Many philatelic writers have commented on the poor rate of success of stamp dealers. Look at a Linn's Stamp News from 1960. With the exception of one or two companies (including Earl P. L. Apfelbaum, Inc.), there are very few professional stamp firms still active that were in business then. Certainly the world changes and businesses change, but in most major industries that are still around, the important players of 1960—the Ford Motor Companies, the General Electrics, and the Corning Glasses—are still major players today. There are two reasons for this, and they tell us a lot about the hobby.
Most stamp professionals are accidentals, that is, the stamp business was not their first choice. Many come to deal stamps when they retire or when they have lost their jobs. Accordingly, though they may have good stamp knowledge, sometimes they have limited business skills or have no business background at all. This impacts their success, and the small working capital of smaller stamp businesses means that the proprietor is often the bookkeeper and mail room clerk as well as the stamp describer. Most stamp dealers have pretty good stamp knowledge and are always surprised that their philatelic acumen doesn't necessarily confer success. But being a successful stamp dealer takes many skills. Certainly knowing how to run an efficient office and give good customer service is important, but the single most important skill in running a profitable stamp business is knowing what to buy and how to break up a collection that you have purchased into units that are the most saleable at the best price. There is no magic formula for this other than to say that experience is the key, and the best way of breaking up a collection is to not to do it the same way each time. And buying is key; most dealers come into the business as collectors, and buying for resale is very different than buying for your collection. It's not just a matter of price (obviously dealers need to buy at lower prices than collectors) but also buying for your market material that you can see clearly how to break into saleable units. Knowing when to markdown difficult to sell material and how much to mark the material down are also skills that collectors who become dealers need to develop.
Difficulties in creating a successful stamp business is only half the reason why so few stamp businesses last past the lives of their founders, if they are fortunate enough to last that long. The other reason relates to an economic term "low barriers to entry." Even before Ebay, it was very easy for anyone who wanted to be a stamp dealer to become one. Any collector can instantly offer his wares to the same hundreds of thousands of collectors as can dealers who have spent decades building customer loyalty. Stamp businesses then are not really so much institutional as they are personal. Even if you never meet or speak to the principal of a stamp business, you are buying his grading and expertise each time you purchase a stamp. Like a restaurant, the success of a stamp business is really the quality of the chef. Cars and jet planes require an industrial process, so Boeing will always exist by one name or another. Stamp dealing occupies a quasi-land between a profession and a business.