| A collecting/trading business can be a lot of fun; after all, you're still working with your hobby, even if you're out to make a profit. Let's look at what's good and what's bad about this particular business model. Pros What are the good points about basing a business around your hobby? Here are a few of the pros: It's your hobby, so it should be fun. The theory is that since you like collecting this type of item, you'll also like the business of selling it. If you like collecting soap opera magazines, a business based on selling soap opera magazines should be more fun than working in an office and filing forms. If it's not fun, why do it? You already know a lot about it. This assumes that you don't start collecting an item the day before you open your eBay business. If you've been collecting for a few years, presumably you've gained some expertise. All that research that typically gets done before launching a business, you don't have to door at least, you don't have to do as much. If you know what you're doing (collection-wise, anyway), moving into a business environment won't be that difficult. There are established rules. Most collectible categories have their own established ways of doing things. If you collect comic books, for example, you know that there's a certain grading system to use, a certain way to store and pack the books, and so on. You don't have to reinvent any wheelsjust follow the rules that everyone else follows. You already know your customer base. One of the key things about selling is to know who your buyers are. If you're a collector, you already know other collectors. You know your customers; you know what they like and dislike, and what they'll pay big money for. That's a big head start over starting any other type of business. There's always the hope of a big score. The holy grail of any collector is to find that one item sitting in someone's attic or lying on a penny table at a garage sale that you can sell for $10,000 to informed collectors. While you might never find that holy grail, what other business offers the opportunity for that type of score?
The main benefits of running a collecting/trading business, then, accrue from the fact that you're already involved in this category, as a collector. You know what you're doing, and turning your hobby into a business is a relative small step. Cons Now that you know what's good about this type of business, let's look at some of the challenges. They include You can only do as well as other collectors. Collecting is rather predictable, the search for a holy grail aside. Yes, there are ups and downs and some guys are better at it than others, but most collectors are going to do just about as well as other collectors in the business. The opportunity to break out from the pack is small. You're stuck if there's a market downturn. If you're a collector, you're presumably focusing on a single type of collectible. What do you do when the market goes bust? If you're buying and selling vintage slot cars and the slot car market goes soft, you're pretty much stuck. The lack of diversity can be a big business risk. Do you really want to sell your private collection? Most collectors get started in business by selling the very items they've been collecting over the past several years. Do you really want to part with your precious collection? You may need to build up an inventory of items less valuable to you, or set aside part of your collection as not for sale, to avoid seller's remorse. Hunting for new items to sell can be challenging. Collecting can be a lot of fununtil you're literally forced to find more stuff to collect to feed your business. For many collectors/sellers, the hunt for new merchandise takes at least as much time as they spend on managing their eBay auctions. Do you have the right stuff to be on continuous watch for new collectibles to sell? Grading/authentication/packing can be costly. If you're collecting items that are expected to be graded or authenticated, make sure you factor those expenses into the cost of running your business. Additionally, you may need to purchase specific mounting or packaging supplies to meet the expectations of your customers, and that might be a tad more expensive than sticking a coin into a first-class envelope. If it's a business, it might not be fun anymore. This is probably the biggest risk of running a collectibles-based business. If you have to do it full time, for money, it's not a hobby anymoreit's work. And work isn't always fun. I've met quite a few former hobbyists who got burned out when they went pro. If you want to keep loving what you do in your spare time, think twice about doing it full time.
Bottom line, running a collectibles-based business has the same risks as running any other type of businessplus a few. The biggest risk is the exclusionary nature of it; many risk-averse businesspeople prefer to have a more diversified product mix, to protect against downturns in any single category. If you can get past that, however, there's a lot to be said for this business model. |
