Wednesday, March 4, 2015

Pocket Change Coin Shop: small business report

Larry Comer started Pocket Change Coin Shop (517-663-7701) in 1991 after a life-long interest in collecting coins.  One day he was walking down Main Street in Eaton Rapids and he saw a "For Rent" sign in the window of a small shop.  He was instantly struck by the thought, "That would be the perfect location for a coin shop!" He is located at 121 South Main Street.  His retail space is approximately 10 feet wide by 16 feet deep.

Mr Comer researching coin prices
The Pocket Change Coin Shop hours allow locals to drop in during their lunch break or drive over after work.  Most clients live within 25 miles of Eaton Rapids, a radius that includes Lansing and Jackson.  The business is closed on some Fridays and Saturdays when major coin shows are held.  Mr Comer uses coin shows to increase his business's visibility and to purchase inventory.

Mr Comer also picks up inventory when people want to liquidate collections.  Mr Comer does NOT buy jewelry.  The valuation of jewelry is not straight forward and Mr Comer had some unfortunate experiences with people selling him jewelry that had been stolen.

Contact information

Two markets

The Pocket Change Coin Shop serves two distinctly different clienteles.

One clientele values coins for their silver (or gold) content.  That is, they see physical possession of precious metals as an important component of their investment portfolio.

The other clientele values coins for their artistic and numismatic value.

The silver bugs

Silver (and gold) bugs see precious metals as money with a longer track record that paper/fiat/electronic money.

Historic price of silver adjusted to constant 1998 dollars.  This kind of price distribution is ideal for dollar-cost-averaging if you assume that events that might force you to use your silver as money are the same events that drive its price up.

Dollar-cost-averaging is a buying strategy where the client purchases the same amount---in dollars---every period.  This is a no-brainer strategy that simplifies discipline and results in relatively more ounces being purchased when prices are low and relatively fewer ounces purchased when prices are higher.

These clients buy two kinds of products.  One of those products is "junk" silver.  That is, coins with silver content that have little numismatic value due to wear and/or lack of rarity.

All math errors are by EatonRapidsJoe.  Values do not comprehend wear.
This table is a convenient way to approximate of the value of various US coins.  The two columns on the right indicate the nominal dollar amounts of silver coins one might expect on each dollar-cost-average buy of $20 and $50 respectively.  That is, at $22 per ounce a twenty dollar bill will buy you 12 dimes.

Bear in mind that the coin dealer needs a little bit of mark-up to keep his lights on.  You might get a better deal if you are a regular monthly customer....for example, you might only pay the equivalent of what you would pay for postage if you bought your bullion on-line.

Close ups taken with a Fuji FinePix S700 in Super Macro mode.
These are not coins.  They are bullion.  They constitute one ounce of silver.

The coin collectors

The other clientele are collectors rather than investors.  That is not to say that a collector would refuse a hefty profit on their collection.  It is to say that a substantial, perhaps even primary value of the coin to the client is some form of connection, be it artistic, time related, or geographic.

This is a tougher clientele to sell to.  Inventory can have birthdays until THAT buyer comes in who is looking for that very coin.

Clicking on the picture should make it embiggen for closer examination.  Or you can download it and view it in a photo browser to really zoom in.

The last major home run for the mint in terms of general interest in collecting were the "State" series of quarters.  Those quarters brought many new collectors to the hobby.  The mint hopes to repeat that success with a series of quarters that highlight our National Park System.  I posted some gratuitous close-ups so you can see the detail of the striking.

Pocket Change has some commemorative coins.

I hope I look this good when I am 134 years old.

For the most part, foreign coins are still affordable for the new collector.  It can be a great way to learn geography and history.

Various books and magazines are available for the budding enthusiast.  Books are a great way to feed dreams.  Yes, all of this information is available on the internet but it is easier to navigate on paper. 

Pocket Change has all of the normal collectables.

Just for Fun

I asked several readers for advice about questions I should ask Mr Comer.  One  of my experts suggested "Revolver or Semi-automatic?"

Well, Mr Comer is "Old School".  He believes that two is always better than one.  And that holes don't count unless they are big enough for mice to nest in.

These are reproductions.

The original New York reload.  Barrels swivel to bring bottom barrel up to the line-of-sight.
The business end of a different, double barrel pistol.
 I also noticed three, side-by-side shotguns tucked in various corners of the shop.

Some pretty good examples of geodes.  Sorry about the lighting.

Three and a half pieces of advice for business start-ups

Keep your overhead low. 
Vast sweeping vistas of plushly carpeted retail space add no value to the coin and make it much harder for your customers to resell that coin at a profit.

Be honest.
Coin collectors have memories like elephants.  They remember.  They freely share their opinions on dealers.  Always be scrupulously honest.  Count things out twice if you need to.

Become knowledgable.
You cannot know everything.  But have some reference books and magazines available so both you and your client can learn together.

The half piece of advice:
Some people want to start their own business because they chafe when working under a boss.  Take a hard, honest look at yourself.  If you are "that" kind of person then you might be a poor fit for retail where every person who walks through your door is your boss.

Link to previous small business report 
Link to next small business report


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