Collecting coins has been a much-loved hobby for coin enthusiasts for a long time. But do you know that coins can also be a profitable business? Being a coin dealer is a good way to earn money as coin collectors look for coins to complete their collections. Some people also act as investors, speculators, hoarders, and inheritors of coins. Whatever the transaction is, a coin business can earn, especially if you have the right knowledge, guidance, and tons of passion for maintaining it. Here is a guide to help you get started.
An Overview of the Coin Collecting Business
Regarded as an annual multibillion-dollar business, the coin industry has evolved a lot in the past decades to accommodate the growing needs of the coin collecting market. There are at least 5,000 active coin companies in the U.S., from small outlets to large-scale businesses. As recorded, the top ten of these coin outlets have generated more than $100 million per year. The market for coin collection is also anticipated to expand and welcome more participants, including international players.
Possible Threats That May Affect a Coin Business
Like any other industry, the coin collection industry has been affected by a lot of factors. During the depression, transactions have slowed down as people’s purchasing power has weakened.
Government regulations may have also hampered the business from thriving with the lack of knowledge as to how the industry works. This misunderstanding resulted in the government’s creation of new tax policies intended to level the playing field among physical stores and online shops engaged in the coin collection business.
These policies can be restrictive and limiting to coin business operators. Issues on counterfeited coins also affected trust levels among dealers and players from time to time. Despite factors affecting its forward growth, the coin collecting industry continued to thrive.
Starting Your Coin Business
1. Decide whether to start from scratch or buy a franchise.
Starting from scratch gives you the freedom to manage your business depending on your budget. But there will always be a risk of making certain mistakes. Buying a franchise may be expensive, but you will not have problems attracting customers anymore or buying genuine coins.
Just make sure to check the franchise’s inventory and niche of the seller. Having a well-thought business plan will also give you a clear sense of direction and projected growth of your business.
2. Be knowledgeable about numismatics and coin collecting.
Knowledge of numismatics may come in handy when you have been a coin enthusiast for a long time. However, if you are new to this kind of enterprise, it is best to be familiar with the newest, rarest, and most traded coins and challenge coins in demand. You may also want to research challenge coin custom designs that organizations in your immediate community usually need.
3. Decide which legal entity you want your business to be classified.
Choosing the legal structure for your business will dictate its short- and long-term operations. The most common legal entity options are the sole proprietorship, general partnership, limited partnership, limited liability company (LLC), S Corporation, and C Corporation. You have to brainstorm the pros and cons that come along with these options. If you want a second opinion, consider hiring a lawyer with a rich background in the coin business.
The lawyer should enhance your knowledge of intellectual property and trademark laws that will be useful for your business later on. They should also advise you with the list of legal documents that you need to get your business started.
4. Get insurance to protect your business.
Like any business in the U.S., a coin business should have an insurance policy to protect it from liabilities. This is to protect your finances and your customers’ well-being and satisfaction from possible theft or counterfeiting. Remember that you are dealing with expensive, rare coins that may attract, so it is best to anticipate worst-case scenarios and their possible solutions. Consider discussing the matter with an insurance agent or broker who can discuss the best insurance policy for you.
5. Decide on the location and layout of your workspace.
The location of your business office matters a lot and will influence your enterprise’s success in the future. Customers would like to transact in visible and accessible shops near other shops that they may want to visit later on. You do not have to spend a lot of money advertising your business if it is located in a very accessible area. The location will also determine your shop’s layout, equipment, and renovations that you are planning to make.
When starting a coin collection business, prepare to give your best shot from the business planning, settling the business’ legalities, advertising, and overseeing business operations. We cannot deny the presence of existing and successful coin collection businesses, so you may want to observe and learn from these shops. Also, availing of services of a consultant who will help you advertise and market your product more will give you an advantage.