Tell-tale signs you need the help of a professional liquidation company
The goal of every business owner is to ensure that their company is able to operate smoothly. This means that your day-to-day operations are able to run with minimal to no roadblocks, cashflow is clear and remains positive, and of course, there remains sufficient resources for growth and development.
One essential factor of a business that can determine its success or failure is inventory—more specifically, your company’s capacity to practice good inventory management. After all, inventory is one of the most valuable assets of any business. Procure too little and your capability to cater to your customers’ needs are compromised, resulting in them doing business elsewhere, and a loss of potential sales. However, there is another common problem that businesses have to contend with: purchasing too much stock.
The inventory dilemma
The problem of excess, aged, or returned inventory is a costly one. In fact, towards the end of 2022, materials supplier Avery Dennison reported that about 8% of excess stock would ultimately end up being wasted and about $163 billion of inventory is being disposed of annually With the supply of products exceeding the demand for them, businesses are also left with little room to grow and inbound new and more in-demand products due to a lack of warehouse spaces.
Furthermore, as a business owner, one has to be conscious of the limited shelf life that inventory possesses. Now, this is different from the expiration dates most perishable goods come with because despite your stock being non-perishable , they still come with a ‘sell by date’ before they become what we call aged and dead stock.
We have a separate blog detailing all the different sorts of inventory your business should be concerned with but for a quick recap, aged stock refers to items that have been in your warehouse anywhere between 60, 90, and 180 days. Also called slow-moving inventory, these are items that have a slow turnover rate either due to being seasonal in nature (such as Christmas decorations) or simply having low demand due to the quickly changing shifts and trends in the market.
On the other hand, the term dead stock, also known as obsolete stock, can be used to refer to your inventory that has surpassed the 180-day mark. Dead stock refers to items that are especially difficult to sell due to them being damaged or outdated. Unless you are able to find buyers with a particular interest in these types of items, the chances of getting a return on the investment you shelled out for these items are slim to non-existent.
The bottom line is, carrying these sorts of inventory can quickly become costly. Not only do you have to contend with unrecovered investments but also the rising storage costs it takes to house such inventory in your warehouse. Clearly, there is a need for a solution that addresses both these problems.
Liquidation: An easy catch-all solution?
Enter liquidation, the process whereby enterprises or corporations sell their inventory and/or assets in order to pay off outstanding debts and obligations, smoothen their operations, make (financial) room for growth and expansion, among many other reasons. Liquidation is often thought of as a bankrupt company’s last resort. However, the many aforementioned benefits have made it an attractive strategy even to thriving businesses – especially as a solution to the many problems related to excess inventory.
However, one should beware of jumping the gun too quickly. While yes, liquidation is a feasible solution, it can quickly devolve into just another dilemma in and of itself when not planned for and executed properly. Don’t get us wrong, there is absolutely nothing wrong with deciding to do your liquidation in-house. After all, no one knows the ins and outs of your business better than you do. However, there are certain situations you may find yourself in that indicate that your company may need the help of a professional liquidation company. If you are second-guessing whether it’s time to call and seek the help of a liquidation expert, then here are the tell-tale signs that you need to look out for.
Signs you need the help of liquidation experts
You have no idea what to do with your assets
Let’s begin with one of the more obvious signs: when you find yourself wanting to liquidate but have no idea how to kickstart or go about the process. While we wish liquidation was as easy as pricing or repricing your assets and putting them out there on the market, it is much more nuanced if the desired result of recovering value is to be achieved.
There are different approaches that may be taken to liquidation depending on your industry, resources, budget, goals, and many other factors. Rather than spend an excessive amount of time mulling over what to do with your assets, researching the different liquidation methods you can explore, directly speaking and filtering interested parties, and essentially learning “Liquidation 101” on your own, wouldn’t it be so much simpler to have a third party do all that (and more) for you and your company?
Liquidation experts are equipped with the experience and resources required to assess and value your assets according to their current market value, recommend the right courses of action to take, and ensure that your assets are made visible to the right buyers.
You are struggling to find a demand for your merchandise
This is a situation you may find yourself in, especially if you’re liquidating excess, aged, or returned inventory.
Before you give up all hope on recovering a profit from your items, you may want to enlist the help of liquidation experts first. When you onboard a professional liquidation company, you gain access not only to their expertise and direct resources but also to their vast network of suppliers and buyers of different sizes and industries.
In addition, these companies will also often include an analysis of your items and their current status to come up with strategies to help them sell better. Are they slow moving due to uncompetitive pricing? Liquidators can aid by surveying the current market value of your assets and ensure that it is priced competitively. Perhaps it’s not the item itself that is the cause of no movement but rather a lack of exposure. These experts may recommend different strategies appropriate to your needs. This can be anywhere from onboarding your items onto different sales channels, a change in marketing strategy and promotion, a rebrand, and so much more.
Or maybe you just can’t seem to connect with buyers in industries that may have a need for your merchandise. Liquidation companies, after working with many other organizations and enterprises, often come with an impressive network of buyers and sellers – one of which may just be what your company is looking for.
Your operations are being interrupted
We like to emphasize that liquidation is one of the more straightforward ways to recover value from your company’s overstocked, aged, or returned items. However, as previously mentioned, this doesn’t necessarily mean that the entire process is easy.
Managing the different moving parts involved in liquidation, from valuing your merchandise to finding buyers can quickly get out of hand, eating away at manpower that puts your daily operations at risk.
Liquidation is a process that often requires full and regular coordination and cooperation between your company’s different departments. Leave out one of the teams and your pursuit may collapse before it even hits the ground running.
However, it’s also important to consider that your business’ operations don’t stop simply because you choose to liquidate. You still have customers to sell, clients to meet, inventors to entertain, incoming inventory to sort, and so much more.
Amidst the different moving parts involved in liquidation, it’s highly likely that you may miss something along the way resulting in roadblocks or worse, a mistake that incurs financial consequences.
Partnering with a liquidation company not only lightens your load but ensures that a whole separate team is managing the entire pursuit, addressing problems as they arise, and ensuring that all the necessary departments are kept up to date. This allows your business to keep running as usual and gives you greater peace of mind.
Your business keeps accumulating losses
The main reason why your business may have entered liquidation is to prevent further losses to your capital and to gain back some of the resources invested in your slow-moving assets. Now when your pursuit into liquidation results in the opposite, there is no clearer sign that you may be in need of professional help.
This can happen when, in pursuit of finding buyers for your assets, your inventory is priced below their market value, you onboard your items onto platforms that reap little to no sales, you spend on non-targeted advertising, and more.
We’ve also briefly mentioned increasing holding costs as one of the consequences of harboring excess, aged, or returned inventory. Essentially, these costs are made up of the different resources you use to keep your inventory in working condition. These accumulated costs may result in losses the longer you hold onto your slow-moving assets while pursuing in-house liquidation.
Partnering with a professional liquidation company ensures that no time and resources are wasted thanks to their knowledge and connections, resulting in an efficient and seamless liquidation process.
Your business is looking to grow, expand, or diversify
We’ve said it once and we’ll say it again: holding onto unmoving assets ties up your cash flow!
These assets hinder you from getting a return on your investment. Excess inventory or unused equipment lying around in your warehouse or storage unit essentially equate to less room for pursuing opportunities that may lead to growth.
Partnering with a liquidation company helps recover some of your invested capital and allows you to put it to better use whether that be in the form of new equipment, development of new products, purchase of more in-demand inventory, hiring of additional manpower, and so much more.
Your business is going into bankruptcy
Of course, liquidation is an essential part of a bankrupt company’s exit strategy, acting as the last resort for the corporations to pay off their obligations towards investors, creditors, banks, and other parties.
Shutting down a business is both a physically and mentally stressful feat in and of itself. Enlisting the help of a professional liquidation company can aid in alleviating some of the pressure by adding an extra set of expert hands when it comes to managing the different moving parts of the business.
Furthermore, some liquidation companies also offer the option of purchasing your assets outright, as compared to a consignment model wherein profit is only gained upon a successful sale. An outright purchase immediately alleviates you of your assets, allowing you to move your focus onto other aspects of the bankruptcy process.
As previously mentioned, these liquidation experts can also aid in the proper valuation of your assets, connect you to interested buyers, and ensure that you get the optimal results out of your goods, and fulfill your company’s financial needs.
Leave liquidation to the experts
Whether your business is looking to partially liquidate in pursuit of financial growth or fully sell its assets as part of the bankruptcy process, partnering with a professional liquidator is one of the courses of action that can produce the most optimal results.
In summary, by partnering with these liquidation experts, your company saves on time, finances, and manpower. In return, you gain access to their vast knowledge and expertise on liquidation, network of suppliers and buyers, innovative solutions, and of course, consultations that result in a liquidation process tailor-fitted to your specific and unique needs.
We mentioned at the beginning of this blog that the goal of every business owner is to ensure that their company runs smoothly. By enlisting the help of a professional liquidation company, that goal is shared, your resources are increased, and the likelihood of your assets being sold has been doubled. Save on time, energy, and resources by leaving your liquidation to the experts.