Potential new business venture
Discussion
Hi all,
I'm contemplating a change in business and wondered if I could assess the opinions of the Pistonhead collective.
I'm interested in starting my own classic car and memorabilia auction house.
I'm specifically looking for any assistance regarding the licensing side of things along with any guidance regarding terms and conditions.
There are many sites for new start-up's on Google ranging from a whole raft of professions however I couldn't find anyone else who has ventured down a similar route to me.
Any help or guidance is greatly appreciated.
Many thanks
Stu
I'm contemplating a change in business and wondered if I could assess the opinions of the Pistonhead collective.
I'm interested in starting my own classic car and memorabilia auction house.
I'm specifically looking for any assistance regarding the licensing side of things along with any guidance regarding terms and conditions.
There are many sites for new start-up's on Google ranging from a whole raft of professions however I couldn't find anyone else who has ventured down a similar route to me.
Any help or guidance is greatly appreciated.
Many thanks
Stu
Classic car auction houses (depending on the price bracket and niche) tend to be dominated by the larger, old names - bit of a limited number of suppliers (and from what I have seen) there are 2 approaches:
1) High volume, low - mid value car auctions (production cars / lease / odd niche car) where you are relying on high volume, low admin and transaction cost with warehouses for auctions, serving 90% traders. Profit made by x% cut of the sale value, plus transaction costs. Weekly auctions.
2) Niche, high value cars where you are selling very few, high value cars, targetted to a select set of individuals / collectors. Monthly or quarterly auctions tied to major events (eg Goodwood FOS), often on the back of an established auction business. eg, Bonhams
The challenge in the classic business will, I suggest be that you will be somewhere between the 2?
What price bracket will you target? How will you establish a "trusted" name quickly enough to achieve the volume needed to recover costs - I'm guessing people, marketing, secure storage and insurance will be substantial? How much start up capital will you need?
One option is to leverage an existing brand with high traffic - if the business plan holds water, going into it with someone like (http://www.carandclassic.co.uk/) would make sense if you could find the right risk/reward share?
The memorabilia sounds interesting - at the low end I know ebay is strong - for the likes of F1 programmes, car parts, etc - not sure on volumes, but with a good amount of research you could look at the volumes the bigger dealers are getting and the price points.
Hope this helps.
1) High volume, low - mid value car auctions (production cars / lease / odd niche car) where you are relying on high volume, low admin and transaction cost with warehouses for auctions, serving 90% traders. Profit made by x% cut of the sale value, plus transaction costs. Weekly auctions.
2) Niche, high value cars where you are selling very few, high value cars, targetted to a select set of individuals / collectors. Monthly or quarterly auctions tied to major events (eg Goodwood FOS), often on the back of an established auction business. eg, Bonhams
The challenge in the classic business will, I suggest be that you will be somewhere between the 2?
What price bracket will you target? How will you establish a "trusted" name quickly enough to achieve the volume needed to recover costs - I'm guessing people, marketing, secure storage and insurance will be substantial? How much start up capital will you need?
One option is to leverage an existing brand with high traffic - if the business plan holds water, going into it with someone like (http://www.carandclassic.co.uk/) would make sense if you could find the right risk/reward share?
The memorabilia sounds interesting - at the low end I know ebay is strong - for the likes of F1 programmes, car parts, etc - not sure on volumes, but with a good amount of research you could look at the volumes the bigger dealers are getting and the price points.
Hope this helps.
Hi,
Many thanks for the informative post.
You are indeed correct, I plan to fall somewhere between the two types of auctions, but generally toward the higher level end. I'm looking to run around one auction per Quarter, focusing on fewer but higher value cars.
As you rightly point out, breaking into the top end (Bonhams, Coys etc) will not be an easy task however I feel there is a market there, and frankly I think I could do a better job than them!
I have been in and around the classic car market for sometime now and have built up a large customer database which I hope to utilise to help with the Sales. I currently run a memorabilia shop so I'm quite knowledgeable in that are also.
The main cost areas I can see at present involve a Sales site (more than likely something rented rather then permanent), getting the actual sales documents, terms and conditions etc created and Insurance. There are quite a few potential sites near me but I need to check with the Council regarding what appropriate licenses I need to run the auctions.
Many thanks
Stu
Many thanks for the informative post.
You are indeed correct, I plan to fall somewhere between the two types of auctions, but generally toward the higher level end. I'm looking to run around one auction per Quarter, focusing on fewer but higher value cars.
As you rightly point out, breaking into the top end (Bonhams, Coys etc) will not be an easy task however I feel there is a market there, and frankly I think I could do a better job than them!
I have been in and around the classic car market for sometime now and have built up a large customer database which I hope to utilise to help with the Sales. I currently run a memorabilia shop so I'm quite knowledgeable in that are also.
The main cost areas I can see at present involve a Sales site (more than likely something rented rather then permanent), getting the actual sales documents, terms and conditions etc created and Insurance. There are quite a few potential sites near me but I need to check with the Council regarding what appropriate licenses I need to run the auctions.
Many thanks
Stu
Another build...
If you have any contacts who have built up their own business as well, or a local business enterprise group / network - join it. Write up the business plan into a 5 page document with the financials, projections, best case / worst case for 3-5 years with all costs profiled, risks, etc.
And then ask them to constructively review it - and grill you on it - think dragons den - they will uncover thoughts and ideas that will help you in the long run, and help reduce the risk of a failure in the first 2 years. Evolve it a couple of times before making any commitments. Writing up your own business plan is good to do; having it improved on by peers will make it even stronger.
Diversifying into a parallel sector to something that has a materially increased opex and risk brings lots of challenges and excitement (!) - leaning on a good network will reduce your blood pressure...
Many expanding business struggle with the increased demands on cash flow, revenue increasing at a different rate to the plan and a challenge in finding the right people to join the business who have the same motivation as the owner leading to tensions and frustrations (having the right reward in place for startups/small business expansion is key if you want to bring experience on board - to the joiner it is high risk - how do you align goals?)
(try to find a good business mentor as well if possible as a long term sounding board - I know that retired directors/MDs will act as a sounding board for no fee and in return for a nice lunch now and again - they enjoy it to keep the brain active
)
If you have any contacts who have built up their own business as well, or a local business enterprise group / network - join it. Write up the business plan into a 5 page document with the financials, projections, best case / worst case for 3-5 years with all costs profiled, risks, etc.
And then ask them to constructively review it - and grill you on it - think dragons den - they will uncover thoughts and ideas that will help you in the long run, and help reduce the risk of a failure in the first 2 years. Evolve it a couple of times before making any commitments. Writing up your own business plan is good to do; having it improved on by peers will make it even stronger.
Diversifying into a parallel sector to something that has a materially increased opex and risk brings lots of challenges and excitement (!) - leaning on a good network will reduce your blood pressure...
Many expanding business struggle with the increased demands on cash flow, revenue increasing at a different rate to the plan and a challenge in finding the right people to join the business who have the same motivation as the owner leading to tensions and frustrations (having the right reward in place for startups/small business expansion is key if you want to bring experience on board - to the joiner it is high risk - how do you align goals?)
(try to find a good business mentor as well if possible as a long term sounding board - I know that retired directors/MDs will act as a sounding board for no fee and in return for a nice lunch now and again - they enjoy it to keep the brain active
)I think that sourcing the cars will be your biggest issue.
If you look at H&H, they have a reall mix of cars in their auction but always one or two show stoppers (AC Ace, early MG with great history). The commission and premium on these probably cover their fixed costs and then the £100 they get for shifting a ropey old XJ-S is profit.
How are you going to get a seller to entrust you with the disposal of a car that should make £1/4 million?
If you look at H&H, they have a reall mix of cars in their auction but always one or two show stoppers (AC Ace, early MG with great history). The commission and premium on these probably cover their fixed costs and then the £100 they get for shifting a ropey old XJ-S is profit.
How are you going to get a seller to entrust you with the disposal of a car that should make £1/4 million?
Hi,
Many thanks for your contribution.
It is indeed true to say sourcing of the cars will be a challenge but I have built up a large customer database already through my memorabilia site. I have approached several customers and already have some beautiful cars lined up in the pipeline.
I believe the trust I have already built up with some customers will help regarding the 'worry' of auctioning through a new site and I would hope after running one or two successful auctions, this will in turn lead onto others trusting as well.
Many thanks
Stu
Many thanks for your contribution.
It is indeed true to say sourcing of the cars will be a challenge but I have built up a large customer database already through my memorabilia site. I have approached several customers and already have some beautiful cars lined up in the pipeline.
I believe the trust I have already built up with some customers will help regarding the 'worry' of auctioning through a new site and I would hope after running one or two successful auctions, this will in turn lead onto others trusting as well.
Many thanks
Stu
As for premises, I think you would be better off renting hotel conference rooms by the day. Outfits like this will have staff to assist on the day as part of a package of hospitality, coffees, greeters etc. You also have the luxury of north and south auctions. You get the cars deliverd by trailer. This also means you get around most of the licensing issues.
Is an auction the way to go? How many cars are you going to turnover? If you are only turning a few, is it not better to act as a sales agent and sell to your existing clients, and advertise at the same time. Could you advertise the cars in other company's auctions to get started. just a few idea's
Is an auction the way to go? How many cars are you going to turnover? If you are only turning a few, is it not better to act as a sales agent and sell to your existing clients, and advertise at the same time. Could you advertise the cars in other company's auctions to get started. just a few idea's
Have a look at http://www.dvca.co.uk set up in 2006 by Brian Chant who has been restoring cars in the area for decades.
Gets lots of local press coverage and seems to have well supported sales.
Gets lots of local press coverage and seems to have well supported sales.
Potential new business venture - Now live!!!
Hi all,
Back in August last Year I posed this query to the Pistonhead team and received some very encouraging feedback. I've been working on the business model ever since and I'm pleased to say the new site is now live:-
www.channons.com
I hope I'm not breaking any rules here posting the link, I just wanted to show everyone the progress I've made since the initial idea through to the first auction taking place in 57 days.
Thanks again to everyone who commented previously.
All the best
Stu
Hi all,
Back in August last Year I posed this query to the Pistonhead team and received some very encouraging feedback. I've been working on the business model ever since and I'm pleased to say the new site is now live:-
www.channons.com
I hope I'm not breaking any rules here posting the link, I just wanted to show everyone the progress I've made since the initial idea through to the first auction taking place in 57 days.
Thanks again to everyone who commented previously.
All the best
Stu
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