09-11-2015, 09:11 PM
Can you make a living from radio restoration?
This is a long post so you might want to read it over several sittings, or at the very least have a large Scotch in hand!
I thought I’d share my thoughts on this question because it’s an idea I have kicked around many times. I have also spoken with a couple of guys who do make a living restoring and servicing vintage valve radios, but at their own admission “I could make more sitting behind the till at Tescos.” And so that’s the first thing to appreciate if you want to go down this road. It’s going to be a lifestyle business. You’re unlikely to raise a mortgage off the back of it. The other thing to bear in mind is; 'if your livelihood depends upon it, you’ll never look at the hobby in the same way again'.
Personally, I think it would be foolish to sell working electrical items to the general public without the protection afforded from being a limited company, particularly when some of the items being sold don’t conform to current safety regulations. In this litigious society, with plenty of no-win-no-fee law firms, it’s terribly easy to be sued. Being a limited company and getting Public Liability insurance at least gives some measure of protection of one’s personal assets. Registering as a company takes you beyond the realms of a hobby though. There are Annual Returns and Accounts to file and possibly VAT considerations too.
If this hasn’t already put you off and assuming you still want to try and make a living from restoring radios, the first consideration is ones market. General public, or, collector/enthusiast? There’s also the question of price positioning which drives the financial model for one’s business. High-value/low volume, or low-value/high volume?
From the perspective of being potential customers it’s my observation that hobbyists/enthusiasts fall into two groups: Those who enjoy the process of restoration and are not seeking profit; and those who are dealers themselves i.e. buying, restoring and then selling on for profit or to at least recover costs. With the former group there is a very definite price ceiling, which immediately constrains one to the low value/high volume business model. To make money it will be necessary to have access to lots of cheap radios which can be delivered cheaply too. Not an easy task I would argue, especially when prospective customers are already likely to be hunting the same ground as you, e.g. eBay, collector’s fairs, local car boot sales and junk shops. With this in mind I think the best bet for making a living from hobbyists is from the sale of peripherals and niche products. This takes us into the realm of breaking and salvage and offering NOS components, speaker grill cloths, replica batteries, eliminators etc. etc.
Personally I have a real dislike of those who buy perfectly restorable rare radios just to strip them down for their components, but I know it’s an inevitable part of the process by which vintage products gain value. Eventually these people break so many units that the complete item becomes so scarce that the price of the whole exceeds the price of the parts.
Of the other group; I have had success selling to enthusiasts who are dealers themselves. Like their fellow hobbyists they are generally disinterested in restored pieces and this means there is a price ceiling. But in this case it’s the profit ceiling. If you know what you are doing you can still find radios which these dealers will have a market for and offer them up at a price which is attractive. This is how I finance my hobby. I don’t make much money, but I make sufficient profit for my hobby to pay for itself. Could I make a living doing it? I’m not sure I could.
This takes us neatly to selling to the general public, which is a very different challenge and comes with a number of obstacles too. Unlike classic cars or vintage clocks, vintage valve radios are generally considered obsolete by the general public and if the eventual switch-over to digital-only does happen then that’s almost certainly going to be true. Vintage valve radios are also considered by many to be dangerous. We have become such a risk-averse nation that few people would consider buying an electrical item which was not CE marked or which clearly states it conforms to the Electrical Equipment (Safety) Regulations 1994 - and for good reason too.
The other obstacles to sales are aesthetics, changing fashion and physical size. These dictate which radios sell and which do not - currently and into the future. At this time (2015) demand for radios produced in the post war era is very low. There will always be some exceptions but the vast majority of post-war radios have no market value from a business point of view. Whereas, there is decent and growing demand for many 1920s to mid-1930s receivers, some stylish 1960s radios, top-end transistor radios, some early miniature transistor radios, and for some Catalin and Bakelite models. In today’s compact households big is not beautiful either. Take the Murphy 146 and 188 as examples. Most sellers are lucky to get a tenner for one of those.
To know which models to buy and sell one needs to track the market. When I first came to this hobby this was something I did for every pre-1960 radio sold on eBay. I have continued price tracking most pre-war radios and in this way I am able to see which radios are worthwhile buying and restoring and also how prices for particular models are trending too. I can even make some educated guesses at which models are likely to become popular in the future. If you want to make decent money at this hobby then I would argue this sort of market research is essential. Another thing to bear in mind is that whatever is attractive now, won’t necessarily always be, and vice versa. Just like many antique markets, this one for radios is subject to aesthetics and the vagaries of changing fashion. However, once something has achieved cult status it will almost certainly continue to achieve ever higher prices, albeit more slowly after the initial rapid growth phase. The Ekco AD36/45 is a case in point. The price of these round Ekcos just keeps going up and up and they are now pulling the price some of the other Ekcos of the same period up along with them.
If you want to make a quick buck it is necessary to identify those radios which when restored fetch a good price, but when unrestored are dirt cheap to buy. As others cotton-on however the price of acquisition for these radios unrestored grows more rapidly than the price at which restored ones can be sold and so profit margins begin to drop. At this point one needs to find alternative radios to buy, or one must be prepared to hold onto a restored radio for longer waiting for the sale price to catch up. This is OK if you can afford to tie up capital in your stock, but there is always an inherent risk that the radio may lose popularity and then you could easily be left out of pocket. This is exactly what happened with the Bush DAC90x. Interestingly enough I am just beginning to see the signs of a revival in the value of the DAC90x.
If you have lots of money which you can afford to tie up in stock then it would be arguably better to speculate and buy up radios which you think might become sought after and simply hold onto them unrestored until their value makes it viable to sell them on (unrestored or restored). Back in the day when I had surplus cash I dealt in wine futures. I would buy wine en-primeur and then sell it on ten to twelve years later when it had matured. I made very good returns like this, often 20%+ compound per year. There’s no reason one couldn’t do the same with vintage radios. For example, let’s say you have £5000 to invest and you want to make 10% a year for ten years i.e. net c.£13000. Could you buy 100 radios at £50 each and then sell each of them for £130 ten years later? Possible? How about making 5% compound per year though? Then you’d just have to sell each for £80.
Just as with wine futures, all one needs in order to succeed in this venture is a good crystal ball and the willingness to write the whole lot off as a bad investment if things turn sour! Personally I’d rather invest in wine and that’s because I believe, that like classic cars and antique clocks, a significant element of the value in a vintage valve radio is its usability. Can you imagine what would happen to the value of many of those classic cars if you weren’t allowed to drive them, or those antique clocks if they never ticked again? I fear for the future of vintage valve radios in a country determined politically to become digital-only. I think very few radios will retain any value as ornaments and so I think it would take a very brave man to invest a lot of money in vintage valve radio futures.
If you do decide to restore radios for sale to the general public then it goes without saying that the restoration needs to be of the very highest quality. Preserve for museums – restore to sell. This might require finishing a radio to a higher standard than when it was originally turned out and herein is a problem. The time needed to restore many radios - particularly early wooden ones – to a saleable condition, combined with the high cost of original components, makes it very difficult to make a living at this game.
Let’s say I want to earn £11,000 a year and to do that I’m prepared to work 1,200 hours a year (30 hours a week, 40 weeks a year). This £11,000 is the mark-up I need to put on top of all expenditure and the cost of running my business. It’s basically the profit margin and in this case it works out at c.£9 per hour. Now, let’s assume the cost of running my business is just £1,500 a year i.e. the accountant’s fees and nothing else. Now I’ve got to earn £12,500 from my 1,200 hours, so I’m at £10 per hour.
For my first radio I elect to buy and restore a radio I know is in very high demand – one of the round Ekcos. Can I get an unrestored one for £500? If I’m lucky perhaps, but more likely £700. However for the sake of argument let’s assume I paid £500 and to get it working is going to take 20 hours work and £50 in replacement components. My fixed cost is £550 and the 20 hours it’s going to take is a further £200, so I’m now at £750 as a minimum sale price. But I’ve also got to add on my cost of sales. Ebay lets me reach the widest audience at the most cost effective price and so that is my chosen route to market. Their fees are 10% though and if my buyer pays by paypal that’s a further 5% - a whopping 15% on top. The minimum I have to sell my £500 Ekco for is now £882. Do-able certainly. But what if I had to pay £700 for the radio. In that case I’d have to sell for £1,117. And how about if I encounter a problem and it takes 30 hours restoration and not 20? In the case of a £500 acquisition I’d have to sell for £1,000 and in the case of a £700 acquisition - £1,235 - a likely loss.
Selling high-value radios offers potential for good profits, but it’s matched with a high risk/reward ratio. Generally these items are already scarce, in demand, and still command a high ticket price unrestored. The margins for error are therefore very small and if it takes longer to restore than anticipated, or one fails to get the sale price needed, that profit can rapidly disappear.
How about something more pedestrian, a Bush DAC90A? Just this week I saw an immaculately restored one go for £256. That’s the highest price I have seen in years and it must have taken quite a bit of time and effort to get it into that showroom condition. Nevertheless let’s use the same model as above and assume it cost £60 to buy, £50 for parts and 20 hours labour. Well, on that basis we’d have to achieve a sale price of £318! When was the last time you saw a DAC90 fetch over £300? If you could achieve £200 on every one you sold you could only afford an outlay of £55 for the radio and parts and eleven hours labour. When you’re running a restoration business, production time has to be accounted for as a cost.
Two final points on buying and restoring radios. The likelihood is that the less you pay in acquisition the more you’re going to spend in time and money to get the radio into a saleable condition and time is your most expensive cost. Where you position the price will also directly influence stock turn i.e. the rate at which you sell goods. For the period radios sit on the shelf they have tied up capital which you need to release to finance further acquisitions and restorations. To increase stock turn, one invariably needs to price more competitively and that usually means smaller profit margins.
There is perhaps one final avenue to stroll down in the hope of finding a business opportunity and that’s contemporary homebrew i.e. combining vintage valve radio technology with very modern, ultra-stylish cabinetry. I’ll let you know how I get on.
Nick.
This is a long post so you might want to read it over several sittings, or at the very least have a large Scotch in hand!
I thought I’d share my thoughts on this question because it’s an idea I have kicked around many times. I have also spoken with a couple of guys who do make a living restoring and servicing vintage valve radios, but at their own admission “I could make more sitting behind the till at Tescos.” And so that’s the first thing to appreciate if you want to go down this road. It’s going to be a lifestyle business. You’re unlikely to raise a mortgage off the back of it. The other thing to bear in mind is; 'if your livelihood depends upon it, you’ll never look at the hobby in the same way again'.
Personally, I think it would be foolish to sell working electrical items to the general public without the protection afforded from being a limited company, particularly when some of the items being sold don’t conform to current safety regulations. In this litigious society, with plenty of no-win-no-fee law firms, it’s terribly easy to be sued. Being a limited company and getting Public Liability insurance at least gives some measure of protection of one’s personal assets. Registering as a company takes you beyond the realms of a hobby though. There are Annual Returns and Accounts to file and possibly VAT considerations too.
If this hasn’t already put you off and assuming you still want to try and make a living from restoring radios, the first consideration is ones market. General public, or, collector/enthusiast? There’s also the question of price positioning which drives the financial model for one’s business. High-value/low volume, or low-value/high volume?
From the perspective of being potential customers it’s my observation that hobbyists/enthusiasts fall into two groups: Those who enjoy the process of restoration and are not seeking profit; and those who are dealers themselves i.e. buying, restoring and then selling on for profit or to at least recover costs. With the former group there is a very definite price ceiling, which immediately constrains one to the low value/high volume business model. To make money it will be necessary to have access to lots of cheap radios which can be delivered cheaply too. Not an easy task I would argue, especially when prospective customers are already likely to be hunting the same ground as you, e.g. eBay, collector’s fairs, local car boot sales and junk shops. With this in mind I think the best bet for making a living from hobbyists is from the sale of peripherals and niche products. This takes us into the realm of breaking and salvage and offering NOS components, speaker grill cloths, replica batteries, eliminators etc. etc.
Personally I have a real dislike of those who buy perfectly restorable rare radios just to strip them down for their components, but I know it’s an inevitable part of the process by which vintage products gain value. Eventually these people break so many units that the complete item becomes so scarce that the price of the whole exceeds the price of the parts.
Of the other group; I have had success selling to enthusiasts who are dealers themselves. Like their fellow hobbyists they are generally disinterested in restored pieces and this means there is a price ceiling. But in this case it’s the profit ceiling. If you know what you are doing you can still find radios which these dealers will have a market for and offer them up at a price which is attractive. This is how I finance my hobby. I don’t make much money, but I make sufficient profit for my hobby to pay for itself. Could I make a living doing it? I’m not sure I could.
This takes us neatly to selling to the general public, which is a very different challenge and comes with a number of obstacles too. Unlike classic cars or vintage clocks, vintage valve radios are generally considered obsolete by the general public and if the eventual switch-over to digital-only does happen then that’s almost certainly going to be true. Vintage valve radios are also considered by many to be dangerous. We have become such a risk-averse nation that few people would consider buying an electrical item which was not CE marked or which clearly states it conforms to the Electrical Equipment (Safety) Regulations 1994 - and for good reason too.
The other obstacles to sales are aesthetics, changing fashion and physical size. These dictate which radios sell and which do not - currently and into the future. At this time (2015) demand for radios produced in the post war era is very low. There will always be some exceptions but the vast majority of post-war radios have no market value from a business point of view. Whereas, there is decent and growing demand for many 1920s to mid-1930s receivers, some stylish 1960s radios, top-end transistor radios, some early miniature transistor radios, and for some Catalin and Bakelite models. In today’s compact households big is not beautiful either. Take the Murphy 146 and 188 as examples. Most sellers are lucky to get a tenner for one of those.
To know which models to buy and sell one needs to track the market. When I first came to this hobby this was something I did for every pre-1960 radio sold on eBay. I have continued price tracking most pre-war radios and in this way I am able to see which radios are worthwhile buying and restoring and also how prices for particular models are trending too. I can even make some educated guesses at which models are likely to become popular in the future. If you want to make decent money at this hobby then I would argue this sort of market research is essential. Another thing to bear in mind is that whatever is attractive now, won’t necessarily always be, and vice versa. Just like many antique markets, this one for radios is subject to aesthetics and the vagaries of changing fashion. However, once something has achieved cult status it will almost certainly continue to achieve ever higher prices, albeit more slowly after the initial rapid growth phase. The Ekco AD36/45 is a case in point. The price of these round Ekcos just keeps going up and up and they are now pulling the price some of the other Ekcos of the same period up along with them.
If you want to make a quick buck it is necessary to identify those radios which when restored fetch a good price, but when unrestored are dirt cheap to buy. As others cotton-on however the price of acquisition for these radios unrestored grows more rapidly than the price at which restored ones can be sold and so profit margins begin to drop. At this point one needs to find alternative radios to buy, or one must be prepared to hold onto a restored radio for longer waiting for the sale price to catch up. This is OK if you can afford to tie up capital in your stock, but there is always an inherent risk that the radio may lose popularity and then you could easily be left out of pocket. This is exactly what happened with the Bush DAC90x. Interestingly enough I am just beginning to see the signs of a revival in the value of the DAC90x.
If you have lots of money which you can afford to tie up in stock then it would be arguably better to speculate and buy up radios which you think might become sought after and simply hold onto them unrestored until their value makes it viable to sell them on (unrestored or restored). Back in the day when I had surplus cash I dealt in wine futures. I would buy wine en-primeur and then sell it on ten to twelve years later when it had matured. I made very good returns like this, often 20%+ compound per year. There’s no reason one couldn’t do the same with vintage radios. For example, let’s say you have £5000 to invest and you want to make 10% a year for ten years i.e. net c.£13000. Could you buy 100 radios at £50 each and then sell each of them for £130 ten years later? Possible? How about making 5% compound per year though? Then you’d just have to sell each for £80.
Just as with wine futures, all one needs in order to succeed in this venture is a good crystal ball and the willingness to write the whole lot off as a bad investment if things turn sour! Personally I’d rather invest in wine and that’s because I believe, that like classic cars and antique clocks, a significant element of the value in a vintage valve radio is its usability. Can you imagine what would happen to the value of many of those classic cars if you weren’t allowed to drive them, or those antique clocks if they never ticked again? I fear for the future of vintage valve radios in a country determined politically to become digital-only. I think very few radios will retain any value as ornaments and so I think it would take a very brave man to invest a lot of money in vintage valve radio futures.
If you do decide to restore radios for sale to the general public then it goes without saying that the restoration needs to be of the very highest quality. Preserve for museums – restore to sell. This might require finishing a radio to a higher standard than when it was originally turned out and herein is a problem. The time needed to restore many radios - particularly early wooden ones – to a saleable condition, combined with the high cost of original components, makes it very difficult to make a living at this game.
Let’s say I want to earn £11,000 a year and to do that I’m prepared to work 1,200 hours a year (30 hours a week, 40 weeks a year). This £11,000 is the mark-up I need to put on top of all expenditure and the cost of running my business. It’s basically the profit margin and in this case it works out at c.£9 per hour. Now, let’s assume the cost of running my business is just £1,500 a year i.e. the accountant’s fees and nothing else. Now I’ve got to earn £12,500 from my 1,200 hours, so I’m at £10 per hour.
For my first radio I elect to buy and restore a radio I know is in very high demand – one of the round Ekcos. Can I get an unrestored one for £500? If I’m lucky perhaps, but more likely £700. However for the sake of argument let’s assume I paid £500 and to get it working is going to take 20 hours work and £50 in replacement components. My fixed cost is £550 and the 20 hours it’s going to take is a further £200, so I’m now at £750 as a minimum sale price. But I’ve also got to add on my cost of sales. Ebay lets me reach the widest audience at the most cost effective price and so that is my chosen route to market. Their fees are 10% though and if my buyer pays by paypal that’s a further 5% - a whopping 15% on top. The minimum I have to sell my £500 Ekco for is now £882. Do-able certainly. But what if I had to pay £700 for the radio. In that case I’d have to sell for £1,117. And how about if I encounter a problem and it takes 30 hours restoration and not 20? In the case of a £500 acquisition I’d have to sell for £1,000 and in the case of a £700 acquisition - £1,235 - a likely loss.
Selling high-value radios offers potential for good profits, but it’s matched with a high risk/reward ratio. Generally these items are already scarce, in demand, and still command a high ticket price unrestored. The margins for error are therefore very small and if it takes longer to restore than anticipated, or one fails to get the sale price needed, that profit can rapidly disappear.
How about something more pedestrian, a Bush DAC90A? Just this week I saw an immaculately restored one go for £256. That’s the highest price I have seen in years and it must have taken quite a bit of time and effort to get it into that showroom condition. Nevertheless let’s use the same model as above and assume it cost £60 to buy, £50 for parts and 20 hours labour. Well, on that basis we’d have to achieve a sale price of £318! When was the last time you saw a DAC90 fetch over £300? If you could achieve £200 on every one you sold you could only afford an outlay of £55 for the radio and parts and eleven hours labour. When you’re running a restoration business, production time has to be accounted for as a cost.
Two final points on buying and restoring radios. The likelihood is that the less you pay in acquisition the more you’re going to spend in time and money to get the radio into a saleable condition and time is your most expensive cost. Where you position the price will also directly influence stock turn i.e. the rate at which you sell goods. For the period radios sit on the shelf they have tied up capital which you need to release to finance further acquisitions and restorations. To increase stock turn, one invariably needs to price more competitively and that usually means smaller profit margins.
There is perhaps one final avenue to stroll down in the hope of finding a business opportunity and that’s contemporary homebrew i.e. combining vintage valve radio technology with very modern, ultra-stylish cabinetry. I’ll let you know how I get on.
Nick.
