Turnover is vanity, but.....
“Turnover is vanity, profit is sanity.”
It is one of those sayings that gets repeated so often in business that it has almost become a law.
And, of course, there is a great deal of truth in it. You cannot pay the bills with turnover. You cannot pay your staff, your rent, your rates or your accountant with turnover. At the end of the day, profit is what matters.
But in the antiques trade, I would add a small qualification:
Turnover is vanity, profit is sanity — but turnover is also oxygen.
You need money coming through the till.
And sometimes, that means taking a smaller profit than you might ideally like. Occasionally, it even means taking a loss.
That may sound strange, particularly to someone outside the trade. Why would you deliberately sell something for less than you paid for it?
Because the money you get back can be put into something else.
More importantly, the space becomes available for something new.
This is particularly important in antiques. Customers want to see change. They want to walk into a shop and find something they didn't see last time. They want surprises. They want variety.
If the same things sit in the same places for months on end, even good stock starts to look stale.
There are also the less glamorous but extremely important things that keep an antiques business alive.
The bread-and-butter items.
The pieces that may not make you rich individually but sell regularly and reliably. The £20 profit. The £10 profit. Sometimes even the £5 profit.
Dealers can be rather sniffy about these small profits. They shouldn't be.
Ten £10 profits are £100.
One hundred £10 profits are £1,000.
And if you can repeatedly buy something for £20 and sell it for £30, and do it quickly, you may be doing rather better than the person who has £2,000 tied up in something that has been sitting in the corner for three years waiting for the “right buyer”.
Small profits, small profits and quick returns can add up to a very decent living.
That is something I have always believed.
Of course, there is nothing wrong with the big deal. We all love buying something for £500 and selling it for £1,500. Those are the transactions that dealers remember and talk about.
But you cannot build a business around them alone.
A healthy antiques business needs a mixture.
The occasional spectacular buy.
The good, solid middle-of-the-road pieces.
And plenty of bread-and-butter stock that keeps chuntering through the business, paying the bills and bringing customers back through the door.
There is another reason turnover matters, too.
Your bank manager notices it.
Your accountant notices it.
And, perhaps most importantly, you notice it.
Regular sales demonstrate that the business is alive. Money is coming in, stock is going out and capital is being recycled.
Of course, none of this changes the fundamental rule.
Profit matters.
There is no point turning over £1 million if you have nothing left at the end of it.
But I have always been slightly suspicious of the idea that turnover is somehow just vanity.
In antiques, turnover tells you something important.
It tells you that people are buying.
It tells you that stock is moving.
It tells you that you are putting things in front of customers that they actually want.
And it gives you the opportunity to buy again.
Because that, ultimately, is what makes an antiques business exciting.
Buy. Sell. Reinvest. Buy again.
Keep the stock moving, keep the shop interesting and keep the money circulating.
So perhaps the old saying needs a little updating:
Turnover is vanity, profit is sanity — but cash flow keeps you in business.
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