An auction house business provides an opportunity for consignors to sell their unwanted goods or merchandise to the highest bidder, with the house earning a portion of proceeds. If you’re an auctioneer you may opt to open your own business. If not, you’ll need to find a skilled auctioneer to run your auctions.
Get Licenses and Insurance
Licensing for auction houses varies from one state to another. You may be required to have a business license, an auctioneer’s license, and if you're selling real estate, a real estate license. If you're selling firearms, you may need a Federal Firearms License to conduct sales transactions. Check with your secretary of state’s office to find out what you'll need. Consult an insurance agent to inquire about coverage needs. Auction houses are generally required to have insurance that protects the property of consigners as well as liability insurance to protect patrons when on property.
Select the Right Location
Renting warehouse space is a cost-efficient way to secure space for an auction house. The amount of space you’ll need will be based on how large an operation you plan to run and the type of consigned goods you'll need to store in your facility. The space should have access ports to easily load and unload merchandise, wide aisles to accommodate buyers, and gallery space where auction attendees can sit or stand during the auction. Also look for a space with ample parking that accommodates passenger vehicles, delivery trucks and trailers.
Set up Shop
Invest in a reliable sound system or PA system that includes speakers and an auctioneer’s microphone or headphone mic. Purchase a clerking desk with space for organizing bidder cards and tickets. Additionally, set up an area for registering bidders, distributing bid cards and a cashier’s stand for checking out customers and accepting payment at the end of the auction. You may opt for a credit card reader to make the process go smoothly. You may also need display tables, computers, moving materials and equipment.
Secure Inventory and Start Your First Auction
Auction house inventory generally comes from consignors. If you don't have consignors lined up, consider stocking your first few auctions with your own inventory, such as merchandise you buy from a business liquidation or close-out. Decide how to run your action. Absolute auctions start off bidding at zero, with the highest bidder winning the item, regardless of how high the price goes. Reserve auctions allow the consignor or auctioneer to set a minimum price, also known as a reserve, which is based on the lowest amount the seller is willing to take for the item.
Promote Your Business
Promote auction items by developing a website and posting an online catalog of upcoming auction items, including pictures and descriptions. Advertise in auction-specific publications and websites. Keep a list of consignors and bidders and distribute regular updates via email or hard copy mailers to alert buyers to upcoming events. If you specialize in a particular type of merchandise, such as farm equipment, antiques or coins, join industry associations or collector organizations to network and solicit new customers.
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