How To Have A Business Liquidation Sale
If you are planning a business liquidation sale, one of your first steps should be to contact a closeout broker who can direct you to companies that buy excess inventory. Liquidation sales take effort to coordinate and below are tips that will help you find companies that can buy closeouts and all of your excess inventory.
1. Make sure you are ready. Before having a full blown liquidation sale you can offer existing customers deals on closeout merchandise. You will recover a much larger percentage of cost if you can get all your regular customers to buy closeouts at a reasonably discounted price vs closeout brokers or liquidators who may only be able to offer 10 cents on the dollar. Do as much as you can on your own to work with other companies that buy excess inventory prior to committing to a full blown inventory liquidation.
2. Contact Your Lawyer And Accountant: Before you get too far along in the process of liquidating, you will want to discuss this with your professional team to be sure it is the right thing for you. Your accountant will help you with any tax liabilities you will have to deal with, and your attorney will make sure you are properly protected through the entire process. It’s always best to work with your advisors first so you don’t spend time and money planning something you won’t be able to move ahead with.
3. Determine Asset Value. It is important to be honest with yourself about the true value of your inventory and closeout merchandise. Business owners tend to overvalue everything about their companies because they view it through a lens that sees the 24/7 work schedule that went into building the business. Blood, sweat and tears don’t have any value to liquidators or other companies that buy excess inventory. These buyers have their own issues and problems, and they view business assets as a commodity without the emotional connection carried around by the seller. It is important to understand what your assets will be worth in a liquidation sale, because you will most likely be selling assets, including closeout merchandise, at a loss. This is the nature of the beast when liquidators buy excess inventory.
4. Research Liquidators. A quick search of closeout websites will bring up more than a dozen qualified companies including liquidation brokers, closeout sellers, and other buyers of overstock inventory. When you are choosing a company to help you through this sale, it is important to work with a liquidator who has experience orchestrating sales similar to the one you want to have. It is even better if they are familiar with your specific type of business and category of assets. When you look for customers to buy closeouts and liquidate excess merchandise it is always helpful if they have an understanding of your industry.
5. Have A Fast Sale. This is really important. When you are selling closeouts and disposing of inventory at a loss, you don’t want things to drag on too long. Closeout brokers and liquidation companies may very well understand the business of closing down a company, but they aren’t necessarily financial geniuses. Basic math 101 will tell you that as you sell excess inventory at a loss, you need to move fast because your expenses will quickly eat up whatever cash is coming in. If during regular times you have a 6 month supply of inventory, you may now only have a 2 month supply because you are selling at 80% off. If it takes you 4 months to wrap things up and get out of your building, you will be paying additional rent, heat, electric, taxes, insurance, maintenance, etc at the end making the liquidation sale even more costly.
