There are many reasons why someone decides to go out of business or needs to otherwise liquidate their stock.
Liquidating one's stock is not an easy decision to make. For each individual making this choice, it is always a cost-benefit analysis. By keeping things honest WeaponSeeker helps take out the emotion and irrationality that is often associated with the process.
It is easy to understand why no one really likes to consider the idea of liquidation. From an emotional perspective, what we hear and our mind often limits us in seeing is that such action means loss.
To help develop a more rational approach to the consideration of liquidating, however, let’s do a simple cost-benefit analysis and examine some different reasons why people are choosing to go out of business, liquidate a particular line or set of specific products.
For many going out of business is about simply retiring. They have lived a good life, loved what they have been doing but now is the time to enter into the next phase of life. Maybe this is brought on by simply wanting to take it easy maybe this is brought on by health concerns often associated with aging.
For those retiring they are often dealing with a base of products that are newer and still have their value. If this is the case then it is important to first understand value is not what the item can theoretically be sold for at the normal retail price. If this is your mindset then it is not the time to go out of business as you need to stay in business to sell it at those prices.
From a liquidation standpoint items that are relatively new are valued at the wholesale price minus the cost of someone else bearing the burden of placing them in others hands. This is no doubt a pain point because it is hard to accept that a $100,000 in relatively new inventory is really only worth about $85,000 when someone else must bear the burdens associated with its disposition.
Most people at this stage face a psychological wall as all they can see is a $15,000 loss.
Let us examine why this is not true, however.
To understand the true cost let’s look at the alternatives. The first easiest alternative may be to stay in business until is all sells. But wait you are wanting to retire so that is not really an option. The next alternative is to store the merchandise until you can find someone else to take it. If you are honest with yourself you will realize to find this individual/business means that you will have to still discount it for them. During this wait period you will be forced to store the merchandise. This means storage costs are involved. Also, have you considered the maintenance cost? You probably already know that storing items such as firearms is not really that easy as without proper care they begin to degrade. To limit the degrading process one either has to have a temperature and humidity controlled environment, which has significant extra cost or they will find themselves spending all their time cleaning, polishing, oiling, etc. All takes time, effort and money. This assumes the one person can keep up with such tasks on the complete inventory. Wait though what about retirement? Surely no one wants to retire and spend their whole retirement (if they even are physically capable) maintaining products on the hope a prospect will come along and give them the price they want. And finally, their new inventory is now gaining age. What was once new is now getting old and value is dropping literally on a daily basis. So when one comes to the final conclusion that selling at a discount is eminent the value has dropped much lower than if they had decided to liquidate at a fair rate in the beginning. Wow! Lots of headaches, time wasted and value lost coming to the same end conclusion.
How is liquidation starting to look now?
For those that can’t be honest with themselves and keep the inventory they later down the road often find themselves in a care facility and now everything is having to be auctioned off to estate bidders looking to get the cheapest deal possible. Worse than this, maybe the primary owner passes away and passes on this burden to their spouse and children. Lots of work to try and hold 15% that you cannot take to the grave anyway.
Next, let’s look at another scenario. Got in quick and easy as the barrier to entry into the retail market is incredibly low. Now you are in the market and you have found out that the high hopes are quickly dashed by the cut-throat nature of the industry and big boxes constantly driving the prices down, often below what you can even purchase at. Of course as the little guy, you are facing the pressure and expectations of MAP (minimum advertised pricing) while the big guys seem to be getting away with dumping. While theoretically MAP is supposed to protect the small guy if we are honest we realize that it is only hurting the small guy as the big guy has the power and clout to flagrantly abuse the process without ramification.
So now the dream has lost its shine, you probably have a product base that due to your inability to compete is now older and finding a buyer is getting harder by the day.
In the scenario of an older inventory base, the dynamics have changed where the value is significantly less than the original wholesale cost. In this scenario, one must accept the psychological pain of dispensing of such inventory for 75% or less of original wholesale purchase.
No doubt this realization hurts and this pain is the primary reason why many will make the excuses to themselves that they simply cannot afford it.
Sometimes in life in order to move ahead though we must accept such loss as the nature of going out of business. Those who cannot accept the psychological pain of this upfront always end up costing themselves more in the long run in terms of money, time and more psychological pain down the road.
Liquidating can be painful both emotionally and financially. Not making the right choice though is even more so.
This is where WeaponSeeker can help.
At WeaponSeeker we are in a unique position of having thousands of other retailers at our fingertips. By helping to act as the go between we can help make the process as smooth as possible. This means we can help place your inventory in the hands of others more quickly and at less cost. Benefits to our purchasing retailer partners are they get a slightly better than wholesale value, thus allowing them to be more competitive and this also means that the person needing to liquidate is able to do so in the quickest, most time efficient and at the greatest value possible.
