How Business Owners Can Benefit From Liquidation Auctions

Whether you're exiting your business, need extra cash for creditors or just ended up with a bunch of additional inventory to unload, liquidation auctions offer an excellent opportunity for selling your assets. The term "liquidation" usually implies "everything-must-go." In many cases, owners hold these auctions when they're closing up shop.

You need to make some tough decisions when it comes to exiting a business. Your alternatives involve selling it, merging it, passing it on to someone else or liquidating it. A lot of owners assume they'll sell the business or have their kids take it over. But, these options can be elusive.

Not only have recent economic conditions been challenging for many businesses, but the current climate has made it difficult to find qualified buyers willing or able to pay you the true value of your business. And, your kids may not have the interest or capability to run your company. If you find yourself in this situation, you may have no choice but to sell the pieces of your business that have value - the equipment, supplies, tools, inventory and other remaining assets.

But that doesn't imply selling your assets is a less than favorable last resort. Quite the contrary. Conducting your sales through a liquidation auction offers a sound strategy and may be just the ticket to accomplishing your goals.

Plan Your Exit

When it comes time to exit the business, you need to consider all your options, as well as develop a well thought out exit strategy. Creating a plan will help remove some of the emotional attachment you may have with your business. A sound exit strategy helps you make decisions objectively that provide you with the best benefit.

So, it's a good idea to discuss your strategy with some professionals, such as an attorney and accountant before finalizing your plan. You want to be sure you cover all your bases, especially on all legal and financial ramifications.

And, liquidating your assets undoubtedly creates a lot of stress. That's why many business owners prefer to use an auction company to manage the process. The bulk of the responsibility shifts to the auction service so you don't have to worry about much.

Liquidation Sale vs. Liquidation Auction

Before discussing why liquidating assets is a viable strategy, it's important to differentiate between a liquidation sale and an auction. Understanding the distinction ensures you make the best decisions for your situation.

Contrary to a liquidation auction that takes place quickly from start to finish, liquidation sales are conducted over longer periods of time, such as weeks, months or even years. The hope is the longer selling time will help the business owner get higher prices. In some cases, owners can review multiple offers and then select the best one. This scenario works best when you're selling specialized or unique equipment.

However, you have to store your assets during a liquidation sale. This means paying for mortgage or rent on the facilities, utilities, security services, taxes and more. Although you're holding out for the highest prices on your assets, the costs of conducting the sale over a longer time frame can add up.

Why Go the Liquidation Auction Route

Liquidation auctions offer numerous benefits for selling your business assets, including:

* Convenience - As mentioned earlier, you're probably dealing with a stressful situation if you're closing your business. The last thing you want to do is pile on more stress at this time. You'll probably have to do some sorting of items, but the auction professionals will take over so you aren't taxed with selling each item individually.

* Marketing Services - Professional auction houses are expert marketers. They'll help you reach a much broader audience than you could do on your own. In fact, professional auction companies can have hundreds or thousands of prospects in their databases that they market to repeatedly.

Because full-service auctioneers have a regular following, you have greater assurance your assets will be sold at the highest price possible. In addition, experienced auctioneers use online technologies so they can literally attract buyers from all over the world. And they're very adept at targeting other businesses that could use your assets.

* Fast Turnaround - Liquidation auctions are quick. The whole process can be over and done with - from start to finish - in about 90 days. Sorting the assets, writing item descriptions, marketing the auction, conducting the auction, cleaning up, etc. is all managed within a short window. If time is of the essence, liquidation auctions can deliver like no other option.

* Higher Prices - Auctions always create an environment for higher prices to be paid on your assets. The nature of auctions involves competitive bidding that can drive prices up. Although the auction company takes a small cut from every sale, the bottom line result can be much greater than paying for all the associated costs involved in going solo. Remember, you have to pay for storing facilities, utilities, security, taxes, marketing and other costs when you sell assets yourself.

* A Bankruptcy Alternative - Because it still comes with a stigma, many people want to use bankruptcy when they have no other options available. Instead, liquidation auctions offer an attractive option, especially if you're experiencing a shorter-term cash flow issue. Liquidating some assets lets you bridge the gap until your financial situation recovers.

* Improving the Bottom Line - Liquidation auctions make perfect sense if you have inventory you can't resell in your business. Examples include customer returns, damaged goods or surpluses. Since you can't resell these items in your business, you can generate additional cash by selling them at an auction. If you have assets you no longer need in your business, have too much of, or can't resell for the reasons noted, a liquidation auction can help pad your bottom line.

Recent economic turmoil has prompted many businesses to shut their doors or unload assets for much needed extra cash. Whatever your reasons for needing to sell assets, liquidation auctions deserve serious consideration. A reputable auction company specializing in liquidation auctions will help you get the most bang for your buck.

Liquidation auctions are great opportunities for everyone involved. Buyers have access to good deals. And, you can get an attractive return on your assets that help you remain solvent, satisfy your creditors or put a nice chunk of change in your pocket.

Source: http://goarticles.com/article/How-Business-Owners-Can-Benefit-From-Liquidation-Auctions/8142892/