How to Start an Auction Company

gavel image by Cora Reed from Fotolia.com

People are often drawn in by the fast-paced excitement of an auction. However, the auction itself is only the show. Attracting consignors, providing good service, marketing your specialty and running a smooth auction requires extensive planning and preparation. If you have decided to start your own auction company, you must first gain some experience by working in the field.

Finding the Merchandise

Writing a business plan
business plan image by Mykola Velychko from Fotolia.com

Write a business plan, even if you are not planning on applying for a loan. A business plan will help you clarify what is in your head and allow you to communicate your needs and goals to others.

Networking with auctioneers
technology computer image by Andrey Kiselev from Fotolia.com

Join the National Auctioneers Association and your state auctioneers association. There, you will find tools and network with people who can answer any questions you might have.

Auctioneering school
school image by dinostock from Fotolia.com

Locate an auctioneering school near you. Most states require an auctioneer's license. Even if they don’t, it's a good idea to obtain one so you have the networking contacts. It's also beneficial to promote the fact that you are a licensed auctioneer. Auctioneering school will teach you various styles of chanting and how to procure consignments, as well as the legal aspects of the business, including administration and record keeping duties.

Website design
website layout image by 6922Designer from Fotolia.com

Start a website, advertising for consignments and promoting your specialty. List the dates of any upcoming auctions. Describe the buying and selling process. Tell what makes your auction house unique. Promote the service you have to offer. Tell your potential customers and consignors who you are so they can relate to you.

Networking with professionals
people image by Rui Vale de Sousa from Fotolia.com

Network with real estate professionals, estate lawyers, and dealers in your field of interest for merchandise. Consignors are the backbone to the business. Join business associations. Give these people incentive, such as a flat rate of $100 for referring clients to you. On larger projects, such as estate liquidations, offer 10 percent of your profit.

Gathering the consignment

Mark up to provide a discount
percentuale arcobaleno +5 image by claudio from Fotolia.com

Pitch your product and make people feel good by giving them a discount. People unfamiliar with auctions will need you to walk them through the process. On your consignment contract, list your commission higher than what you intend to actually take in. When you are talking with a potential consignor, give them a discounted commission.

Consignment contract
signing a contract image by William Berry from Fotolia.com

Offer consignors reserves on pieces they are unsure about selling which they would be willing to have returned to them. List other fees such as buy-back fees, reserve fees, insurance fees and photography fees, and then waive the ones that are not necessary.

Expensive antiques attact customers
antique chest image by Inger Anne Hulbækdal from Fotolia.com

Buy some lead pieces to attract wealthy buyers. Make sure the items you are buying have not already been exposed to the general market.

Storage warehouse
warehouse image by Niki from Fotolia.com

Provide storage so people can consign items to you far in advance of the auction. Unless you are having a single on-site estate auction, you will need to collect consignments far in advance of your auction date.

Numbering system
numbers image by Anton Gvozdikov from Fotolia.com

Mark all merchandise with a number that you have assigned to that consignor. Paying for lost items should not be your business plan. Marking items with a simple numbering gun and listing that number on the top of the consignment contract is common practice among auction houses. Be sure to place the number on the merchandise in a place where it will not damage it in any way.

Setting up the auction

Firehouse hall for rent
suburban fire house image by Ray Kasprzak from Fotolia.com

Determine where you will be having your auction. Firehouses, auxiliary halls, and hotel conference rooms are a few places where auctions are commonly held. On-site auctions are also common.

Chairs for people
chairs in a row image by TMLP from Fotolia.com

Purchase or rent equipment to run your auction. You will need a speaker system for your auctioneer, tables for merchandise, and chairs for attendees. If you are having an on-site auction you will need a large tent to conduct your auction, as well as portable toilets. You will need to purchase a computer system and auction software, but also have a back-up paper system available in case of power or computer failures. Credit card machines are also necessary, not only for convenience but to ensure payment.

Part time computer clerk
1 2 meins image by Yvonne Bogdanski from Fotolia.com

Hire part-time personnel. If you are not the auctioneer, you will need to hire at least two auctioneers. One auctioneer is needed to give the other auctioneer a break from chanting. You will also need people to do the business administration of accounting, advertising, and cataloging of merchandise. During the preview and auction, you will need a crew who can do the clerking, registering of the bidders and the checkout. You will also need people to be runners to hold up the merchandise and assistants to show the merchandise during preview while they are also keeping an eye out for thieves.

Free food at the preview
party food image by Bartlomiej Nowak from Fotolia.com

Hold a preview the day before the auction. Registration should be made available at this time. Besides collecting the persons name, address, phone number be sure you collect credit card information. Let buyers know they have the option to pay by check or cash. You are collecting their credit card information so they can not just walk away with merchandise. Collect email addresses for your mailing list and what specialties the buyer is interested in collecting. Supply free food and drinks to attract potential buyers.

sold sign image by Stephen VanHorn from Fotolia.com

Start your auction. Announce and post when items of high interest will be sold. Ensure that people know the order of your auction if you are not running it off a catalog or list. Make your auction an entertaining event by directly engaging the audience, providing refreshments, and making appropriate jokes.

References

Resources

About the Author

Rachel McKay Laskowski has a B.A. in creative writing from Antioch College. She is a second-generation antique dealer whose focus is American impressionist, WPA, and social realist paintings. She is also an experienced landlord and her passion is volunteering to help dogs and animals in disaster situations.

Photo Credits