Auction House Business Plan and SWOT Analysis

Auction House Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Auction House Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Auction House business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

Your Business Planning Package will be immediately emailed to you after you make your purchase.

Product Specifications (please see images below):

  • Bank/Investor Ready
  • Complete Industry Research for the Industry
  • 3 Year Excel Financial Model
  • Business Plan (26 to 30 pages)
  • Marketing Plan (24 to 28 pages)
  • 425+ Page Funding Directory
  • PowerPoint Presentation
  • Loan Amortization and ROI Tools
  • Three SWOT Analysis Templates
  • How to Start a Business Guide
  • Easy to Use Instructions
  • All Documents Delivered in Word, Excel, and PowerPoint Format
  • Meets SBA Requirements

Auction houses generate extremely high gross margins from being able to act on behalf of sellers of art, antiques, and related items with wealthy buyers. The vast majority of auction houses are generally able to remain profitable and cash flow positive at all times given the fact that from time to time individuals, who are wealthy, are going to need to divest certain inventories of their collectibles in order to generate revenue. Auction houses typically are able to generate commissions ranging anywhere from 10% to 30% of the sales price. It should be noted that the cost associated with developing in a new auction house are relatively low. These businesses can be started for as little as $100,000 worth much as $1 million depending on the type of facility that will be used house auction house. However, the startup costs for ensuring that the business can reach profitability can be somewhat higher. This is primarily due to the fact that auction houses do have very high operating expenses as it relates to recruiting wealthy buyers that will attend auctions that are held by the business. This requires a substantial amount of marketing, which will be discussed below.

An auction house business plan should be developed if the entrepreneur is going to be raising capital from a bank or from a third-party investor in order to launch operations. This business plan should feature a three-year profit and loss statement, cash analysis, balance sheet, breakeven analysis, and business ratios page. For industry research, there are approximately 1,500 companies that operate in an auction house capacity, and each year these businesses generate about $2 billion in revenue. The growth of this industry is expected to remain in line without the general economy.

A demographic analysis targeting not only sellers of items, but also buyers of items should be developed as well. This includes taking a look at the inventories that are carried by these individuals, their annual household income, median net worth, and how much money they spend on collectibles on a yearly basis. There should also be a competitive analysis developed in order to ensure that a new auction house is not being developed in an overly saturated market. Additionally, a discussion regarding how many auction houses now operate on a worldwide basis through the usage of the Internet should be included as well. There are many major auction houses within the United States it catered exclusively to extremely wealthy people, and as such – a new auction house may need to find a specific niche in which they can operate in order to differentiate themselves from much larger competitors.

An auction house SWOT analysis should be produced as well in conjunction with the business plan and marketing plan. As it relates to strengths, auction houses do not have an inventory holding risk, but they are able to generate an extremely high gross margin from their operations. These businesses also are able to operate on an international level by being able to use the inner power of the Internet in order to market specific items that are going on the auction block.

For weaknesses, competition within this field is substantial. The very large commissions taken from a successful auction have driven it numerous people into this field over the past hundred years. Highly established auction houses like Sotheby’s and Christie’s have captured the market as it relates to very high priced items that are going on auction. As such, and again – auction houses that are just starting need to find ways to differentiate themselves from other types of businesses. The operating expenses for these businesses is also very high.

For opportunities, the best way in order to expand auction houses to simply continue to make substantial reinvestments into the company’s marketing campaigns and operating infrastructure in order to attract wealthier sellers that can provide the auction house with higher value item products for sale. Additionally, many of these businesses will frequently use Internet-based platforms in order to make direct sales on a more consignment based focus.

For threats, outside of competitive threats a major economic recession can impact the way that an auction house conducts business. However, even during times of economic recession there are going to be people that overspent on certain items are going to need to divest these relatively quickly.

An auction house marketing plan also needs to be developed in order to ensure that the business can attract both buyers and sellers. This marketing plan should focus heavily on taking out large-scale advertisements in lifestyle magazines that are frequently read by people that have a high net worth. This also includes the advertisements in financial magazines and related publications in order to boost the visibility of the auction house brand name from the onset of operations.

Most importantly, a large-scale presence on the Internet is also required and the company’s website should feature information not only about auction house, but also about all current inventories it will be up for auction. In some cases, e-commerce driven functionality can be put into the company’s auction house website in order to ensure that people can bid online for certain products. Among very wealthy buyers, third parties may use phones during the course of an auction in order to place bids for specific items. It is imperative that the entrepreneur develop methodologies so that people can bid on items among a number of different communication mediums.

One of the other things that many auction houses do, given their high start up costs, is to hire an outside marketing console and or in order to properly assist the business with positioning itself within a highly competitive market. Although this may translate into a higher operating expense as well as a higher startup expense, common mistakes that are typically done by newer businesses can be avoided by hiring a qualified marketing consultant to assist the business during its launch operations. Typically, an auction house can expect to spend anywhere from 5% to 10% of its ongoing revenues for marketing and advertising expenditures.

Since the beginning of time, auction houses have been around. These businesses are not subject automation given the fact that people are going to want to communicate with each other as it relates to acquiring unique, one-of-a-kind, and high-priced items. These businesses act as a strong conduit and clearinghouse for individuals that have these items that need to be sold relatively quickly. As such, and with the power of the Internet – auction houses will continue to remain as a profitable enterprise in all economic climates.