What is a liquidation sale?

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Everything must go at the liquidation sale!
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When a store goes bankrupt, a liquidation sale is what often results

Closeouts, weekly specials, two-for-ones and coupon days. There are all kinds of names for a sale. So, how do you know what you are really saving, and what in the world is a liquidation sale?

A liquidation sale occurs when a business either needs or wants to sell its assets. Often, when a business goes bankrupt a liquidation sale takes place.

There will be signs on display at a liquidation sale that say ďEverything must go!Ē

When a store liquidates they are settling their business affairs by determining what the business' liabilities are and applying the assets from the liquidation sale to the discharge of those liabilities. A store holding a liquidation sale is working at settling a debt or obligation.

When a business has hit rock bottom it can either choose to convert as much of its assets into cash so that it can pay off its debts, or it may be forced to do so by legal order. The goal is to make as much money as possible. 

When a business owner is facing a liquidation sale, odds are that heís under stress, both financially and emotionally. No one likes losing their business or going bankrupt. When a business fails and is facing liquidation this means the business has more debt than it can carry. It may also be that the owner wants to close the business for other reasons.

A liquidation sale should be done properly so the owner can maximize his profit and get on with his life.

Advice if you are holding a liquidation sale

Before you jump into a liquidation sale, talk to your lawyer and accountant and get their advice and guidance. You need to have accurate and useful information at your disposal before you begin this process. You need to unload your debt, but you need to know how to do this right. Yes, you will have to pay your lawyer and accountant, but it will be worth it in the end. You may even manage to turn a nominal profit. 

You need to know the value of your inventory. If you donít know this you donít know if your net profit is even worth the effort of having the sale. When you are figuring out the value include the cost of running the sale. You may think your assets are more than they really are. However, you must remember that the price you paid for the product isnít what you are going to get for it. If you determine that a liquidation sale isnít worth your time and effort you will need to figure out another exit strategy.

There are businesses and individuals that are in the liquidation sale industry, and they can assist you in this process. Hire a professional. He can come into your business and price your items. Additionally, he can oversee the sale and educate your employees and you in how to go about shutting down the business, which is probably something they, or you, have never done before. 

Make sure you have made it perfectly clear that no returns will be accepted and do not give warranties on the items you are selling. Your terms must be final and everyone needs to understand that going in. Post your terms in visible locations so that the customers can see them. 

Advice for shopping at a liquidation sale

If you are going shopping at a liquidation sale with a specific purchase in mind, do your homework.

Know what the item is going for elsewhere. Compare prices.

Check deal sites such as FatWallet, which gives you a ballpark figure for the item you are interested in.

When you go to a liquidation sale, be on your toes, because you could be enticed into paying full price for an item even though it says 75 percent off. The course of liquidating stock can be deceptive - motivated by desperation - so pay attention. There are also great deals to be found at liquidation sales, so go armed with information and you really can save lots of money!

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