How do you liquidate a business?
While it may seem challenging, liquidation is easier following this four-step process.
Step 1: Talk to Your Legal/Accounting Team
Before doing anything related to liquidating your business, you must first speak to your company’s lawyer and accountant.
Also, you must inform your creditors that you will be liquidating your company.
Talking to your lawyer and accountant is essential because they recommend the best way to settle your debts and sell your assets.
Further, they ensure your business takes the proper steps throughout the process.
Step 2: Prepare Your Assets
The second step to liquidating a business is to prepare your assets for the sale.
Preparing your assets includes doing the following things:
- Inventorying all assets
- Determining their worth
- Finding potential buyers
Also, if your business has items like a car up for collateral, preparing these items for selling is critical.
For instance, if you put a car up for collateral, ensure it looks as best it can before selling it.
Preparing your assets in advance helps you ensure that you earn the most money possible!
Step 3: Work with an Appraiser
The third step in liquidating a business is to work with an appraiser.
Working with an appraiser means setting prices on each asset you sell to pay back outstanding debts.
A qualified appraiser ensures you accurately estimate the worth of your items.
Lastly, deduct each sale’s costs when determining your net sale income.
Step 4: Determine the Type of Sale
The final step is determining what type of sale your business will pursue.
For example, some of the types of sales include the following:
- Negotiated sales: These types aren’t common but are helpful when a business needs instant financial assistance. Some buyers include a company’s competitors, suppliers, or landlords.
- Consignment sales: Sellers turn to a local dealer who sells items and then pay the business afterward.
- Internet sales: Selling assets on the Internet is common; just be sure to understand the rules and legalities.
- Sealed bid sales: These sales are helpful if confidentiality is critical. Buyers submit bids via a sealed envelope at a specific time and place.
- Going out-of-business sales: When your company has a big sale to attract customers. The goal is to sell as many items as possible.
- Public auction sales: Auctions are an excellent way to sell items quickly. To do this, you must hire an auctioneer.
Keep in mind that a business can pursue multiple types of sales!