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8 Mistakes Owners Make Running a Going Out of Business Sale

 

Many retail owners decide to do their own store closing sale. They have complete control and have no fees to pay to an outside company. On paper, it appears to be the smart thing to do, but in reality, most owners put less money in their pocket and go through much more stress. Here are some of the common mistakes owners make.

 

1. Emotionally Attached to Store & Inventory - This is an emotional time and hard to make rational decisions. Owners are often too concerned about the cost of the merchandise which in many cases lead to a lower return

 

2. No Experience - Running a going out of business sale is a full-time job that experience matters. It is not the same as business as usual. One mistake can cost hundreds or thousands of dollars.

 

3. Good Start - Creating a shopping frenzy the first day is essential to a good sale. Many people will visit the store one time and if your discount is too low will leave. However, if they see lots of customers filling their baskets more likely to spend a lot of money. You will have to close your store a day or two to prepare for the sale. Customers must know what the price is and using just a discount amount(unless 50% off) will result in many lost sales. I have found price charts to be the most effective.

 

4. Keeping Momentum - Customers dropped out during the sale. If the momentum is lost, sales will fall quickly and be hard to get back. Prices should be discounted about every 5-10 days until the sale is over. Most sales should be done in 30-45 days.

 

5. Selling Fixtures - Have one person sell the fixtures. Otherwise, double selling will occur. I know one store that lost $3,000 for double selling a forklift. As for pricing, it varies on the market. Craigslist is an excellent way to sell fixtures if done properly.

 

6. Advertising - Owners will put a sign or banner and that is the result of their advertising. Using Craigslist, email, text message marketing, postcards and newspaper advertising will bring results within the right message.

 

7. Keeping Employees Around & Productive - Employees need a job after the sale. You must have the proper motivation to keep them around and be productive. There is a lot of store maintenance during a going out of business sale. Also, need to have a plan to control inventory shrinkage, because it is an issue during a store closing sale.

 

8. Discount % - An owner could follow my pricing 95% and have terrible results because this is like cooking. Just one small change can make the food taste terrible. My pricing has a method to its madness including where the merchandise is placed in the store. This is where experience is a huge plus. Perception in pricing matters more than reality.

 

If a retail store has over $100,000 inventory at cost, a good liquidation consultant will put more money in the owner's pocket (even after fees) with a lot less stress. The sale will be finished much quicker, so the owner can start the next chapter in their life. For stores that decide to do their own sale, avoid the mistakes above to put more money in your pocket.