How to Make Money with a Liquidation Business

What is a Liquidation Business?

So, you are thinking about doing something of your own and starting making money by being your own boss? You Google a bit and one of the options seems to be about starting a Liquidation Business. You can buy liquidation pallets from some of the begs wholesale liquidation companies and make some money.

But what is a Liquidation Business?

A liquidation business is a business that deals with buying and selling liquidation merchandise. It can be a wholesale business or a retailing business. The main idea is to source some liquidation items or products to sell. These liquidation items come from big retailing companies that have a humongous stock to meet the ever-growing demands of the customers. Amazon has hundreds of millions of active customers. They want products delivered in the fastest way possible. This makes it essential to stock up on items as much as possible. Due to such a huge number of transactions happening daily, some mishaps lead to customer returns as well.

All these overstocks, returns, etc. are the merchandise that is liquidated by the bigger companies because it makes more economical sense for them to sell these at a lower price to wholesale companies rather than keeping them in the warehouse where they will keep on acquiring some space which can be used for other more popular products. But how can you make money by running a successful liquidation business? There are a few things to keep in mind to run a successful liquidation business. We will be focusing on the liquidation retailing business for this.

Things to Consider to Run a Successful Liquidation Business

So, what are some things that need to be considered to get on the right path?

You Need A Good Plan

The key to gaining success in any project is to plan it ahead. If you plan it beforehand you will find out a lot of problems that you are likely to face and you can start figuring out the solutions for this very early on. Having a plan also helps in filtering out all the kinks that may be present in your thought process. You might learn that you need to know more about some things and you will end up gaining more knowledge to start your business in a better way. A detailed plan will help you keep your focus on the goal and your efforts will be much more directed and you won’t waste time and money.

Do Not Chase a Bunch of Stuff, Pick a Niche

You cannot just sell any product and expect to make a profit. Market research is needed to understand what things you can sell at your level of experience and expertise. What are the products that you know you can sell and make a profit on? This is something you need to figure out. If you are interested in selling electronic products, don’t try to sell any electronic gadgets. Focus on a niche like electronic toys or electronic kitchen appliances or electronic tools etc. Since you are starting out you can start making more sales by targeting a niche rather than going for a more general or bigger category.

Plan Your Budget

You don’t want to start losing your money and then quit your business. A lot of businesses that end up closing down do so because they run out of capital. You have to plan ahead and ensure that it does not happen. Know your budget when you start bidding in any auctions or when you buy liquidation pallets from a liquidation wholesale company. Do not overspend. Understand your spending potential and the profit margin you can have. Even if you end up taking a loss it should burn through your entire capital. Also, if you had done your market research your loss will be less. But remember to always make a budget so that you always have some capital without incurring huge losses. Start small and once you gain experience start increasing your capital.

Choose a Good Liquidation Wholesale Business

To make a profit you need to sell good merchandise and to source good merchandise you need to find the best wholesale liquidation companies. Some good companies source quality merchandise from some of the biggest retailers like Amazon and Walmart. You can buy liquidation pallets from these companies and you should get good products. Some companies will let you visit their warehouse offline and check out their products and then you can buy liquidation pallets. So, take some time in finding the best liquidation wholesale companies. Reach out to people who are already in this business and ask them for good options. If you don’t know anyone personally, use social media platforms.

Where Can You Make Your Sells

Depending on the product you are going to sell and your target audience you have to decide on where to sell your products. Today selling online makes sense since you have a bigger reach but if you are in a position to sell your products offline and you know that you can make a place in the market by setting up a brick and mortar shop then go for it. You can even go for both like a lot of Liquidation businesses. Your market research will help you understand which path to choose.

So, that’s it, folks. These were some of the tips that can help you start running a successful liquidation business. It will take some time before you start seeing nice profits but stick with it and be smart about it. Our list of tips should be enough to get some idea about what things you need to focus on. We wish you all the best.

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan