Clients deal with estate sales businesses because they quickly want the contents of an estate disposed of quickly. An estate sale business can be referred to as a tag sale business or an estate liquidation company. Clients engage in a tag sale business after they face a sudden life change, such as divorce, quick relocation, death of loved ones, etc.
An estate liquidation company tags everything in the house with a price and finds buyers. The sale takes place in a single or several days and is open to the public.
There is a lot to beginning this business that you need to know. Let’s get started! This article compiles a simple guide to help you create an estate sale company from the ground and make it a thriving business.
1. Understand The Market Dynamics
Understanding the market dynamics will help determine whether this industry is worth venturing into. You need to weigh the pros and cons of the estate sales market. You do not also want to start up a business and close it within a short time. That is why you should understand the trends and challenges shaping this industry.
Find the estimated capital for establishing an estate sale business at this stage. The costs vary depending on the location and size of the company. However, startup capital for this business range between $2000- to $15000. Much money will go toward storage room, marketing, branding, advertising, and buying equipment. Some items you will need for this business are a cash register, desk/table, stationeries, computer, and truck for transporting goods to the auction site.
While evaluating the dynamics in this industry, remember to identify the barriers to entry and see if you can manage them. If you are sure that this is a business idea you would love to pursue, consider your business’s name.
2. Choose A Business Name
A business name defines your business identity. It is the base of the trademark design. It plays an important function as far as the perception and growth of a brand are concerned. The best thing is to choose a business name that encapsulates your mission, objectives, and services in just a few words.
A good business name should convey the right messages to your target audience.
It would be best if you chose a business name that has the power to create a long-lasting relationship between customers and the company. Considering that a business name is the first thing customers interact with, go for one that is short and easy to recall.
Some guidelines on how to brainstorm your business name include the following:
- Go for a word that can allow expansion
- Avoid names based on location, for they can affect future expansion
- Choose a catchy name
- Choose a short and easy-to-remember name
- Try including keywords such as liquidate or estate to boost SEO
Online tools can also help you quickly generate your estate sales business name. Once you develop your business name, begin to brand it.
3. Plan Your Business
Having a robust plan of how to run your business is essential for the success of your business. It lets you map out what you need to begin your business, including the capital, target market, business name, etc.
It would be best if you planned for the startup and ongoing costs to have a successful business. In this phase, make a budget for the employees you need to hire, the cost of renting a workspace, designing your logo, licensing fees, permit requirements, and insurance costs.
During planning, determine your target market and how to reach out to them. The target market will affect where and how you will conduct your business.
You need to understand that a business plan acts as a guidebook to take your estate sales business off the ground, maintaining focus on the primary goal. Structure a clear business plan to enable prospective investors and partners to understand your business and its vision.
If you encounter difficulties in creating a business plan, consider hiring a professional to help you out. You can use sites such as Upwork, Fiverr, and freelancer to find a business plan specialist.
4. Register Your Estate Sales Business
Registering your business makes the whole process of starting up a business official.
Before registering your estate sales business, you should consider the location where you want your business registered. Location may affect revenue, taxes, and legal requirements.
In this phase, you must choose a business structure that will work better for you. The common business entities are corporations, limited liability companies (LLCs), sole proprietorships, and partnerships. The business entity you choose will shape registration requirements, taxes, and personal liability. Limited liability is the most suitable business structure for new business owners.
5. Enroll For Taxes
You must obtain a federal tax identification number/employer identification number to register for taxes. You can use your social security number (SSN) as your employer identification number if you have registered your sales estate business as a sole proprietorship business entity. With your employer identification number, you can now choose your tax year. If you encounter problems while filing taxes, consult an accountant to ensure you are doing what is legally required.
6. Open A Business Bank Account
Think of where you will be keeping your money. Keeping it in the bank is best, but you must open a business account.
Banks differ based on their offerings. Opening an estate sales business account is simple. A business bank account will make it easy for you to file taxes and perform other accounting roles. The performance will help you to divide your personal assets from those of your sales estate business. This is very important when protecting your personal investment if the company gets sued.
Thus, it would be best if you inquired at the bank of your choice concerning their rates and features for you to select your preferred plan.
Once you open a business account, you can now get a business credit card. A business credit card will help you to separate business and personal expenses by putting your estate sales business expenses in one place. This account will also help you build your business credit history. When credit history is good, it can help raise money later on.
7. Get A Phone Set Up
Setting up your estate sales business’s phone system is equally important as opening a business account. There are better choices than accepting business-related calls on your private line. It’s a good way of separating your private life and business life. It seems unprofessional, especially when answering a business call with a greeting you give your friends. Besides, you expose yourself to receiving business calls 24 hours a day.
Since you are new to the estate sales business, you want to go for something other than an expensive phone service. Setting up a phone system enables you to make your company more automated. It also makes it easier for prospective clients to find you and improves business legitimacy. There are a variety of companies offering phone services to small businesses. However, their charges range with phone features and how user-friendly it is. Choose a provider with fair pricing.
8. Apply For Business Permits/ Licenses
Business Permits and licenses are legal requirements for an estate sales business. Before launching your business, ensure to acquire the required business permits. Otherwise, you may find yourself being fined or your business shut down. The licenses and permits vary based on the state and local government. You will therefore need to check with your county, city, or town clerk’s office.
Your business will be selling items on behalf of your clients. Thus you and your clients should sign a consignment agreement. The agreement specifies the information of the arrangement between your estate sales business and the clients. Knowing other contracts, such as consignment and service agreements, would be best.
Clients should also sign a service agreement before your estate company begins any project with them. This agreement explains the clients’ expectations, payment terms, service level expectations, conditions, and property ownership.
9. Business Insurance
Business insurance is crucial because it protects your business’s financial well-being in case of a covered loss. There is a wide range of policies depending on the nature of the business. General liability insurance is the most common coverage that you can begin with. It’s the most comprehensive insurance because it covers many elements of a business. It is sometimes known as commercial liability insurance because it helps cover overheads of liability claims that can be made against your estate sales company.
For instance, a client can injure himself while on your company premise. If he brings a lawsuit against your business, general liability insurance will come in to help you pay the costs of that claim.
If you have recruited employees to help you run your business, consider taking worker’s compensation insurance. Compensation insurance offers insurance to employees who get injured on the job. Worker’s compensation insurance offers financial support to staff who are not in a position to work due to illness. For instance, if your employee injures himself while lifting heavy items while working in your business, worker’s compensation insurance can help cover his medical bills.
10. Market Your Business
Marketing is key for new businesses. It will help in boosting customers and brand awareness. To begin with, build a professional website. Ensure you state what your business does and where its located, and encourage response. In the modern world today, social media has offered a good platform for promoting business. Therefore, ensure you link the website to your social media accounts such as Facebook, LinkedIn, and Instagram. Begin by creating engaging posts that feature and advertise your products.
Focus on unique selling propositions when conducting marketing to stimulate buyer desires. Try drawing potential customers into your estate sales business is also good. You can do this by calling them on the phone. If your budget allows, hire a social media manager to assist with marketing roles. You can hire a social media manager by visiting sites such as Upwork, freelancer, and people per hour. You can also post your job ad on recruiting sites such as ZipRecruiter or Indeed.
11. Seek Connections
Networking is crucial for your business gain. For your business to thrive, you should review your professional and personal networks and contact those with interest or possible links in estate sales. This can involve sending mailshots to companies that you wish to work with, arranging a meeting with business owners, and attending suitable events.
Your network can offer untapped business opportunities, such as finding new customers that you can begin a partnership. Some of your friends may already be in this type of business, and they can provide you with valuable insights that can help you thrive easily in this industry. Others may offer you industry connections that you may not have had anywhere else.
It is impossible to run an estate liquidation company without a network of buyers. Thus, you must build and maintain a good healthy network with brokers. They are important for appraising and selling assets. Good networking will raise your estate sales company off the ground quickly.
12. Build A Good Team
As your business grows, you may need to employ a team of workers that can help you manage your estate sales company. Based on the needs of your business, you can create positions such as marketing lead, estate sales executive, and general manager.
Marketing lead work to ensure that clients can find your company’s website easily. They are responsible for social media marketing and SEO optimization.
Estate sales executives are responsible for closing deals, engaging new prospects, and establishing and negotiating contracts.
A general manager will help you handle administrative duties, recruiting, firing, supporting clients, bookkeeping, and scheduling, among others.
You might need to fill in these positions at a go or as the needs of your business arise. In case you encounter difficulties in hiring talents, you can involve recruiting agencies. There are free-of-charge ways that you can also use to hire and employ the right candidates, such as posting ads on social media platforms. If your budget allows, you can advertise the vacancies on premium recruitment options such as Glassdoor, ZipRecruiter, and Indeed.
13. Strategize Your Business
Holding an estate liquidation can be challenging and exhausting. However, if you design a good system from the beginning, it will be easy for you to dispose of the products on your list. The best strategy is arranging similar items together with prices tagged on each item. Before you place a price on an item, ensure to research to find a suitable price that the item can fetch. You should know how to place true value on antiques, art, furniture, office equipment, collectibles, books, electronics, and other items of an estate being disposed of. For this reason, you must take time to research sales items for proper pricing.
Timing is also very important in estate sales liquidation. Holding an estate sale when many clients are likely to be available can help you reach out to many potential buyers. Thus, hosting an estate sale on holidays or weekends can be a good idea.
You should also do proper advertisement before the due date to target many buyers. The more people turn out to your sales event, the more estate sales you are likely to have. Focus on selling your company to the client whose estate you are liquidating, the buyers purchasing the items, and the referrers who are likely to recommend you to others.
Maximize your crowd control and organizational skills to build and handle the sale, work well and lead a team under pressure.
Ensure to have maximized security during the estate sales process to avoid cases of theft that might lead to the loss of items.
14. Scoping Your Service
The most common way in which estate liquidation businesses make money is by taking a particular percentage of the gross sales made from an estate. The percentage you charge depends on the kind of service you provide. You can charge a higher percentage if you are providing full disposal and cleaning services. The advantage of the estate sales business is that you can shape things to your vision, skills, and goals and start making money. To maximize your sales, you must make the entire estate sale enticing and presentable. Selling clean and undamaged items will get buyers more easily than good but unclean items. The packaging of the items can affect the entire sale or lower the entire value of the overall set of items.
Establishing a successful estate liquidation company can be challenging. It needs a smart business plan and a proper marketing approach. To succeed in this business, adopt a well-thought, measured and consistent tactic for the creation of your estate sale business. Conduct comprehensive research before tagging the price on the items being disposed of and build a strong network. Your estate sales company will thrive sooner than you may think! Good luck