How To Start A Liquidation Business

By April 12, 2016Small Business

Thinking about starting a small business? 70% of people ages 25-34 are considering becoming their own boss in 2016. But, how can you choose the right industry to ensure your small business’s popularity spreads like wild fire? An industry on the rise and growing increasingly popular are liquidation businesses. Learn how to start a liquidation business here.

Every year, businesses all across the U.S. put up billions of dollars of inventory for reduced rates. Surplus inventory can be resold for much higher than the purchase price, making way for high margins for liquidation businesses. How can you get started?

1) Make a business plan and choose your liquidation business structure

Before starting any venture, it’s important to put pen to paper and chart out your objectives. Formulating a business plan keeps you focused and organized. Registering your liquidation business and deciding its structure is important for tax reasons and can help you make future projections. Additionally, you can choose to start your liquidation business either full time or part time. Estimated start up costs are valued between $10,000-$50,000.

2) Evaluate the business financing options available to you

Decide whether you want to make short term or long term repayments, and how much funding you’ll need. Short term business loans enable you to make small, manageable repayments so you’re not overburdening yourself with large debt. Similarly, making regular repayments can also help improve your credit score. On the other hand, if you need to pay off existing debt larger loans with longer repayment terms may be a better choice for your liquidation business.

3) Forge alliances with trustees

A good way to make your first purchases before you build up a contact base or reputation is to form partnerships with trustees that specifically deal with commercial losses or debt.

4) Understand the options for selling your inventory

Liquidation businesses can range from selling their merchandise to other liquidators or wholesaling to retailers. You can choose to have monthly inventory sales so that you can cut upfront costs and only rent space on an as-needed basis, or your can keep a store front open year-round. Make the right decision for your business by researching the buying habits of your target consumer base, knowing how much capital is needed, and analyzing the competition’s tactics.

Starting your liquidation business, your way

A liquidation business can be highly profitable, but to run it successfully, you need to make sure you’ve done your homework. Going into an industry with a background of research will allow you to run your business the way you want to, and sets you up for success.

Behalf is a business purchase financing solution that grants business owners up to $50,000 of credit. We pay vendors on behalf of their small business customers, then allow customers to extend payments affordably for up to six months. Behalf already works with many industry-leading liquidators, including B-Stock; Miami Lots; and Sarinas, so it’s easy to take advantage of a Behalf line of credit today. Start by completing our 30-second application here.