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Hiring An Auction Company

Estimating your assets value:

Typically, one of the first questions a business owner will ask me is, “how much will the assets bring at an auction”. After taking the time to review the assets, the auctioneer should give the client a conservative estimate of the sale based upon his experience and the current market trends. It is important that the company give realistic expectations so the seller can make informed decisions based on their best interest.

Compensation and Expenses:

Is the company you are considering working for you or against you? The agreement you decide may determine this.

A business owner should carefully consider how the auction company is compensated. The most common commission structures include: straight commission, outright purchase of assets, guaranteed base with a split above to both auctioneer and seller, guaranteed base with anything above going to auctioneer or a flat fee structure.

In a straight commission structure, the company is paid an agreed upon percentage of the total sale.

In an outright purchase agreement, the auctioneer simply becomes your end buyer. The company purchases your assets and relocates them. While this can be an option in some unique situations, keep in mind that they will want to purchase your assets at a very reduced price to make a profit at a later date.

In a minimum base guarantee, the auction company guarantees the seller that the auction will generate a minimum amount of sales. Anything above that amount either goes to the auction company or split with the seller. While a seller might feel more comfortable doing an auction knowing that he is guaranteed a minimum amount for his sale, keep in mind that it is the best interest of the auction company to secure a minimum base price as low as possible in order reduce their financial liability to the seller and secure higher compensation for the sale.

In a flat fee structure, the auctioneer agrees to show up for the sale and call the auction. There is no incentive for the auctioneer to get the best prices for your assets. The auction company is compensated regardless of the outcome of your sale.

What is the best option for business owners? In my experience, an agreed upon straight commission structure. This puts the responsibility on the auction company to offer the best outcome for everyone involved. There is an incentive for the auction company to work hard for both parties, set up and run a professional sale, get the highest bid and sell every item on the inventory. Successful auctions translate to a higher bottom line for both the seller and the auction company.

Auction Expenses:

In most auction agreements the expenses to conduct an auction are passed to the seller. If the auction company pays for the expenses, it is simply absorbed in higher commission rates.

All expenses should be agreed upon in advance in a written contract. Typical expenses will include the costs of advertising, labor, legal fees, travel, equipment rentals, security, postage and printing. A reputable auction company will be able to estimate all expenses based upon their experience in previous auctions. An agreement should be actual costs charged as expenses, not an estimated amount.

Advertising is typically the highest cost in conducting an auction. The auction company needs to set up an advertising campaign that will promote the sale to its best advantage and not overspend to simply advertise the auction company.

Once the auction is complete, the auction company should provide a complete breakdown of all expenses to the seller, including copies of receipts within the auction summary report.

Buyer’s Premium:

What is a buyer’s premium? If you attend auctions regularly, you are very familiar with this term. The auction company charges a fee to the buyer when they buy an item at auction.

The buyer’s premium has been around since the 1980′s and is standard auction practice. It was first used by auction houses to help offset costs of running brick and mortar permanent auction facilities. Since then, it has spread to all aspects of the auction industry. It is prominent in online auctions and allows auction companies to cover added expenses incurred from online sales.

It is the responsibility of the auction company to provide clear disclosure of the buyer’s premium to both the buyers and the sellers. Those not familiar with auctions are often taken back by the buyer’s premium. They looked upon it as an under handed way for the auction company to make more money. Reputable auction companies will provide full disclosure within the auction contract, advertisement and bidder registration.

Typically, an auction company will charge online buyers a higher buyer’s premium percentage than those attending an auction in person. Extra fees are incurred with online bidding and are charged accordingly to online buyers. This provides the seller a level playing field for both online buyers and those attending the auction in person. Without the buyer’s premium, there is no way to do this.

Pre-Sales:

We’ve all been there. We’re looking forward to attending an auction only to find that some items were sold prior to the auction date.

As an auctioneer with over thirty-six years of experience, I can honestly state that pre-sales will hurt an auction. When a company decides to liquidate their assets, it is easy to sell off high-end pieces of equipment through online sources, equipment vendors or to other businesses. The seller receives instant cash and avoids paying a commission to an auction company.

Auctioneer’s find themselves appearing to acting in a self-serving capacity when potential clients say they are planning to sell off parts of their inventory prior to an auction. It’s hard not to consider the auctioneer’s commission when they warn you not to pre-sell anything. Yes, the auctioneer wants to earn a commission on those sales but it is more important that the auctioneer protect the sale from potential negative backlash that comes from pre-selling. The buying public knows when an auction has been “cherry picked” prior to the sale and it reflects in their bidding. It becomes a sale of “leftovers” and that impacts prices.

A buyer who purchases prior to the auction usually does not attend the sale. They already bought equipment at a good price with no competition. If they do attend the auction, they tend to let others know of their great pre-sale purchases which again, impacts prices and the overall excitement of the sale.

It is important to understand that auctions work best with a complete inventory. You want competition on your higher end equipment. The easy to sell items make it possible to gain respectable prices for hard to sell items.

When a business owner decides to liquidate their equipment assets, there is only one opportunity to do it right. Hiring a reputable auction company will assist you with a professional, orderly and timely liquidation.

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How Do You Get A Loan For Your Small Business?

Where can I get loans for my small business?

Funding for small businesses is often done through loans and equity. Equity is that part of the capital or money required for the business that you put up from your own pockets and the rest you take from outsiders in the form of loans. There are various sources like banks, venture capitalists, insurance companies, private individuals and organizations like US Small Business Administration that provides you loans for your small business.

What are the banks going to ask me?

Getting loans is not always easy and there are a host of questions to which you must provide answers before being considered by a bank or any other financial institution for a loan.

10 questions that the banks will ask before lending you money:

1.Can the business that you are considering to enter into generate enough money to pay off the interest on the loan?

2.If the business fails then do you have the capacity to pay off the interest yourself?

3.What is the history of the business? The lending institutions will be interested in how the business has evolved over the years and how well it has been performing in the past. The past is considered to be a good indicator of the future and chances are that if your business has done well in the past you will find it easier to obtain the loan.

4.What is the background and history of the managers and how committed are they to the business? The one criteria that makes or breaks a business is whether the management is committed and capable enough to steer the business in the right direction.

5.Are the sales growing? It is important for any business to grow its sales and especially a small business where the base is smaller and the lenders are certainly going to pay attention to the growth rate of the past few years and the future outlook.

6.How profitable is the business? While you may think that the lenders are only interested in getting their repayments their success is dependent upon your success and to that extent the profitability of your business is crucial.

7.What is the competition like? Lenders would not like to loan out to a small business which has bigger and more intense competitors with deeper pockets.

8.Is the industry itself growing? If you are operating in a profitable and growing industry then the chances of your getting a loan also increase that much.

9.Is the cash flow smooth? Cash flow is to business what blood is to the body and you should have a smooth cash flow to pay all your bills on time, pay your employees and keep the ball rolling.

10.The banks will also look at your past credit history and how you have performed with the loans that you may have taken in the past.

What are the things for which I will get the loan?

There are many aspects to a business even a small one and you get different types of loans tailored to suit each kind of need. For instance you get loans for working capital, buying capital equipment, expansion programs, installing new machinery and computerization etc. You get loans for almost any type of needs that arise provided you have a good case for it.

What is the amount and rate of interest of the loan?

Different institutions have different ways of evaluating the amount that they will pay you. Indeed in cases of venture capitalists entire 100% is also funded for your small business. If possible it is always better to have as much equity as possible in your business for two reasons. One is when the prospective lenders themselves see that you are putting your money in the business their confidence in you increases and secondly your interest outgo also reduces making your profitability that much more as your interest expense is lowered. The interest rate hovers but if you take the loan from the US Small Business Administration it will range somewhere between 8 and 13%.

There are various means and ways of getting loans for your small business and you must persevere at getting the right loans that suits your needs and gives you the best interest rates and repayment terms.

Home Based Businesses – The Top Ten Mistakes People Make

The majority of home based businesses will fail. So how do you make sure your home internet business is a success, in the face of so much failure?

Perhaps the most important factor in determining whether your business will thrive or fail is your ability to avoid the many pitfalls to which online business owners often succumb.

In order to help you know what to avoid, I have compiled this list of the top ten mistakes made by home based internet business owners. Hopefully, the list will provide you with some food for thought as you establish and operate your home based business.

10. Falling for Get Rich Quick Schemes

There are simply countless of these schemes out there. Any Google search for “home business” or “internet business” will turn up a bunch of these scams.

But most of these schemes only make money for the people that originate them. If it sounds too good to be true, it is. There is good money to be made online, but it takes time, commitment, knowledge, and dedication.

9. Succumbing to Internet Information Overload

The internet is a wonderful source of free and abundant information. When starting your web business, it is easy to get so caught up in researching your business and never actually get started on building your business.

Surfing the Internet can be addictive, and while it is important to do research into both internet marketing in general and your niche in specific, you must at some point stop researching and start building your business.

8. Not Doing Proper Keyword Research

Doing adequate keyword research is one of the bedrocks of any successful home internet business. You should know both the demand for a keyword and the level of difficulty in achieving top search engine rankings for that keyword.

Many people charge ahead with building their sites without doing enough keyword research, and then they are surprised when they get no traffic, either because nobody is searching for those keyword terms or because the competition for these keywords is simply too stiff.

7. Picking the Wrong Niche

When you select a niche for your home based business, make sure it is one in which you have enough interest and in which other people have enough interest too. This gets back to keyword research, which is the best way to assess demand for your niche in the online community.

6. Obsessing Over Pagerank

Pagerank is one of the most over-hyped and overexposed elements of SEO. It is simply Google’s attempt to lend a numeric value (from 1 to 10) to the overall quality and quantity of a web page’s backlinks.

There are many other factors that go into determining a site’s search engine rankings, not the least of which is the level of trust attributed to those sites linking to yours, also known in SEO circles as “Trustrank”.

Nonetheless, many people spend far too much time worrying about their Pagerank and concentrating on boosting it. A much better use of time is to focus on getting links from relevant authority sites in your field.

5. Lacking Passion for Your Niche Business

The importance of passion in determining the ultimate success or failure cannot be overstated. While it is by no means the only factor in determining a site’s success — you need knowledge and marketplace demand too – it might well be the single most vital ingredient.

If you truly love your business’ topic, you will be far more likely to work on it, and your passion will show in your site’s web pages.

4. Going Up Against Too Many Authority Sites

In picking a niche, it is vital to make sure that your site will not be competing against too many “authority” sites in the search engine rankings. These are sites that generally have thousands of backlinks, a high Pagerank (often 6 or more), and quite frequently, they date back to the late 1990′s.

If you see that more than one or two such sites are showing up regularly in the search results for the main keywords in your niche, it might be time to consider either reconceiving your approach to the niche or switching niches altogether.

3. Failing to Understand SEO

Far too many small web site owners simply fail to comprehend how search engine optimization (SEO) works. Without current and comprehensive knowledge of the methods and techniques that can be used to elevate your site’s position in the search engine results, you will be at a major disadvantage.

There are many wonderful, free resources online covering the methodology of link building and the proper manipulation of on-page factors, which together make up the core of any SEO campaign. If you do yourself a favor and educate yourself on SEO, your site’s traffic can increase dramatically, as can your business revenue.

2. Losing Interest in Your Business

Quite frequently, this is the direct result of a lack of passion for your niche. Many people simply get bored with their web based businesses after spending many hours and months working on them, only to let them stagnate or abandon them altogether.

If you are passionate about your business, you are far more likely to continue to invest time in building it, even when you hit lulls or when your site traffic drops. Be persistent — it pays off in the end.

1. Building Poor Quality Content

Anyone who has browsed the web knows there is a ton of bad content our there. Many webmasters seem obsessed with pumping out more and more pages without any concern as to the quality of the content on those pages.

While this strategy might work for a while, especially for people who create a huge volume of material, more often than not, it is a recipe for failure. Poor quality content will lead to people leaving your site quickly, and this in turn will hurt your search rankings and kill prospects for repeat traffic. It’s also a bit soul-sapping — it’s hard to be enthusiastic about a site you know is pure rubbish.

Build content you are proud of. This will help build your readership, and it will help improve the web in general. And in the end, it’s just good business. After all, the search engines ideally want to return quality sites in their results. Your best long term strategy is to give them what they want, and in turn, they will be more likely to show you love (and send you lots of traffic) down the line.