Do you want to start a coin collection business? If YES, here is a complete guide to starting a coin collection business with NO money and no experience.
Okay, so we have provided you an in-depth sample coin collection business plan template. We also took it further by analyzing and drafting a sample coin collection marketing plan backed up by actionable guerrilla marketing ideas for coin collection businesses. In this article, we will be considering all the requirements for starting a coin collection business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Coin Collection Business?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start a Coin Collection Business?
There are several reasons why people collect different types of coins. Some collect coins as a hobby, some to deal in, some as an investor, as a speculator, as a hoarder and as an inheritor. Coin collectors who are experienced in the field usually have hundreds and thousands of coins in their possession and this fact is bound to scare a new entrepreneur.
However, you can still be a successful coin collector no matter how late you start as long as you know the different types of collectors that exist, the popular types of collection themes and how you can purchase your coins from dealers physically and from the internet.
In starting this business, you will need to consider your budget as this is one very important aspect of starting this business. There is one thing you will need to consider and that is how much you are willing to invest in your coin collection business especially if you intend to build an extensive collection.
As an entrepreneur in the coin collection business, you will need to spend on acquiring coins, purchasing storage boxes and envelopes as well as attending shows and conventions. Therefore, you would need to create a budget that you would be comfortable in and one that won’t add a strain onto other areas of your business.
Knowing the popular coin collection themes is important especially if you intend starting your coin collection business as a dealer (someone who collects coins to sell). There are numerous coins available based on type, categories and variety.
However the most popular themes that coin collectors usually look at are the ones that are; by country, by type, by year, by error, by subject, by mint mark and by period. You might as a dealer decide to engage in all the coin collection themes or you might simply choose the themes that you prefer to focus your attention and money on.
In order to become a coin dealer hoping to generate revenue that will grow your business, you need to understand that coins are very accessible and can be found almost everywhere. However, because you intend to run this as a business, you might need to purchase coins in order to add to your collections or to obtain valuable coins.
Starting a Coin Collection Business – A Complete Guide
1. Understand the Industry
The coin collecting business is regarded as one that is an annual multi-billion dollar business. The market has seen a lot of evolvement in past decades. The united states of America has at least 5,000 active coin companies which range in size from a one man operation to those that are employing hundreds of employees.
The industry has no dominant company with a market share but at least ten companies generate more than $100 million per year. There are a lot of mass marketing companies that generate more than $100 million annually in sales. The coin collection market is therefore estimated to be more worth than $3 billion annually in the United States of America.
The coin collection market is one that is expanding to include international players as there are no strict categories of players in the market. For instance, those that are said to collect coins as a hobby also sell their coins as well. The growth in the coin collection market can be said to be due to the ‘wealth effect’ influencing many investors.
Even though the industry slowed a bit during the depression but the stability of the stock market has seen consumer confidence increase as they now have disposable income available to purchase these coins. This has created more wealth and confidence in the market.
Government regulations may however have much impact on the coin collection business especially as regards its market size. This is because of the intended new policy regarding the collection of sales taxes across state lines in order to provide a level playing field for traditional brick and mortar stores as well as those operating via the internet.
The policy if implemented might have a huge impact on the industry as well as for players as the government and even most people do not totally understand the market as most of its activities usually fly under the radar. This has allowed only few funds with considerable capital to engage in trading rare coins from an investment point of view.
The coin collection business industry is having a hard time dealing with counterfeit coins as most of these coins have poor quality or are perfectly crafted as to require a close examination or a third party verification. Most of the counterfeit coins according to industry analysts originate from China and this is causing a huge strain on the coin collection market especially as the government and law enforcement agents aren’t taking much interest in this market, thereby causing a lot of people to lose their investment with no means of recouping it back. Since most issues regarding counterfeits usually come from people who buy from unknown dealers at what they regard as a bargain price, it has had a huge impact on the market.
The coin collection market is experiencing a bit of quiet as unattractive coins are only getting sold when offered at a discount. Most coin shops have had a drop in volume and as a result only few fresh coins are coming into the general market. Collectors, especially the wealthy ones, are now more interested in collecting rare coins as these are the kind of coins that are doing very well in the market.
Also rare coins are seen as an alternative sort of investment and this reason has also attracted several foreign buyers into the coin collection market. This is also why many coin collectors are focusing on buying few great coins as opposed to buying different series.
The coin dealers market had a tough time in Minnesota 2013 as a regulatory regime was created and this stopped many dealers from engaging in their coin collection business. The law came up as a result of unscrupulous dealers who exploited the citizens of Minnesota especially the senior citizens by making promises that were not kept as regards the coin business collection. However after having gone to court, the regulatory law was repealed with a new law put in place that exempted collectors and businesses that sell for less than $25,000 from the regulatory law.
The industry has had to incorporate the fair market value in selling or buying coins. This term is mostly used depending on the rarity of the coin. The fair market value which is what a dealer charges on wholesale price for a specific coin and can be determined by searching the marketplace to find what the lowest wholesale price for a coin is.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the purchase or sale of rare coins is not restricted to dealers and investors alone but to speculators, hobbyists, inheritors and hoarders alike. This therefore means that it could be any individual especially as the internet has caused a spread in activities allowing for more people to participate.
Therefore if you are looking towards defining the demographics for your coin collection business you should make it as all-encompassing as possible as you would need to include corporate organizations as well as foreign players.
3. Decide Which Niche to Concentrate On
Coin collection is a very interesting but difficult market as coins collected follow a collection theme that might not be easily identified by the market but instead by other players in the industry. There has however been an increasing adoption in the collection of coins for investment, business or leisure purposes. This has been the driving force of the market and it is expected to continue that way.
However, there are some restraints in the market which is due to a thorough regulation of the market by the government and increasing counterfeit coins in the market, which has affected business performance. However, to stand out in this industry, you might need to engage in several niche ideas.
Some of the niche ideas that you might decide to major in when starting your coin collection business are;
- Coin collection
- S Paper Money
- Ancient Greek Coins
- S Colonial Issues
- Large Cents
- Morgan and Peace Dollars
The Level of Competition in the Industry
The level of competition in the coin collection business market has no dependence on the location of the business because a dealer can make use of the internet by setting up shop in several e-commerce sites and still effectively compete with other dealers in the global market.
Before you start the coin collection business however, it is essential that you get acquainted with some of the fundamentals of numismatics so as to have an understanding of coin types, mint marks, grading, value trends as well as key date analysis. This knowledge will help you determine which coins to buy so as to be able to effectively compete in the market place against your competitors. What most clients want when buying coins is to deal with those that are honest in providing true coins and not the counterfeit regardless of their location.
There are several coin collection businesses in existence in the United States of America and on the internet. eBay alone is one of the sites online where coin enthusiasts gather to deal in the sale and purchase of coins. This has caused a lot of competition in the market place as most coin collectors are selling below the book value. It is those that collect coins who then determine the trend on which the industry would run.
4. Know Your Major Competitors in the Industry
Even though the coin collection business isn’t one that has a dominant share of the market, there are many brands that have stood out due to several factors such as their performance, their length of time in the industry, their coin collections, their marketing and publicity strategies as well as their being proactive in a volatile market.
Below are therefore some of the leading coin collection business or brands in the United States of America as well as globally;
- Goldberg Coins
- Sarasota Rare Coin Galleries
- Bozarth Numismatics Inc
- MF Rare Coins
- Collectors Universe
- Blanchard and Company
- Integrity Coin Store
Many wealthy investors have continued to invest in treasure assets that are regarded as non-financial in an attempt to diversify their portfolio. According to industry analysis, millionaires globally devoted an average of nearly 10 percent of their money to nonfinancial assets such as coins and other collectibles.
Rare coins have gone up for over 248 percent in the past decade according to a 2013 wealth report. The report also found that the wealthiest people in each of the United States were 19 percent richer than they were the previous years.
Rare coins and other collectibles are considered to be safer than stock even though they carry their own risks as well. According to analysts, coins are alternatives that are regarded as speculative investments as they do not produce income neither do they have a future productive capacity.
Rare coins are usually traded through dealers and auction houses or even by individual owners, however, since the market is largely unregulated, it makes investors become targets of fraud. However, authorities and regulated authorities have started warning investors on the potential steps to take in order to minimize fraud which include conducting advance research about the coins to be purchased and also requesting full disclosure from the vendor regarding the source and market value of the coins. However asides fraud, there is also the risk of theft as it easier to steal coins because of their size.
Rare coins are treated as capital tax and therefore no tax is imposed on them even as they appreciate in value as the coins are only taxed when they are sold which brings the tax rate down. When engaging in rare coin collection, it is usually best to buy through a dealer than from an auction house, this way you are able to avoid the fees and markups that come with auction houses.
5. Decide Whether to Buy a Franchise or Start from Scratch
When it comes to starting a business of this nature, your best bet is to know what niche you intend to start in and then start your business from the scratch. Starting from the scratch might lead you into making certain mistakes but as long as you have rudimentary knowledge as regards the coins you intend to collect and how to grade them, then you are ready to start and run your coin collection business.
However, starting your business from scratch will need you to possess managerial abilities as you will need to decide the best location for your business, as well as how to attract more customers to your coin collection business.
While the coin collection business can be dated back to biblical times, the industry is not yet regulated and structured enough for the franchise system. Buying a franchise would have been easier as you would not need to source for genuine coins or attracting customers but this is not so as you will either need to start form the scratch or buy an existing business. When buying an existing business, you will need to check through the inventory and niche of the seller and decide whether you want to improve on the niche or just focus on that.
6. Know the Possible Threats and Challenges You Will Face
Every business no matter the industry it is situated in usually has to deal with threats and challenges and the coin collection segment is no different. If you therefore decide to run your own coin collection business, you will need to be prepared for any challenges and threats that may arise.
Some of the threats and challenges you might face during the course of starting your own coin collection business in the United States of America are the lack of government policies which has caused the industry to be regularized or properly structured; economic downturn which will affect people’s purchasing power and the arrival of new entrants into the market place. There is really nothing that can be done about challenges and threats, except remaining proactive.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
Deciding what legal entity is best for your business is very important as the legal entity you choose will have an impact on your business in the short and long run. There are four main factors that you should take into consideration if you are deciding on what legal entity to choose for your coin collection business and they are; ease of admitting new owners or investors, taxes, ease of transferability as well as personal liability limitation.
If you are however not convinced on the best legal structure to choose for your coin collection business, you can approach an attorney or accountant with the necessary experience to help you out.
There are different kinds of legal entity options that are available to an entrepreneur and they are, sole proprietorship, general partnership, limited partnership, LLC, an S Corporation and a C Corporation. Each of these legal entities has its own pros and cons and it is after weighing these pros and cons that you can decide what is best for your business.
A sole proprietorship kind of legal entity is very easy to set up and organize as all the owner needs to do is to get the required business license to start the business. While taxation is usually simple under this legal entity, the sole proprietor is however personally liable for all the debts and obligations incurred by the company.
A corporation is a legal entity where the business is regarded as a separate entity from the owner(s); this way, the owners are protected from any liabilities incurred by the company. The corporation is harder to set up and has so many formalities and you would require an attorney to help you set up this kind of legal entity.
A Limited Liability Company (LLC) is a hybrid form of legal entity as it provides the owner with benefits of a corporation in terms of separate entity and the benefits of a partnership in terms of taxation. However, with an LLC, the entrepreneur cannot seek for venture capital or any other substantial financing. Many entrepreneurs usually go for this option.
8. Choose a Catchy Business Name
Choosing a business name for your coin collection business is very important as the name you choose will have an impact on how your business is perceived. The business name you choose for your coin collection business must be creative, unique and easily memorable.
If you are therefore considering what names to use when starting your own coin collection business, here are some names you should try;
- Schummers Coin Dealers
- Rare Coins and Memorabilia
- Stu’s Coins and Metals
- The Coin’r Store
- Pennies and Cents Collectors
9. Discuss with an Agent to Know the Best Insurance Policies for You
Having insurance policies when running any business in the United States of America is very important as without having insurance policies, you might end up paying for liabilities from your own pocket which might eventually ruin your business.
Because you are trading in coin collection, insurance is very important to protect your business against fraud and against theft of your coins. If you are however not sure of the insurance policies you should purchase, then it is necessary that you meet with an insurance agent or broker who will advise you as regards the best insurance to purchase for your business.
Some of the basic insurance policies that you should therefore consider purchasing if you intend starting your coin collection business in the United States of America are;
- General Insurance
- Liability Insurance
- Workers’ Compensation Insurance
- Payment Protection Insurance
- Business Owner’s Policy Group Insurance
- Fidelity Bond insurance
- Employment Practices Liability Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
This is a collectibles industry and as such there is nothing that requires protecting. Intellectual property protection chiefly applies where there is a new idea or invention and this is not so in this industry.
11. Get the Necessary Professional Certification
Most people that go into this business usually have developed the habit of collecting coins from their childhood or rare artifacts. This therefore is not a business that requires any certification professionally before one can become a player in the industry.
Also, the industry is largely unregulated and not well structured and therefore players can enter or leave at any time. Also, one does not have to be in the business in order to participate at a seller or a buyer and therefore there is no need for professional certification of any type.
12. Get the Necessary Legal Documents You Need to Operate
Even though the coin collection business might not be as regulated and structured as some other forms of business, you will still require some basic legal documentation if you intend to start and run your coin collection business legally in the United States of America.
The U.S authorities are very strict about documentation for any business especially if you intend to trade for profit and the penalties are usually severe. Therefore, in your best interest, you might need to engage the services of an attorney who has the experience in this field to help you determine what legal documents you would need to run your coin collection business.
Some of the basic legal documents that you should have in place if you intend running your own coin collection business in the United States of America include;
- Certificate of Incorporation
- Operating Agreements
- Business License and Permit
- Business Plan
- Insurance Policy
- Employment Agreement
- Seller’s Permit
- Federal Tax Identification Number
- Employer Identification Number (EIN)
13. Raise the Needed Startup Capital
If you intend to become a well-known and reputable dealer, then having the necessary start-up capital for your coin collection is very important. While knowing about the collection themes of a coin is important as well as how to grade the coin, it is essential that you are able to put some amount of money into ensuring that you make gains with your knowledge.
This is why it is important to have a business plan as a business plan will convince those you intend approaching to invest in your coin collection business. Therefore, some of the financing options you can explore when seeking for start-up capital for your coin collection business include;
- Raising money from your personal savings and sale of stock
- Getting soft loan from your family members and friends
- Applying for loan from the bank
- Getting the required capital from private investors and business partners
14. Choose a Suitable Location for your Business
Deciding where to locate your coin collection business is very important especially as most dealers run their business from home as this is not a business that requires you to be face to face with your clients all the time.
However, the fact that you can operate your coin collection business from home does not mean that location has no influence on how your business will grow and succeed. Most of the established and successful coin collection dealers are those who have a physical operation that they operate from and do not mind leasing or renting a facility to run their business.
This therefore means that the location where you choose to launch your coin collection business has a huge influence on the success of your business. There are several actors that you must consider when choosing a suitable location for your business and this includes ensuring that your location is visible and easily accessible to your intending customers.
If your location is not visible enough, you might have to spend more money to promote the location of your business to potential customers, which is why you should seek the advice of a realtor who would help you know what location would be best for your business.
Also, it is important that you create a budget for your facility so that you do not end up spending more than you should. If you intend to run your business from home, you would need to set up a website and look for credible e-commerce platforms where you can set an online store and run your business from.
15. Hire Employees for your Technical and Manpower Needs
When starting your coin collection business, it is always advisable to start on a small scale and then watch your business grow. Whether you choose to set up a shop or go online is purely your prerogative. However, you will need to be updated as regards all the information you will need regarding the coins.
Starting the coin business can be cheap or expensive, but if you are looking to have quite a collection, then you might need considerable capital to start up. This is why it is good to have your business plan in place especially if you will need a loan to start the business.
There are some basic equipment you will need to have in place when starting your coin collection business and they are; display cases, cleaning materials, jeweler’s eyepiece, phone and a computer amongst other things.
The employees you would need to run your coin collection business successfully are; chief executive officer (owner), business development manager and marketing executive, human resources and admin manager, accountant, front desk officer and coin grader.
In summary, you would need at least 6 key people in order to run your coin collection business successfully.
The Service Delivery Process of the Business
The coin collection business has certain processes that one must undergo in order to start and run the business successfully. The first is learning to grade the coins if you intend to run your business successfully and this doesn’t require you to be an expert.
Knowing how to grade the coins means knowing the difference between a good coin and a very good coin. This will help you as a dealer not have to over pay for a coin that has been overly graded on purpose. This is the reason why you need to get familiar with certified coins.
You have to know what coins are selling for by making findings on its current value in the market place. Also, you would need to buy the best coins that you can afford by studying the coin value table to know which coins have always been in high demand and which will continue to remain coveted by other coin collectors in the near or far future. In order to know what the best coins are, you will need to check the key date recommendations in the US Coin Type Pages.
Once you have purchased the coins you intend to deal in, you will need to get a store in which to display them or engage in auctions that will bring enough dealers, investors, speculators, and hobbyists to check your collection and buy from you.
16. Write a Marketing Plan Packed with ideas & Strategies
- Marketing ideas and Strategies
If you intend to become a dealer in the coin collection business, then you must be sure of how and where to market your coins. Marketing is the aspect of a business that helps an entrepreneur to generate the revenue needed to keep the business sustained and growing.
Also, aside from generating revenue for the business, marketing also helps to create the publicity needed to allow customers in the target market become aware of the business. Without engaging in marketing, you might just have to struggle with keeping your business afloat.
While marketing might seem easy, it is not so especially as you would need to study the market thoroughly to determine who your target market is, what they expect from your business and what you should expect from them as well. It is in knowing who your target market is that you would be able to know what niche you should concentrate on before creating marketing strategies that will enable you to market this niche to your intended target market.
In creating the market strategies that would allow you to not only penetrate the market and carve a share for your business but also one that will allow you to stand out and be able to compete favorably against your customers, you would need to use a combination of online marketing campaigns such as using the internet and social media platforms to placing adverts in local newspapers and on radio and television stations.
Alternatively, you can also seek the services of a reputable marketing consultant who knows and thoroughly understands the kind of business you are into and who has the experience in creating marketing strategies for businesses such as yours to create the right marketing strategies that would allow your business to grow and become a success according to your corporate goals and objectives.
The marketing ideas that you can therefore deploy for your coin collection business include;
- Ensure that your coin collection business is listed in yellow pages as well as in online directories
- Formally introduce your business to several associations such as the numismatics association, top coin auction houses and other stakeholders in the industry
- Place adverts about your coin collection business in local newspapers and related business magazines as well as on radio and television stations
- Post fliers and distribute your handbills and business cards in different strategic locations
- Use social media platforms such as Facebook, Twitter, Google Plus, and Linkedin to market your coin collection business
- Associate with other dealers online and offline in order to create awareness for your coin collection business
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you intend to start a coin collection business that will grow beyond the city or region where you are located, to be reckoned with nationally and internationally, then you must be ready to spend money in order to promote and advertise your coin collection business to your intended target market.
In promoting your coin collection business, you would need to understand what channels you intend to use (print media, electronic media or social media) so that this will help you create a budget and not to cause a strain on your overall budget. Most entrepreneurs usually combine all channels so that they would have a more effective result in creating awareness to the target market.
Due to the fact that there are already established coin collection businesses that have an already established customer base, you might need to engage the services of a brand consultant who thoroughly understands the market in order to create the necessary brand awareness campaign for your coin collection business.
Below therefore are the platforms that you can leverage on in order to boost the awareness and also create a corporate identity for your brand;
- Place adverts in local and national newspapers and related magazines as well as on radio and television stations
- Use your website as well as social media platforms such as Facebook, Twitter, Linkedin, Google Plus and other such platforms in order to promote and create awareness for your coin collection business
- Encourage your loyal customers to spread word about your business
- Install billboards in strategic positions all around the city where you are operating from
- Attend coin collection dealers associations and other forms of associations in order to network and create awareness about your business
- Distribute handbills and fliers in various target locations in the city where you are operating your business from
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