Liquidation is the process of selling a business’s assets to closeout brokers to produce enough cash to pay back creditors. Liquidation stock that sits idle in the warehouse is costly and can be sold to companies that buy overstock inventory. If you don't sell excess inventory and dead stock, It ends in the business closing. If a company is not able to make ends meet, liquidation is one option to pay creditors and close the business. One reason businesses fail is because they carry to much dead inventory on the books. Old merchandise should always be sold off to liquidation buyers while the business is still profitable.
Liquidation is just one business exit strategy option. An exit strategy is how you plan on selling your investment in your business. Other exit strategies you might consider before liquidation are mergers, acquisitions, and Initial Public Offerings. Closeout companies are businesses that buy and sell liquidation stock either directly or with the help of closeout brokers. They buy all categories including overstock housewares, excess inventory of lawn and garden products, overstock pet products and other inventory being disposed of.
So just what is the liquidation option? It is the direct conversion of assets to cash by selling them to a user/consumer or to companies that buy overstock. There are generally three categories of business that will liquidate assets: The reasons for this are numerous: Your heirs may want nothing to do with a takeover or succession plan.They have been too close to the business for years and know the 24/7/365 routine required to be successful in many small businesses. And they're attracted to the high salaries and benefit packages offered in the corporate world. Or they simply are not capable of continuing the business. Closeout brokers and companies that buy overstock are often being run by 2nd generation family members. Many of these companies were started in the 1960's or 1970's and are now headed by children who are grown adults. Today's leaders were kids raised in the family business where they may have been involved in loading/unloading truckloads of closeouts and participating in purchases of liquidation stock, working in the warehouse, cleaning, etc.
Moreover, your business is at least solvent or near-solvent, so bankruptcy is not an option. And even if you were near or at insolvency, you'd probably find it preferable to liquidate your assets and negotiate amounts owed to your creditors, while at the same time avoiding the stigma of bankruptcy. And finally, you have come to realize that selling a business with significant assets is much easier said than done. Clearing stock from a warehouse and running a liquidation sale is not an easy task. Shutting down operations can be emotionally draining and physically challenging, especially if the warehouse is full with old inventory, closeouts, excess dead merchandise and overstock inventory from years past.
Potential buyers are few and seldom truly serious. Most with the required assets and credit lines required to buy your business will not want to invest for the same reasons your heirs have declined the opportunity. The vast majority will not pay for goodwill or "blue sky." They will discount your inventory and pay far less than cost, basically giving you what you would get from a closeout liquidator or closeout brokers, because they are going to have to turn around and sell excess inventory they bought from you. Most prefer to purchase their own new assets (equipment or inventory) and start a new business rather than buy an existing one that may include all kinds of dead stock taking up warehouse space. To achieve the best results, liquidation firms are available with experience in conducting "going out of business" sales for virtually all types of businesses. These firms are typically classified as consulting firms. And the liquidation sales they conduct may come in several cloaks: Quitting Business Sale, Total Liquidation, Going Out of Business Sale, Retirement Sale, Creditor Sale are just some of the titles associated with these sales. Your buyers may also be called overstock buyers, closeout buyers, wholesale liquidators, companies that liquidate inventory or companies that sell excess inventory. As with any method of exiting from your business, an inventory liquidation should be approached with professional assistance and some important guidelines. Most importantly, you must realize that, even though liquidating is still retailing, the strategy and techniques used are very different from that of an ongoing retail operation. When you downsize your warehouse or are shutting down operations you will have to learn to let go of old inventory and obsolete merchandise for pennies on the dollar.
Businesses with assets used indirectly in the production of income — This generally includes the furniture, fixtures and equipment (FFE) of a service business, such as insurance agencies, attorney's offices, etc. The liquidation value is extremely limited and can usually only be sold to used office equipment dealers, although an auction is sometimes viable. Businesses with assets used as tools in the direct production of income — This would include restaurants, manufacturing and construction companies. These assets can be sold to similar types of businesses, sold or consigned to used equipment dealers, or liquidated with the assistance of an industry-specific auction house. Whatever the case, shutting down operations is not easy and requires patience, time and help from inventory liquidators who specialize in end of line stock, downsizing warehouses, going out of business or completely discontinuing operations.
Businesses whose assets directly produce income — These are retail storefront businesses and, for our discussion, are independently owned and operated. Independent stores, apparel and shoe stores, sporting goods stores and furniture stores are in this category. (Public companies and multi-unit operations, like major chains such as Target, Staples or Home Depot, also fall into this category, but amazingly enough these companies often wait to liquidate until they are bankrupt! By liquidating excess inventory and dead stock, their "losers" and focusing on their "winners," both large and small chains could avoid insolvency, but they usually wait until it is too late.) Before you can liquidate your business, you must first talk with your business’s lawyer and accountant. And, you need to tell your creditors beforehand that you will be pursuing having an inventory liquidation. Your lawyer and accountant can help recommend how to sell your inventory assets, and they will help you through the liquidation process. Make sure you have an accurate count of your inventory. Then, you want to make the items look appealing so that you can sell them. When you intend to sell a car, you make it look its best so you get the most money for it. Likewise, make sure all your assets look presentable.
Merchandise USA is a closeout liquidator in business more than 38 years. We can help if you are closing down operations, shutting down warehouses, downsizing 3PL warehouses, going out of business and no longer selling merchandise, or simply need to get rid of old stock and clear inventory from the warehouse to make space. We buy closeout pet products, overstock home goods and housewares and obsolete inventory of sporting goods and toys.