Business
Salvaging the Remains: 4 Steps to Liquidate a Closing Business’ Assets
If you’ve decided you can no longer stay afloat financially, you might want to liquidate your business. It can be a tough decision, but it could also be the right one. The reality of the situation is that creditors still need paying and you should do your best not to leave them with nothing. You might think you haven’t got much money to pay all the people you owe, but that’s because you haven’t factored in all the assets you’ve already got – they might be worth a lot more than you think.
If you want to pay off all the people you owe and potentially keep a bit of money for yourself, you need to liquidate your assets quickly and easily. In this article, we’re going to look at how to do this so that you can move forward through the liquidation process and hopefully get some relief from a stressful situation.
- Make a list of all your assets
This one is simple, but you need to get a list together of everything you own. You’d be surprised how many business owners simply start trying to sell things without having an idea what their inventory is like.
Write everything down in an orderly fashion. Categorise items. Your list should include equipment (like computers and cash registers), office furniture and vehicles. You can also include a list of accounts receivable or money you’re owed that you still need to collect. Don’t forget things like insurance policies where you could be entitled to a partial refund.
One important part of your list should be any property you own – and this should be a separate part of your list. Write down who owns it, what condition the property is in and how it was purchased. Aside from actual property that your business has purchased, you might be able to sell a lease get a partial refund on some rent. Work this out (phone around if you have to) and include the details on your list.
You may also be able to sell contracts you have to other businesses like yours, so include these if you’ve got any.
- Value your assets
Work through your list and make an estimate about how much you think you’ll be able to get for each item. Remember, you should expect much lower than market price for most of your items because they’ll be second hand. Also don’t expect as much for selling your contracts or partially completed works. The only things you should really expect market price for are your property.
You might want to speak to real estate agents to get an estimate and to start the selling process. Some items will be easy to research, you can just check on eBay to see what things are going for. However, for certain assets – estimates might be a bit vaguer. Don’t expect to get back anywhere near the same amount as you initially estimated, but you should still be able to get a fairly good idea of what you own and if your assets will be enough to pay off all your creditors.
- Find buyers for your assets
Work through your list methodically and start trying to sell things. Phone up your creditors and ask them when they’re able to pay you to buy. Items like computers can be put on eBay, or you could try local second-hand stores. You could do the same with your office furniture, or try office supply providers in your area. You might want to do a bulk deal with someone who’s willing to take all your items off you for one price – leaving them the work of selling everything individually. While this could save you a lot of time and effort, make sure the price they’re offering you is worth it. Weigh up how much time you’ll save from not having to find buyers for everything with the difference in the price they’re offering and what you’ve estimated everything is worth.
Start listing your properties with local real estate companies. Take your vehicles to a dealer or list them yourself if you’ve got the time. A lot of liquidating your assets comes down to how much time you’re willing to spend getting the best price with how much time you’re willing to put in. Finding the absolute best price for every item could take you months, and you might want to weigh this up with just getting things done. You could also try an auction site like EquifyAuctions.com to get rid of a large number of your items quickly and easily.
Talk to other businesses in your area to see if they’re interested in taking over some of your contracts. See if someone wants to come in and finish completed jobs. Some businesses might be interested in some of your other assets, too. Like specialist equipment, software licenses or even computers. If you’ve got any trademarks or intellectual property, you might be able to sell these on to rivals or competitors. Some business owners can let their egos get in the way of phoning up competitors to offer them these sorts of assets – but don’t be one of them. Your finances and future stability are more important than your ego.
It’s important that you don’t simply sell things off as cheaply as possible because you know there’ll be nothing left for you anyway. Don’t cheat creditors like this and try your hardest to get as much money back for them as possible.
Try getting in touch with landlords to see if you can get a refund on part of your lease, especially if you paid up-front for a year or more. Speak to insurance companies and other licensees to see if you can get a refund because you only used a couple of months out of the policy. If you can’t get a refund, you might be able to sell the policy on, so look into this too.
- Get help if you need it
While a lot of this work can be done yourself, you might realise you need a bit of help. This can be difficult if all your staff have left because you can no longer pay them. If you file for bankruptcy, the bankruptcy firm could move in and do a lot of this for you, although you won’t have much control and they will need paying too.
