Business Liquidation, is it the Perfect Exit Strategy for Closing or Selling Failing Businesses?
I’ve had many potential clients schedule a free, private consultation to discuss their business exit strategy with me.
And it never ceases to amaze me the volume of people that are kicking the tires of a full blown liquidation sale because they clearly see the writing on the wall.
But then proceed to tell me that they simply want the information “just in case” they are unable to sell their business.
Let me elaborate.
Usually the facts are these:
- They are losing money.
- Have very little traffic.
- Slow or stagnant sales
- Have old or stagnant inventory.
- They have increased rent (or taxes in the event they own the building they do business out of).
Yet they still believe they can sell their business as a whole.
It’s almost sad to me that people in this situation are usually so emotionally attached to their business that they are unable to look at their situation objectively and do not even think of a proper liquidation exit strategy or a competent service provider who can help.
Here’s the reality:
The likelihood of finding a buyer who’s even qualified to buy the business is a feat in and of itself.
Sometimes my potential clients think they “can” sell it to one of their managers or “key people” as if that is a good idea.
imagine your store looking like this on day of Exit liquidation
With long lines of customers and minimal discounts
And looking like this after the Liquidation Sale is over
Assuming they are even qualified, what rational person would be willing to pay full price for a stale or stagnant inventory sitting in a store that has little traffic and declining sales?
Um, not many.
Then I’ve had other potential clients that say they may just finance one of these managers or “key people”.
Again, do they think this manager or “key person” will be able to magically turn the business around?
Likely not, then the owner is left holding the bag yet again.
Only now with more time that has passed, thus making their business worth even less (and their situation worse).
My bigger point is this:
Retail store owners have a tendency to not only become emotionally attached to their business to the point where reality is unable to be clear in their minds.
For some reason they tend to look at having a going out of business sale, a store closing sale, and the like is a sign of failure.
Seems to me that all the situations I described above would qualify for “failure” if anything did!
Then the best of all is when someone tells me they plan to hire a broker to help them sell their failing business.
IF a broker is even willing to take them on as a client, and IF they are able to find a qualified buyer that is willing to pay them anywhere NEAR what they paid for their inventory and fixtures (VERY unlikely), there’s still another big problem:
This broker is going to want a fee/commission!
This fee/commission is usually 30%-40% of the sale.
So I try to explain to these potential clients that having a PROPERLY CONDUCTED going out of business or store closing sale can actually be EXTREMELY profitable than an outright selling of the store.
AND be done and over with in a matter of weeks – IF it’s done correctly, if you hire a specialized small business liquidation service.
I even go on to say that, if done by me or with my help, they can also walk away with their heads held very high because of the unique press release campaign I produce on behalf of my clients.
The reason I started offering private, discreet, and free consultations to potential clients is because I want them to understand what’s available for their situation.
I know I can’t (won’t) work with everyone, but I get off every consultation call hoping that I provided enough value to at least lead them in the right direction…
And that direction – assuming profit and pride are a top priority for them as it is most people- is a properly facilitated and conducted going out of business or store closing sales event.