Yesterday a dealer said to me: “I love the antiques business, but it’s taken over my life; I don’t have time for anything else.”
Can you relate? Many dealers do. Most Mom-and-Pop stores have trouble keeping (and affording) good help and paying for the accounting and inventory systems that signify a mature business. Dealers have a knack for picking, pricing, and selling. They have a knowledge of periods and trends. Delegating those tasks is challenging; rarely is a dealer lucky enough to find an employee capable of running their store and making buying and merchandising decisions.
If an owner could stay at her store and spend more time selling and developing customer relationships, then there would be more money to fund growth. But she can’t, because too much time is spent on the road finding new inventory. Under such circumstances, it’s hard to avoid feeling “stuck,” and even harder to figure a way out of the situation. Consequently, antiques businesses have difficulty reaching maturity.
What is a “mature business”?
Mature businesses are those on “cruise control.” They have systems and employees in place, and the business can run well without full-time attention from the owner. Owners of mature businesses can take vacations, pursue hobbies, and enjoy a comfortable retirement. For too many antique dealers a vacation is a buying trip, picking is the default hobby, and retirement is a pipe dream.
What you need to know before launching a startup
Growing a business from startup to maturity is a bit like raising children: each stage of development brings new problems that require new solutions. Like children, businesses have a life cycle. Antique businesses – whether online, offline, freelance pickers or show vendors – follow the same life cycle as service contractors, software companies, and major corporations.
Each industry has its own challenges, but the cycle is the same nevertheless: businesses are conceived, established, mature, and decline. At each stage in a business’ life cycle, owners make decisions that will either keep them stuck where they are or move them forward. Framing decisions based on a company’s position in the business life cycle helps an owner stay focused on the “big picture” and avoid spending traps.
For example: Imagine you’re a startup, and you have engaged a CPA to guide you through setting up your bookkeeping. He wants you to invest in a software program that will require a computer upgrade. You want to take his advice, because you don’t like dealing with the bookkeeping. A new computer and accounting software are already on your want-list, along with a lighted storefront sign and a new van. Money is tight, but you’re anxious to keep moving forward. Which of these items do you invest in?
More than anything else, startups require customers and sales. A new computer won’t bring you customers; a new sign will. Despite your accountant’s insistence, investing in a pricey accounting solution at this stage is unwise. You buy the sign. Another dealer might spend money on the accounting system and then have trouble paying for it because there aren’t enough customers and sales. However, if your business is a five-year-old bricks-and-mortar store with three employees, it might be time to invest in a better accounting solution. What proves to be the best solution depends on where you are in the life cycle.
Five stages in the life cycle of an antiques business:
The imagineering stage is characterized by “dreaming and scheming.” It’s what occurs before you buy a business license and sign a lease. Some dealers spend years dreaming about the type of shop they want; how it will look, what they will sell, and how the merchandise will be displayed. One can’t move forward without those basics. But to complete the vision of a shop, it’s necessary to drill-down and fully visualize the details. Having a detailed working blueprint greatly increases the chance of having a successful shop.
Think of a startup as if you were assembling a jigsaw puzzle: First, you must know what the “big picture” looks like. Then you determine how many pieces the puzzle is supposed to have, and you count the pieces. If you’re missing some, you won’t be able to complete the puzzle. Next, you organize the pieces to determine how they will fit together; you sort them by edges, colors, patterns, and so on. Only when you have done the visualizing, counting, and sorting and are satisfied with the results should you move forward. First know what you want to do, then decide if it can be done, and then go out and do it.
The plan developed through imagineering becomes the blueprint for the engineering stage. If you missed something in the imagineering stage, it will become apparent in the engineering stage (forgetting to lock down a domain name, for instance). Like constructing a house, the process starts with laying a foundation: a lease is signed, utilities arranged, tax accounts set up, store improvements made, fixtures organized, inventory merchandised, and a bookkeeping system is placed. With the foundation done, now the business “house” must be built.
The primary activity at this stage is to get the store set up and the doors open.
Growth is characterized by the development of systems. Systems are procedures that can operate without the owner’s direct involvement. For example, building an inventory supply network of pickers, estate attorneys, realtors, auctioneers, and tag sale companies are a system. Having an operating manual that employees can use as a reference is another. Automated accounting that correctly posts sales, expenses and updates the inventory is another. Automating social media tasks and marketing are also essential. Growth is the stage where many antique dealers get stuck, because their marketing, inventory supply, sales, and accounting are inconsistent and/or being frequently re-invented.
Primary activities at this stage include creating systems for marketing, merchandising, selling, operations, and inventory supply.
The maturity stage is reached when all systems are engaged and operating smoothly. A dealer can spend years – maybe decades – building a business to maturity. Maturity is characterized by stability and profitability.
Primary activities in this stage are monitoring systems and managing finances.
When dealers are unable to initiate and maintain management systems, eventually something will happen that causes their antiques business to decline. Sales may plunge; demographics of the neighborhood may change; a desirable lease may end, a key employee may leave, or a partner may die. If the business was established as a sole proprietorship, the business dies when the proprietor does, and the entire business goes into probate. Maintaining a business without key personnel is a difficult task.
When systems are in place, financial records are in order, and an antiques business is profitable and well located, then it is a good candidate for renewal rather than decline. Such businesses are marketable as a “going concern” and the business may be sold to a new and enthusiastic owner.
Where does your antiques business fit into the life cycle stages? Are you stuck, or making progress? Only you know for sure, and only you can make the decisions that will move you forward.
This article was originally published in Antique Trader magazine. If you like what you’ve read here, consider subscribing to the print or digital versions of Antique Trader it’s available for $26 per year (print) or $20 per year (digital) to receive 24 issues.
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