If you hope to be your own boss someday, starting a liquidation business is one attractive, realistic option.
You already know that shifting from the comfort of a steady salary into the unknown will be challenging and difficult at times. Still, you might feel that you are ready for a change. You want to be in charge of your future, have more control over how your workdays go, and do something you genuinely enjoy.
But what exactly is a liquidation business? In the business world, liquidation is what happens anytime someone closes up shop. Available assets are sold to pay off debts. This process typically involves selling those goods to liquidation resell firms at a reduced price. The liquidation company turns around and resells to the public at deeply discounted prices.
Here’s what you need to know (and do) to start a successful and profitable liquidation business.
Choose Trusted Liquidation Wholesalers
The number of liquidation wholesalers in the United States has skyrocketed in recent years. You can now find dozens of websites that offer daily auctions of liquidation merchandise. Online shoppers typically review an inventory of products ahead of auction time. This can include everything from home and garden goods, groceries, health and beauty commodities, consumer electronics, and clothing. Buyers receive huge discounts on top brands even as the wholesaler earns a profit.
However, even though buying liquidation pallets has never been easier, you’ll want to stay sharp. Do business only with reputable wholesalers who provide high-quality merchandise below wholesale prices. A few simple guidelines can prevent getting burned.
Before making contact, check for reviews of the merchants you are considering. If you come across complaints against the vendor and see they have a history of doing bad business, cross that vendor off the list.
Don’t artificially limit your search. Look for similar products sold by other vendors. Check out the price of similar items to ensure the price you are paying is competitive. Market research is critical to ensure you don’t get overcharged. You also want to have a place to sell the items once you received your shipment.
When deciding on a liquidation wholesaler, take into consideration your inventory needs. Opt for wholesalers with various selling options such as selling by carton, pallet, LTL, or truckload. If you want to do business internationally, look for a wholesaler that can assist you with international shipments.
Starting a Liquidation Business Lets You Decide on Product and Pricing
Once you’ve selected your trusted wholesaler(s), the next step is to decide what you want to sell. To do that, you’ll need to have developed a business plan that includes detailed market research.
There are many different products available to sell out there. Decide what types of goods you plan to buy and, importantly, how much you plan to buy. Keep in mind that if the goods have been checked and graded, you will pay more.
Since you’ve done your preliminary research, you already know approximate prices for the products you intend to purchase. The next step is to calculate other expenses such as transportation, storage, and any additional fees. These extra expenses will cut into your profit margin, so you need to prepare for that.
Calculate your total cost to determine the amount of profit you expect to make. Estimate the merchandise quantity and ensure that their quality is decent and corresponds to the price you plan to charge. Most importantly, make sure that the goods you are buying have an available market where you can deliver them quickly.
Set Up an Online Store or Physical Shop
After deciding what to sell and purchasing the liquidated goods, start looking for a storefront assuming you plan to open a physical store. Make sure you’ll be able to store your inventory at that location to minimize storage and transportation costs.
In the internet age, you no longer need to wait until your physical store is fully functional. You can start selling your goods online immediately. Once you have established yourself, you can rent or purchase an actual store to expand your business.
Another option when starting a liquidation business is to limit yourself to an online store. If you decide to go that route, you will also need to secure a location where you will store your inventory. To start your online business, you will need a domain name idea — this will be your online store’s name. You’ll also need a web hosting account and a reliable internet service provider. Nowadays, you can get started using an eCommerce platform where you can set up your online store without any coding or web design skills and an average budget.
Next, you should decide which features you want your store to have since they are a vital part of your online store. Start a written list of needs, ordered by priority. For example, you might need maps, galleries, an “About Us” page, maybe videos on your homepage, etc. Ultimately, you will need to set up payment methods and sort out your shipping settings.
Utilize a Tailored Marketing Strategy
After you’ve established your business, you will need to decide on the most suitable marketing strategy. Any robust online marketing strategy will help you reach prospective consumers and turn them into customers. Simply put, it will make your business visible and help you boost your company’s revenue.
If your budget allows it, hire a marketer to do your company’s marketing and PR. If that’s not possible, opt for outsourcing these services. Either way, you need to have a well-designed, customized-to-your-needs marketing strategy. What you don’t want is an online presence that conveys anything less than professionalism.
If all this seems too overwhelming, start by reading about the most fundamental marketing tools to hatch some ideas. Every business’s marketing needs and goals are unique. Even so, there are a few strategies that have proven universally effective for generating leads and revenue.
The Bottom Line When Starting a Liquidation Business
The key to operating a fast-thriving company in any niche market is keeping costs low, turning profits, and staying afloat. The same goes for starting a liquidation business since buying low and selling high is the core principle in play.
Nowadays, there is an increasing amount of available goods, many of these quality, brand-name merchandise, which can be bought at bargain-basement prices. Getting a good deal has become easier than ever. But this is not the only factor that will determine your success.
To make a profit, you will need to pay attention to market forces and economic conditions. Simply put, if you are going to be successful, you need to know as much as possible about what you are buying and how you plan to sell it. Finally, you must also be optimistic and keep yourself motivated in times of distress. A positive attitude and ambition can help you to attain optimum levels of growth.