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Surplus/Liquidation Business Frequently Asked Questions

The following information has been submitted to educate those interested

in dealing in surplus and liquidated goods.

The surplus and liquidation business has been bathed in secrecy for a very

long time. Only within the past year or so have people started to become

aware of the tremendous profit potential of the business. For years,

liquidators kept the workings of this business very secretive and only

revealed the information to those close to them. Now, people from all over

are turning up distressed merchandise while others are finding markets

never before known. Hence, the rapid growth of the industry over the past

few years. To illustrate this, look at the sudden explosion of dollar

stores, discount marts, liquidation centers and warehouse super-stores.

All these businesses are constantly searching for low-priced goods . . .

closeouts, discontinued goods, seconds, insurance recoveries, salvaged

goods, bankruptcies, overstocks . . . DISTRESSED GOODS. Buyers employed by

outlets are constantly scouring the country (and the world for that

matter) in search of bargains. Liquidators are an important source of

supply to these buyers. The buyers need to continually "feed" the monsters

they created. High volume stores consume a tremendous amount of goods. The

main reason many of the dollar stores failed recently was that they

couldn't "feed" their monsters any longer. The limited number of

liquidators could not keep up with the demand of the stores. The dollar

stores then resorted to filling their shelves with cheap imported goods to

keep their stores full. Customers soon caught on and lost interest in

shopping there.

The demand grew faster than the supply. The supply didn't grow because the

limited number of liquidators were overworked. They couldn't keep up. It's

now apparent that there is a tremendous need for more networkers . . .

people constantly locating and marketing distressed goods.

Frequently Asked Questions:

Q. Can I get involved in liquidation without jeopardizing my present job?

A. I recommend keeping your present job and starting part time. A few

hours a week is all that's necessary to start.

Q. How much money can I make?

A. You can make a very good living, probably much better than your present

job pays. It all depends on the effort you personally want to put in. Some

people put in very little effort and make very little. Then again, many

liquidators have become millionaires.

Q. I've got very little spare cash. Is there a way I can get started

anyway?

A. At first, I suggest making small buys, spending only $50, $100, or

several hundred dollars. Since your profits can be three times or more

your investment, your profits can build quickly. Don't spend your profit

on foolish things. Invest it back into your next buy. Soon you'll have

quite a reserve to use for bigger and bigger buys. You can also use the

technique of securing items by consignment. This requires none of your own

money and is an excellent way to get started when ready cash is a problem.

Legally secure the rights to sell something that doesn't belong to you,

find a buyer, and make a profit. As you become familiar with the business,

you'll find there are many more ways to make money with little or no money

of your own.

Q. Can I operate out of my home?

A. Yes. Many liquidators are doing huge volumes of business with little

overhead while operating from their homes. It's the best way to get

started.

Q. Where do I find Distressed Goods? Are they in short supply?

A. Distressed goods are all around us. There is hardly a shortage of them.

To know where to find them, you need to become aware of circumstances

around you and understand what creates distressed goods. They can be

caused by surpluses, discontinued items, mistakes by manufacturers,

seizures by government or secured parties, estates, failures in

businesses, insurance claims, salvage, unclaimed goods, repossessed items,

bankruptcies, overstocks and many other situations that may occur.

Q. Where can I sell these items?

A. With the large influx of discount stores surfacing, it's not hard to

sell something if you bought it right. The secret is to buy right. Many

people confuse slightly discounted goods with distressed goods. There is a

big difference. Small businesses and people starting new businesses are

also potential buyers.

Q. Some companies I've seen offer to sell lists of companies that supply

closeouts. Should I buy one of these lists?

A. I don't suggest it. The reason is, these are usually not distressed

goods. They're usually just slightly discounted goods. They're not a good

enough bargain.

Q. I know that a lot of businesses fail because they can't collect what's

owed to them. Is this a problem?

A. No. Everything is usually on a cash or COD basis.

Q. Do I need to deal with a lot of employees?

A. No. You can start by yourself. Later you may want to involve a family

member or friend if you wish to.

Q. The economy is shaky. Is it a good time to start a new business?

A. Maybe not most businesses. But this business thrives on poor economies.

And it can work well when the economy is good also, because people are

always looking for bargains and businesses will always fail, disasters

will always occur, and mistakes will always happen.

Q. What exactly are closeouts and aren't they distressed goods?

A. Closeouts are goods that a manufacturer is no longer making or a store

is no longer carrying. They may or may not be distressed. It depends on

how badly the source needs to get rid of them.

Q. My present job is not real secure and I may get laid off soon. How long

does it take to start getting an income from this business?

A. Depending on the effort you want to exert, is tomorrow too soon?

Q. Will I have to warehouse lots of stuff?

A. You don't have to warehouse anything if you don't want to. There will

be circumstances when you can only make the deal if you personally take

the items yourself. If you don't want to, then pass on the deal. There are

plenty of cases where you don't need to handle the goods yourself.

Q. I'm not too good at selling. Is that a problem?

A. No. If you bought or obtained the goods at the low price you should

have paid, you'll have no trouble getting rid of them. When you have good

deals to sell, people will be looking for you.

Q. I've never been in my own business. I don't know if I've got what it

takes.

A. Many people who come from regimented business backgrounds have

difficulty adjusting to the relaxed business standards of this industry.

For instance, those that have lived by a "34% cost margin" cannot relate

to the new relaxed mentality of this business that simply says "if you can

make a decent profit and sell it quickly, buy it!" Besides that, what it

takes is a strong desire to get ahead and a willingness to devote time to

being in a business that is your own. It's by no means a get-rich-quick

scheme. It's a legitimate business that needs attention.

Credits:

The previous article was prepared as a courtesy by Henry Kulesza, retired

liquidator and author of HIDDEN WEALTH: A Layman's Guide to Finding,

Buying and Selling Liquidated Goods.

This information was provided by:

Career Research Institute, Inc.

PO Box 2276-N

Clearwater, FL 34617

Voice 813 585-0088

FAX 813 581-8657

Email Heli...@aol.com

This report may be reproduced provided the proper credits are given as

listed above. Any other use of this material is strictly forbidden without

consent of publisher.

Copyright © 1995 Career Research Institute, Inc.