling on business can be a plus for individuals in the higher tax brackets.
Collector/dealers usually specialize in one type of antique. Collector/dealers are in reality sophisticated collectors. They resell only from necessity as they upgrade their collection. They are in the business to build a collection; selling is a necessary evil. Collector/dealers should disregard today’s selling price when they purchase items for their collection and buy only the finest examples. The finest examples are always priced high. However, today’s purchase price is not relevant to the value these items will have in 10, 20, or 30 years.
At auctions, the collector/dealer is the enemy of all other bidders. They are the biggest guerrillas in the forest. They can, in fact they should, pay too much for the items they buy. They are investing in a collection not buying cheap for short-term profit. Collector/dealers always have a hard time reselling items culled from their collection. This is also true for their buying mistakes and things they no longer want. This is true because they paid too much money when they purchased the item and have not allowed enough time to pass for inflation and market demand to generate a profit. Experienced collector/dealers must be careful when they purchase items for their collection and they must be willing to take a loss should they make a buying mistake.
The full-time and the part-time dealer:
Full-time and part-time dealers are easy to define: they simply do it for the money. They hate (best) or have no feelings (almost as good) about the things they buy and sell. If they can buy something for $1 and resell it for $5, they do so regardless of what it is.
A good friend of mine, a professional dealer, had the opportunity to buy 7 million Styrofoam balls for $7,000. The Styrofoam balls were part of an estate auction. Within six weeks, he resold the entire lot to a company that specializes in art-and-craft items. He made enough profit on this one transaction to buy a new truck and trailer, pay all of his son’s college loans, and help a second son start a new business.
I have bought tens of thousands of dollars worth of antiques from this dealer. I have bought many thousands of dollars worth of junk. I have never lost a cent on anything I have purchased from him. He buys cheap, he sells cheap. He will buy and sell anything on which he can make a profit. The bottom line for a professional dealer is short-term profit. If you can make money quickly, buy. If you cannot make money quickly, do not buy. A professional dealer generally deals in both extremes of the antiques trade, the very best and the very cheapest. Many other buyers, except the collector/dealer, are too timid to pay high prices for the best and/or too snobbish to buy the junk.
There are several types of retirement dealers. Professional dealers and collector/dealers often save a portion of their purchases to sell after they have officially retired. The collector/dealer is the best situated to make large profits selling part of a collection in his or her retirement. I am lucky enough, and have been in the trade long enough, to know several retired dealers and collectors. All of these individuals put things away to sell during retirement. These individuals are in their 80s. All sell only when they need a little extra cash.
Ironically, one collector/dealer who out-bid me for years at auctions is now selling me some of the best antiques that I have been able to buy in years. Items he bought in the 60’s, 70’s, and 80’s for more money than I could then pay as a dealer are now worth many times the price he paid. Another and more common type of retirement dealer is the person who is retired from a company, usually a large nationally known company. This type of retirement dealer is in the trade for fun, as a hobby, for social reasons, and for tax purposes. The tax advantages of traveling to sell and buy are enormous. One can literally travel throughout Europe buying and write off all the expenses. One can spend the winter in the South selling and write off the expense. One can buy a van or a SUV and write off the entire cost of the vehicle plus all the upkeep and fuel. A retirement business that simply makes enough money to sustain itself will add wealth to the dealer’s estate by substantially reducing his or her tax burden.
It is important that new dealers sit down with pen and paper and analyze the reasons they want to join the antiques trade. They must choose the type of dealer they wish to become. They must create a list of things they will need to accomplish in order to make their new business a success. If you want to make a lot of money, consider becoming a professional dealer. You must buy and sell a lot of junk, but you will also handle many very fine antiques. If you like being surrounded by fine antiques and making money is not important to you, consider becoming a prestige dealer. Need a tax shelter? Do you want to travel and have Uncle Sam pick up some of the expense? Want something exciting to do to get you out of your house during retirement? Want to meet new friends? Want to study, learn new things, do a bit of research? All of these things are possible when you become an antiques dealer after you retire.
To be a success at whatever type of antique business you choose to create, you must do those things required of that particular type of business. Here are a few things you will need to consider. How much money is available to buy stock? Will you handle low end, mid-range, or expensive items? How much time can you devote to the business? How much traveling do you want to do? Will you sell at group shops, at shows, through auctions, on the Internet, or all of the above? Will you buy at auctions, from other antiques dealers, by knocking on doors, or pick flea markets and yard sales? How much money are you willing to pay for research material? Can you do your own paperwork or will you need to hire an accountant?
Because every antiques business is different, every list will be different. This list is, for all practical purposes, a basic business plan. If you want to be a successful antiques dealer, decide which kind of business is best for your purposes and develop a business plan. Direct your energies to doing those things necessary to make the kind of business you choose to operate a success.