The Best of Ed Welch: Money Making Techniques
By Ed Welch
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. Many thanks to Ed’s wife, Marilyn for her permission.
Developing a business plan is the best method of creating a profitable antique business. Many practices and procedures go into making a business plan. Items to be considered include: what kind of antiques will I carry, where will I buy these items, where will I sell these items, how much can I pay for a given item and how much will my business costs me to operate?
No two antique businesses are created equal. Each antique business must have its own business plan. A dealer’s age, gender, enthusiasm, energy level, education, income, work ethics, commitment and other such things will play a part in developing a business plan.
Most new dealers have a mind’s eye concept of the antique business they would like to create. However, a mental conception of an ideal business is not a business plan. Most antique businesses turn out to be something other than what the creating dealer envisioned.
A business plan is a living thing. A formal business plan must be in writing so that it can be altered, added to and amended as often as necessary. It can and must be updated as market conditions change. Antiques come into fashion and fall out of favor constantly. The cost of doing business changes and personal assumptions change. If your business plan does not make allowances for change in market conditions, adding new items to your inventory, deleting unprofitable items, purchase price reviews, selling location changes and the many other things that a antique dealer must constantly watch, chances are that your labors will not generate sufficient income to keep your antique business exciting and rewarding.
I once did business with a person who specialized in Windsor chairs. He became an expert on Windsor chairs. His stock was small but always impressive. He managed to run a profitable business for about five years. When the supply of Windsor chairs dried up and therefore became expensive, his rigid business plan allowed for no alternatives. He is no longer in the antique business. He now sells spars and hot tubs and, true to his nature, they are the very best and most expensive on the market.
I am often asked to come up with the best ten business techniques, practices and procedures that should be included in all business plans. Such a list is impossible to create because no two dealers are alike. To be quite honest, I hate lists of ten. Generally, such lists are narrowly focused and many of the objectives are impossible to achieve. For example, the ten best ways to lose weight.
There are no ten ways a person can lose weight. The only method that works is to eat less and exercise more. Now, if a person created a list of ten things he or she would do to eat less and another list of the ten things he or she would do to exercise more, these two lists together would work for the person who created them. The two lists would not work for you and me or for anyone else because the lists would be too personal in nature.
Ten business techniques that will work from most antique businesses.
1. Keep accurate written buying and selling the records. List all the costs associated with buying such as travel, hotel, buyer’s fees, cleaning, and restoring. List selling costs such as booth rents, auction fees, travel and hotel expenses. A dealer must know the exact cost of buying and selling every item that passes through his or her business.
2. Send a thank you card to every person who buys anything regardless of the selling price of that item. Read the above sentence 500 times. Make copies and paste those copies on your refrigerator door, the dashboard of your automobile, on every box you use to pack your merchandise. Make a copy in large type and paste that copy on your forehead. If you want to make money in the antiques trade, send thank you cards.
3. Send invitations to your customers to visit a show when you will be in their area. Send notices to your customers to visit your booth in a group shop when you have added major items or many items such as a collection. Send a notice to your customers to buy directly from you when you have made a substantial purchase such as the purchase of a complete estate or a major collection. Send individual notices to specific dealers and collectors when you have bought something they collect or purchase for resale.
4. Send a Christmas card to all of your customers. Always hand-address the envelope and add a small personal note with your signature to the bottom of the card. One of the most successful antique dealers that I know has a Christmas card list of more than 9000 individuals (you read the number 9000 correctly). I have been in his shop in October while he is addressing and signing Christmas cards. I once asked him about the expense and the commitment of time involved in sending 9000 Christmas cards. His reply was a full-face grin and the words, “I think about my customers and my customers think about me.” This dealer has changed his business style three times in the 36 years that I have done business with him. At first, he sold at flea markets and low-end shows. For many years, he operated a mid-level antique shop. Finally, he specialized in one specific item. After all this time and all these years, I still get thank you notes and Christmas cards from this dealer.
5. Research the items you sell. If you sell porcelain, research the maker, the number of years the maker was in business and learn to identify all the marks that are stamped or printed on the bottom of many pieces. Buy and read every book you can find on the subject. Join collecting clubs. Visit museums and visit dealers and collectors who are interested in the types of porcelain you intend to carry. Go to auctions, shows and group shops to learn first-hand the asking price. Often, the common selling price is much less than the price printed in price-guide books. If you come across a rare piece, do not resell this item until you know exactly what it is and how much it is worth. You should also check selling prices on eBay. Be careful – eBay, with a few rare exceptions, is the Wal-Mart of the antique trade. Generally, eBay prices are bargain basement prices. At one time, I could receive up to 10 times the Brimfield price for items that I sold on eBay. Today, the reverse is often true. I recently purchased an item on eBay for $279 and resold that item at an antique show for $1750.
6. Buy and sell within a given level of the antique trade. The antique trade, as a whole, is divided into ten levels based on selling price. Level 1 is the flea market trade; level 10 is the trade in period antiques and works of art by known artists. Most dealers operate at levels four, five, and six. They do not carry the cheapest items and they do not carry expensive items. It is difficult for a flea market dealer to receive full retail value for a level five or six item. It is nearly impossible for a flea market dealer to receive full retail value on a level ten item.
7. Men, wear a suit or sports jacket and tie when you meet with your customers. Women, wear business attire. Whether we like it or not, we are judged by our appearance. If you want to be successful in the business of antiques, dress for success. The one exception to this rule is for dealers doing business in the flea market trade.
At the high end of the antique marketplace, a dealer must spend a substantial amount of money and time on appearance. It is difficult to sell a $20,000 antique dressed in faded blue jeans and wearing a torn shirt. At the mid levels of the trade, items that sell for a few hundred to several thousand dollars, a sports jacket and tie is a necessity.
8. When you sell in person from your own shop or at an antiques show, expect to receive a premium price for each item sold. The premium price is the result of the seller injecting his or her personality, knowledge and enthusiasm into the selling process. When you sell at auction or from a group shop, expect to receive less money for each item sold. The major factor influencing sales at a group shop is selling price. If the selling price is perceived to be low enough, a sale results. If the selling price is perceived to be too high, no sale is made. Dealers who sell in person can pay slightly more for an item than dealers who do not sell in person. Adjust the price you pay to the selling method you use.
9. Keeping your chosen level in mind, overpay for the best, and underpay for everything else. The best will always sell no matter what the price is. All other items are hard to sell unless the price is cheap. The only way to sell cheap is to buy cheap.
10. Control your emotions. Make buying decisions using your brain not your heart. I have heard many dealers say, “Keep the best, and sell the rest.” This is precisely the wrong way to run an antiques business. Dealers should buy and sell only the best. If you cannot control your emotions when you buy certain antiques, simply do not deal in these items. Instead, buy and sell something you hate.
Folks, use this list to create your own personal list. I send thank you cards for every sale that I make. I do not send Christmas cards although I know that doing so will result in more business. I also keep my “active” customer list to less than 350 names. If a buyer does not make at least one purchase in two years, he or she is moved to my “Inactive” customer list. Inactive customers receive invitations when I do a show in their area. Inactive customers receive notices when I buy estates and large collections. However, inactive customers do not receive the two catalogs of my merchandise that I produce each year. My catalogs are expensive to produce and expensive to mail.