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Anyone have any experience with this type of business? I have seen them popping up the last few years and as far as I can tell from research I have done they tend to be pretty profitable. I was thinking about possibly looking into opening one in either a strip mall or my local mall (kiosk). Anyone think this is a bad idea?
Hello B:Quote:
Originally Posted by BenjaminM580
That's the wrong question to ask... Look, even the boring shoe business is profitable, if you KNOW what you're doing. Contrarily, a flashy, kiosk/storefront, that has a lot of business, may NOT be profitable if you DON'T know what you're doing.
Are you a collector? Are you talking about numismatic coins and estate jewellery, or just bullion? Have you been in the retail business?
excon
Where are you going to sell it to, after you buy it
Hello Padre:
Well, he'd sell it to people like me. I'm a buyer.
excon
Well, what I would basically be doing is opening a shop and buying scrap gold and reselling to refineries by the ounce. I have retail experience, but I don't think it's necessarily an advantage in this type of business. Although it may help me in flagging down people walking by in the mall and closing deals. So what do you think would be a better place to open this type of business? In a strip mall or a mall? I can see advantages to both. For instance, in a mall I don't have utilities as far as I know, and there would be less chance to be robbed because of mall security and being in such a busy place. Eventually I would want to turn this business into a cash advance business as well, but figured starting with scrap gold buying/reselling would be the best starting point. The advantages I see to being in a strip mall is better parking and people not having to deal with the mall just to go in and sell some gold. The traffic from the mall may make up for that though.
Hello again, B:
Well, that changes everything... The reason to be in a mall is to take advantage of the shoppers. But, shopper are looking to BUY, not to sell, so you won't find any customers just walking by. Besides, if you DID find somebody who's interested in doing business with you, he probably doesn't have his scrap gold his his pocket.
Nope. Your customers are going to seek you out. But, since all you're going to be doing is BUYING, you don't even NEED a location... I don't know why you don't do what ALL the other gold buyers do, and that's to rent a room at a local hotel and invite your buyers with advertising. That seems to work.
Look. People selling gold don't care WHO they're selling it to. They care about the PRICE they're getting.
Which brings me to my next question.. You say "scrap gold", but what you mean is jewelry. Do you know the difference between 18 and 24 karat gold? Can you SPY the difference? How much per ounce can you sell it for? Have you checked? That number is KEY, you know. Otherwise this is just idle speculation.
excon
Well, the thing is, the mall 30 minutes down the road from me in a smaller city has 2 gold buyers in it currently (not counting the jewellery stores, just strictly gold buyers), it's also a smaller mall. The one here in my city has only 1 that I know of and the area has a higher population.
The gold buyer in the mall here is also the most successful I know of for the area and does cable adds for the area a couple times per year. They have been there for about 2-3 years so far. I called them and asked them what they would pay for some gold and was able to get some information out of them. They said the highest they have ever paid was 75% but generally they pay between 30-60% depending on the person. I assume they try to low-ball it and if it's not working gradually raise the price until the offer is accepted.
I also called a refiner in Orlando (about 45 minutes from me) and asked them what they pay. He told me it varies depending on the amount brought in. The more I bring in, the better deal he will give me. He said the lowest he pays is 95% and if I bring in larger amounts 98%.
I figure if I open in the same mall as this successful gold seller it may work to my advantage. Their adds bring in people looking to sell gold, but they may run into me first. I also plan to do a lot of local guerrilla marketing if I go through with this. I plan to run a classifieds add and advertise with a small publication that goes out with every papa john's order in my area, I was also considering door hangers on all of the apartment complexes in the area (we are loaded with apartment complexes in Central Florida) and fliers. I was also going to start a website for the business (with proper SEO) and possibly let people send their gold to me via the mail as well.
My main reason for looking at the mall is security. I think by the time I cover utilities, buy surveillance equipment, and pay a security company to set me up in case I get robbed, the mall would probably end up being cheaper. The gold buyer in my mall basically just has a few tables with some cloth draped over it to make it look better.
I am not formally trained in spotting whether jewelry is real or not, but my sisters uncle in law owns a jewelry shop about 30 minutes away (that also buys scrap gold) and I think I could convince them to let me come in and learn for a few days. I know the difference between 18k and 24k. The difference is the amount of gold used in each. 24k is 99.9% and 14k is around 56%, I can't remember exact numbers off the top of my head at the moment. I know a little bit about testing with acid kits, my only concern is how to tell whether something is simply gold plated or not (if it doesn't stick to a magnet). I supposed I would test that by testing the volume or the piece? In any case, that is why I thought working at the shop for a few days as a volunteer may help me out.
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Correction: They pay 40-60%, not 30.
Oh, I forgot to answer a question in your post. The reason I do not rent a room at a hotel and advertise and just do events like that is because I assume that would be a huge flip, something I don't have the money for. I am more looking to gradually ease in and build up to being able to do huge amounts like that. That sounds like the type of thing you do a huge amount of advertising for and try and get as many people into it over a weekend as possible and buy 10-30k worth of gold over the weekend then flip it. I just don't have that kind of start up. I have enough to get started and buy a couple ounces worth of gold, then I would have to flip it so I could continue.
Hello again, B:Quote:
Originally Posted by BenjaminM580
That changes things too. If I was the mall guy, I'd make sure that I was the ONLY one allowed in the mall. Plus, if I was the mall itself, I'd make sure that I had a year lease minimum, with 6 months paid IN ADVANCE, and your personal guarantee that the rest would be covered... Then after you've paid for your fixtures, insurance, licenses, and other start up fees, if you only had a few grand to start with (and it sounds like that's all you've got), you don't have enough capital.
That's why I suggested the hotel buy. So, you can put ALL you've got into gold instead of the stuff that SUPPORTS your buying effort.
excon
So what you are suggesting is I rent space at a hotel conference center or something once a week and just advertise that I am buying on that day and to bring your gold in and buying as much as I can and flipping then rinsing and repeating? The only problem is I am not sure of the most effective way to advertise for a weekly event like this that would bring in enough people on that specific day without costing a lot to advertise for. Do you have any ideas?
Hello again, B:Quote:
Originally Posted by BenjaminM580
I think it WILL cost a lot to advertise, but that is your ONLY major expense. I think it will cost MORE to open a store/kiosk. If you need help advertising, you can hire it.
excon
I suppose trying it in this way may be one option I could explore. It will depend on what kind of pricing I can get at a hotel and what the ads would cost. Thanks for the information.
IF you don't have 20 to 40 thousand dollars to be honest you don't need to even be looking at this,
First what are you going to live on, pay your rent, electric where you live.
Next do you know what mall rents are like, I have cheap rent for my studio, not in a mall but in a KMart shopping center and it is about 1500 a month plus electric and the such, and after insurance and the such, I have about 3000 a month. Of course with deposits and the such, I had almost 10,000 I had to pay just to open up my first day.
Plus with home budget and studio budgets I have about 6000 to 8000 a month I have to make just to pay my bills.
Next remember they told you that the more you bring in, the more they pay, I am not even sure if they will just take a piece or two, And I would guess that 30,000 in items you purchase is not going to be that much profit either.
Next what if for two weeks, there is really bad weather and you don't make any money, how do you pay your bills.
Most business make no profit what so ever for at least 6 months, many for a year. So at this point, can you pay all of your person bills for that long without any profit from your store
Seems like prices are much higher where you live. I have seen strip mall spots as low as 700 a month here (@ ~ 900 sq ft). I could get a small business center spot for as low as $375 a month (@ $1.00 a sq ft). That center also has a few thriving businesses in it already. A nail salon, a btcher who has expanded from 1 unit to 3 since opening and a few others. I believe space for a kiosk in our local mall runs around $800-1000 a month. The city I live in has a population of around 100,000 and this is the only mall in the area. The nearest mall besides that is in a city of around 60,000 and 25 minutes north of us. There is also a city just south of ours (they border each other) that has another 110,000 or so. There is also another small (but more upscale) city just north of us that could potentially go to either mall, but I think our mall is a little closer.
My main reason for not wanting to open in one of those cheaper spots is the increased risk for getting robbed. Not to mention the fact that I would have to buy security equipment and pay a security company to set up and monitor the place and the added cost of utilities, which are not needed in a mall. Most malls seem to require a million dollars in liability though, which would run me an extra $200.00 a month approx.
I would pay my bills with money from my current business. I run a small cleaning business currently, and while it doesn't make a lot of money it does pay the bills. I would just work my new business during the day and work my cleaning contracts at night, until I could hire people to work the cleaning contracts for me full time. I realize most businesses don't make money for 6-12 months, although my cleaning business started making a profit within a month (since it was really low start up).
How do you get no profit from my post? You buy gold at 40-60% approx and the refinery buys for 95-98% depending on the amount. If I buy at around 50% on average, and sell at 95-98% to the refinery, how is that not a profit? I plan to work the hours until the business picks up so it's not like I am paying an employee to work on a weekly basis or anything. Even if I could only buy a 1/2 oz of gold per week it would pay the bills easily, and a 1/2 oz of gold shouldn't be hard to come by at all. That's factoring $1,000.00 for rent, $200.00 for insurance, and $30-50.00 on acid test kits.
Hi Ben,
Congratulations on getting the cleaning business up and running. How many accounts do you have now?
Stringer
Hey Stringer. Thanks. We are at about the same currently, we did lose 1 account but we are picking up another account this month. I did a lot of door to door and while we did get a small amount of interest from a couple of them, nothing really came of it. We ran into the issue that going door to door asking for business was just too time consuming on top of our daily apartment jobs. I was considering doing some small local ads to try and pick up some residential and mailing the rest of the apartments in the general area since we are having such a hard time picking up commercial contacts.
I may try to focus on this other idea for a bit or a may just try to pick up more contacts, it is kind of up for debate at the moment.
Well you know I wish you the best Ben.
I'm heading out in about an hour we opened another regional office down south in the state and I have been there three days a week for the last three months to get it started. Hired a regional manger and we have about 6 quotes already, mostly hospitals and their off sites.
Stringer
That's great, Stringer. I just can't seem to pick up that kind of business. I tried so many different types of offices. Anything we saw we went to. We just can't seem to pick up business that way for some reason. Or maybe we could if we just kept at it, we just didn't really have the time to do it for 5-6 hours a day AND work our current jobs. Like I said, I may try to go for a residential campaign and send fliers and business cards out to the rest of the apartment complexes in this area and see how that goes, but I have about given up on commercial.
I was considering buying a carpet cleaner and adding that to our services but I don't have the kind of money to buy a truck mounted one and van to accompany it so I would have to settle for one of the transportable ones for a few thousand. If I did that I wouldn't be able to pursue this other idea though. It's rough when your funds are so limited. I guess the best thing to do would be to advertise my current business more and expand on it, but I am really conflicted about it at the moment. I would like to do both but as I said before, limited funds. Anyway, thanks for stopping in to say hi. Take it easy.
Persistence Ben, persistence... it will come, just be ready with a plan to staff it and run it.
See you toward the end of the week. Corn fields... (sigh) here I come, that's about all that is between me and where I'm going... boring.
Stringer
Hello again, B:Quote:
Originally Posted by BenjaminM580
The Padre is right. You don't have enough money... But, the gold business doesn't require a lot of money.
You don't NEED a physical location. The only reason retail business's have them is to attract walk by traffic. THAT is NOT where your business will come from. If you spent whatever money you'd spend on rent, on advertising and security instead, you'd be way ahead of the game. The mall is great for one thing, though. It's an excellent well lit and pubic place to meet your clients.
excon
Very true excon. I could just skip the physical location for now and meet people at the mall to make deals. Only problem is, what am I going to do, carry around a acid test kit in a briefcase or something? Only thing that worries me about that is what if mall security get on to me about it or notice me in there frequently and not like the fact that I am doing deals in the mall without paying for space.
I think there is a shop up the road that used to be a cash advance place. I don't think it has been rented out yet, I will have to check. It has a bank style wall with slide through bottoms and bullet proof glass though, unless they took out the wall since the cash advance place left. If it is still available it has been vacant for a couple years and I may be able to get it very cheap.
I also worry that some people would be afraid to meet me, even in a public place.
What about flea market locations, or work out of your house.
What about finding a partner or working for and/or with a family member
Flea market could be a possibility. We have one about 10 minutes up the road from us. I think I am going to take Excons suggestion and try to start it off without a location. I checked Craigslist for people buying gold in my area and could only find one add, but the nearest major city (45 minutes north of us or so) has tons of them. I looked into finding a partner, I tried a few of my siblings and my parents and none of them really seem interested (or don't have the money and/or think they can't get a loan). I do have one of my oldest friends I could still try, but he has been kind of unreliable since his divorce. It would be right up his alley if he is interested though, he used to flip virtual merchandise in MMPORPGs and made a nice profit from it, and he also dabbled a little in flipping cars.
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