This provides other businesses with a great opportunity to source their
stock at the lowest possible prices. Some business owners feel guilty about
exploiting other business owners who are battling, but remember that they
have to clear their stock in order to pay their debts and solve their
business crises. One is merely using the system to maximize one’s success in
business; there is nothing wrong with that. In fact one is doing the
business under liquidation a good turn.
Benefits
It is clear that one would benefit to varying degrees in such a scenario.
It usually happens that a wholesaler or retailer is prepared to negotiate
prices up front whilst at other times the stock would be up for auction. The
route of auctioning the stock is often taken when a wholesaler or retailer
is being legally liquidated due to having been declared insolvent or
bankrupt.
Purchasing the liquidated merchandise at an auction is usually the best
possible option as it will be available at the lowest possible prices.
Whether one wants to wait for the auction date before making an offer on the
stock is another matter. This may not turn out beneficial at all, especially
if the business being liquidated is willing to negotiate prices beforehand.
It depends on a couple of factors.
Being aware of how urgently one needs the stock and the lead time
required until delivery can take place is very important. Another strong
determining factor is the demand in the market for these goods, at the
prices which one would be able to offer them. If demand is low or relatively
low I strongly suggest reconsidering the need to purchase the stock. Another
important factor is one’s available storage space and whether one would need
to rent or buy more storage space, thus increasing the cost of acquiring the
merchandise.
Finally, the question would arise as to whether one has calculated the
full cost of acquiring the goods correctly; including the delivery cost,
storage cost, distribution cost, handling cost and the cost to actually
procure the goods.
One should remember that gaining the full or maximum benefit can only be
achieved with in depth planning and due consideration of all possible
scenarios in acquiring the benefit. Caution must be taken in this regard;
rushing into a deal without comprehensively taking everything into account,
including the correct quantity required, meeting quality standards, the
price, storage, and the other determining factors stated above, could lead
to a critical business error.
As long as the business owner, manager and the procurement manager keep
their wits about them and perform this function as they should, great
business benefits can be achieved.
Be cognoscente of the reason why these opportunities arise:
1. Certain manufacturers have over sourced raw materials or have
underbudgeted their costs, expecting to be able to meet budgetary
constraints, thus over committing their business’s financial resources.
2. Wholesalers who purchase from manufacturers and distributors suffer
the same fate in terms of their budgeted purchases and expenditure.
3. Certain retailers experience the same causes for failure.
4. Certain wholesalers and/or retailers have to clear redundant or
oversupplied stock from their outlets.
5. Wholesalers and retailers are declared insolvent and their stock must
be liquidated according to a court order.
6. A wholesaler or retailer may simply decide to close his business due
to various reasons. Look out for these opportunities; they arise ever so
often.
Benefit by finding liquidation opportunities
In order to benefit from liquidations one has to monitor the market, read
newspapers, periodicals, business newsletters, court rolls, and keep in
touch with leaders in the relevant industries. Websites are rising up at
present which offer liquidation notifications and services. As part of their
services they offer
to source liquidation merchandise for one, arrange the delivery there-of,
deal with all import & export procedures and close the deal off on one’s
behalf.
Be cautious when dealing with liquidation agents. Do the necessary
research to establish the reputation and reliance of the agents before
making the decision.
From my experience, it is usually better to do it in one’s own capacity,
otherwise one needs to take responsibility for other peoples errors and
shortcomings.
Conclusion
There are numerous benefits from sourcing liquidation merchandise but, as
in all functions within a business, due caution and diligence is good
policy.
About the Author
Vaughan Jones is a business mentor, a published author of many business
management books, articles and tutorials. He is also a songwriter and
musician, as well as being the founding member of the ONE Life-Love-Energy
Foundation..http://businessmentor4u.webs.com
