Inventory Liquidation Checklist

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Liquidating your excess inventory is usually not a pleasant experience to deal with but the current financial crisis has made the need to liquidate inventory an almost unavoidable part of business. In previous years inventory liquidation was more often than not the result of poor management or bad business decisions, but today the tightened economy is bringing even well-managed businesses to their knees.

When the economy restricts and consumers become cautious about their spending, backlogs of inventory begin to pile up. When excess inventory piles up, cash gets tight. And when cash gets tight, it's difficult to pay off creditors let alone invest in new ventures. If a business gets to this point, it may be too late.

Without getting into a detailed market analysis, by starting with the end in mind you have a much better chance of getting to where you want to be. If you do not have a solid plan for adapting to the changing climate, your inventory liquidation may become permanent.

For the sake of this article, I'm going to keep the checklist limited to a simple inventory liquidation and not an entire business liquidation.

Your Inventory Liquidation Checklist:

Audit your inventory- Many times inventory gets lost, your inventory database gets corrupted, inventory gets found, etc. Having an accurate inventory count, with pictures if possible, is critical.

Place a dollar amount on your inventory- Although it is a liquidation, it still helps to know how much money your working with. Either a wholesale cost or retail value is acceptable.

Know your limitations- If you're locked into a lease and fees are accruing; you need to know when you can pinch pennies and when you can't. When you need the job done quickly sometimes it's better to lose a little upfront than to lose a lot in the backend. This will help you decide between an auction or individual buyer, and more specifically which buyer you go with.

Finding the right inventory buyer- Time is almost always worth more than money, so finding the right inventory buyer is critical to making the most of your inventory liquidation. It's a lot easier to give you a good price upfront than it is to deliver quality service later on. And I can tell you from experience, quality service will save you more money in the long run.

Closing the deal- Besides getting a fair return for your inventory, it's important to understand the process in the backend. Where is your inventory going to end up? Is it being sold wholesale or is the buyer the end-user as well? Will it be distributed in new markets or will your own merchandise become your new competition? Will the inventory liquidator work with you to protect your channels of distribution and fraudulent customer returns? Who is going to remove the inventory? Who is going to handle the shipping and logistics and how much is that going to cost? And finally, what are the terms, will the buyer pay cash, or is it a consignment?

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