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
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.
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.
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.
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.
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
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.
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.
Buy some lead pieces to attract wealthy buyers. Make sure the items you are buying have not already been exposed to the general market.
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.
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
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.
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.
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.
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.
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.
- gavel image by Cora Reed from Fotolia.com