Making Big Money With A Small Surplus Sales Business

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Accumulate close-out, distress and bankruptcy sale, auction and other bargain priced merchandise for resale at several times your cost. Buy things that are surplus to the present owner and store them until you find someone who needs them.

With a building or storage space on your lot or a leased warehouse, you can buy "lots" of materials at auctions, from motivated sellers and responses to your "will pay cash" ads.

Unless you have an immediate buyer, store the items until they can be sold at a good price. Or, put up a big sign on your warehouse (or a separate outlet) and hold periodic or continuing liquidation sales.

Your merchandise can either be arranged tastefully to "showcase" the products as much as possible, or they can be in disarray -- for that "distressed" look. Used merchandise can be repaired or "spruced up" or it can be sold "as-is."

Surplus sales require considerably more of an investment than most home based businesses because many good buys require cash now, so it is wise to learn as much as possible about this field before investing too heavily in products you know little about.

As an example, surplus adding machines in working order can be found for as little as a dollar each at government and other surplus sales.

But before a thousand of them, ask who is going to buy them! The reason these items are surplus is because the previous owners went to computers.

The "secret" of making money (possibly lots of it) is knowing how to DISPOSE of things you can buy cheap.

If you can't dispose of them, they are not valuable to you -- they just tie up your working capital. The best way for a beginner to start in surplus sales is SLOWLY and CAREFULLY.

Go to every auction you can in your area. Watch to see what sells, and how much. Watch carefully to see who bids (and how often). Learn contrast to amateurs or private parties;) see how they look over anything they might bid on BEFORE the sale.

The easiest way to spot dealers is to note who bids one or two low bids only on many different items. The dealer will buy anything that is a bargain; the private party wants one specific thing; the dealer will not pay any more than wholesale (usually much less); the amateur will pay up to what he thinks is retail (amateurs often get carried away and bid well over retail).

Also watch carefully to see how much the auctioneer or his crew buys -- they may be "snapping up" bargains -- or, they may be bidding up the price!

There are all kinds of auctions -- government, dealers only, strictly retail, or a combination.

Normally, you can tell what kind it will be by the auctioneer company (once you get to know them) and the manner in which it is advertised. If it is advertised openly, it is not for dealers only. If you go to 10 different auctions and watch carefully, you can pretty well tell how they operate -- which means you can probably "take care of yourself."

Government auctions can be a little different. Some of them are by sealed bid where it is very difficult to tell how much it will take to buy a given lot. The smart dealers bid low on many different things and only get a few -- but those few are real bargains.

In a government or any surplus type auction, it is extremely important to get there early and make a thorough inspection of anything that you might bid on. If others ask you, be sure to point out flaws if you want to buy it. The ones who ask will be mostly amateurs -- the pro's don't ask unless they know you (they don't tell you much even then).

if it is electric, plus it in to see if it works; if it is in a can, open it to see if it is still good; find out how much is in each lot and check the entire lot; if necessary, make a phone call or two see what repairs might cost before you buy something that would cost twice its value to be fixed.

Despite all the possibilities for getting into trouble, a good auction buyer can make BIG money if he buys at a good price and buys what he can sell.

When you are ready to enter competition, follow the basics "religiously":

Check before you bid,

make a list of ot numbers, comments and
your estimate of what each is worth:

don't let others know what you really
think, or what you intend to bid on --let
them be totally responsible for
themselves.

Don't bid on things that LOOK or SOUND good when the auctioneer's helper holds it up-- his "it looks good tome" is NOT and endorsement or guarantee -- it is pure "hype."

Many things you learn at auctions will come in handy in similar situations like garage, divorce, foreclosure and warehouse sales.

You should also go to non-auction sales as early as possible -- for the best selection AND to buy complete lots at reduced prices.

You might also return after the sale is over and make an offer for all or part of whatever is left. Once you learn what to buy and how much to pay, you will be able to recognize bargains at these and many other events and situations.

Of course, you can also buy new merchandise on sale and close-outs and foreclosures -- at prices that will let you offer real bargains to your customers.

There are a number of close-out merchandise houses listed in the NEW YORK ( and other large city) BUSINESS TO BUSINESS TELEPHONE DIRECTORY, available through the phone company for about $25. several other possibilities are listed under Business Sources.

You have probably seen those ads for surplus government jeeps for $100. If you believe that, I have this "nice bridge in Brooklyn--" Seriously, the U.S. Government dispose of surplus ,materials at various locations -- and the details are FREE.

DOD sales are much like many others except that they sometimes use "silent" bidding (a form of sealed bids). At these sales it is especially important to know exactly what you are bidding on (the items are not displayed as bids are taken), or you can end up with something you didn't want (possibly at an exorbitant price).

Cars may be in good running condition - but they also may be nothing more than a rusted chassis. if you don't look first, you will probably still learn this lesson -- but the cost to you will be considerably more than this manual!

Although you will soon develop your own procedures, a starting position for how to handle things you buy at surplus sales might be to fix the cheap things and leave any expensive repairs for the new buyers.

After all, they are not going to pay retail or even the "going" rate, so they can afford to do some repairs. Since they need the equipment in question and know what it is, it is probable that they can either fix it themselves -- or know exactly how to go about having it done at the best possible price.

If you try to fix everything, you will probably have to pay more than someone knowledgeable on that particular piece of equipment, and raise your price accordingly. This means you have more funds tied up in your equipment.

Remember what it is that makes you money: buy and selling-- not buying RESTORING and selling.

So, if the item needs a knob, or a light coat of paint and you can get it done cheap, by all means do it. But if it needs a new flywheel, tell the buyer you are knocking off the price of one and let him take care of it. Your time and funds are better used to buy more thing to resell.

To find out when and where the Department of Defense DOD) will hold sales -- and get a list of what is to be sold, simply write to DOD SURPLUS SALES (see Business Sources for address) and ask them -- unless you would prefer to pay some mail order entrepreneur $20 to $50 for the same information!

Once you attend one of their sales, sign up to get on their mailing list and start receiving free advance notices of upcoming sales.

For the record, there probably has not been an operable government surplus jeep purchased at a government auction for anywhere near $100 for at least 30 years.

One surplus entrepreneur looked at several trucks being offered at auction and noted that one had a refrigeration unit on the back. As usual, he arrived early and checked everything. When he looked at the paperwork in the glove compartment he was astounded to see that the "refer" had been replaced just a few week ago and was nearly new. Even though the truck was nothing special, that unit was valuable!

Unfortunately (for the other bidders) the papers "mysteriously" disappeared right after that. As a result, he was able to buy the truck for just over $400. He sold with one phone call the next day for $2,000 to a buyer who came and got it- and was happy to find such a bargain!

When you know how and where to buy your merchandise at the right price, you can offer your customers real bargains and still make a nice profit for yourself (probably much more than conventional stores, even though their prices are higher).

Obviously, there is more risk in this business than in doughnut machine, but there's also a lot more potential profit.

Many fortunes have been made doing exactly this. If you have a chance to buy a walk=in cooler for $20, BUY IT. Have it moved to a safe place; check it for INEXPENSIVE repair or "cosmetic fix-up" and find a buyer who will consider it a "steal" at $5,000!

As mentioned previously, there are two parts to smart surplus dealing: knowing how to buy AND how to sell.

Things that can't sell are worth only what you can salvage them (less transportation); those you can just might make you rich!

BUSINESS SOURCES

U.S CUSTOMS SERVICE, Box 7118, Washington, DC 20014. Information on annual sales of seized merchandise.

U.S POSTAL SERVICE, 475 L'Infant Plaza, Washington, DC 20260. Information on unclaimed parcel post packages.

U.S. SMALL BUSINESS ADMINISTRATION, 1441 L St.,NW, general Agency Information, Washington, DC 20416. Information on Small Business Administration Sales.

DOD SURPLUS SALES, Box 1370, Battle Creek, MI 49016. Information on Government surplus (local or nationwide) auction sales.

AUCTION MERCHANDISE, CALIFORNIA, 800/541-0900. Sells computer listings of pending auction sales by geographical area. List 200 sales -$15.

RISONA, INC., 135 E. 28th St.,New York, NY 10016. Closeouts on cosmetics, video tapes, general merchandise.

ROYAL SUPPLY, 156 5th Ave., New York, NY 10010. Close-outs on pens, perfumes, cameras (including name brand) merchandise.

STEVENS, Box 734, Syosset, NY 11791, Close-outs on jeans, tapes, Army/Navy type merchandise.

THE JERSEY DEVIL, Box 202, Lambertville, NJ 08530. Monthly list of shows, auctions, etc... for eastern costal areas. Sample - 60 cents.

MARKETER'S FORUM. 160 E. Eileen Way, Syosset, NY 11791. Magazine featuring wholesale and close-out offers (cosmetics, jewelry, toys, novelties, clothing, etc.) -$20 yr.

DOVER PUBLICATIONS, INC., 31 East 2nd St.,Mineola, NY 11051. Discount books, clip art, stencils, etc.

QUILL CORPORATION, 100 Schelter Rd.,Lincolnshire, IL 60917-4700, 312/634-4800. Office supplies.

NEBS, 500 Main St.,Groten, MA 04171, 800/225-6380. Office supplies.

IVEY PRINTING, Box 761, Meriden, TX 76665. Letterhead: 400 sheets plus 200 envelopes -$18.

SWEDCO, Box 29, Mooresville, NC 28115. 3 line rubber stamps - $3; Business cards - $13 per thousand.

ZPS, Box 581, Libertyville, IL 60048-2556. Business cards (raised print - $11.50 per K) and letterhead stationery. Will print your copy ready logo or design, even whole card.

WALTER DRAKE, 4119 Drake bldg.,Colorado Springs, CO 80940. Short run business cards (250 -$3), stationery, etc. Good quality, but no choice of style or color.