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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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Expanding Small Business Financing Opportunities For Your Business

Small business financing is often the only way for some businesses to get the capital they need to open their doors, expand operations, or develop new services and products. However, the Great Recession created some significant hurdles for personal and business loan applicants who boasted less-than-perfect credit scores.However, recent investigations suggest that banks are starting to open their doors to business owners in greater numbers. Although credit requirements remain above what they were before the recession, lending has indeed warmed up for many business owners. Where many businesses were just “treading water,” they’ve now entered an era of cautious and optimistic growth.Another positive sign in small business financing is the improved cash flow in the nation’s major banks, which has led to increased lending activity and an overall reduction in average commercial loan rates. With the recession fading into the background of the economy, small businesses that have been waiting for an improved economy are finding that banks are willing to deal with businesses that might have had budget shortfalls a few years ago. Small businesses and fledgling companies that have been conservative in hiring and expansion efforts post-recession have finally become eligible for loans.According to data compiled by the federal government, one of the major sources of small business financing today has been loans through the Small Business Administration (SBA). One of the reasons why looking at banks that provide loans that are guaranteed by the SBA is a savvy way of obtaining a business loan is because the government’s list of banks represents lenders who are already interested in making loans to small entities. Looking at these banks reduces the time a business owner might need to spend to find commercial lending opportunities. It’s also a good idea to locate a bank with loan officers who have prior experience with SBA loans.However, getting business and commercial loans still requires a solid application. In small business financing, one of the most powerful features of a loan application is the business plan. Banks are much less likely to hand over a check if the business plan isn’t fleshed out, accurate, and professionally written. A business plan with typos or a lack of information on cash flow, budget, and fiscal projections won’t impress a loan officer. Some small business experts advocate hiring a business plan writer to ensure the final document is as professional as it can be when it’s sent to the bank.The government has taken an interesting step in encouraging growth of small business by reducing the fees associated with SBA loans. Borrowers already enjoy SBA loan rates that tend to sit below traditional loan rates, but low fees on certain SBA loans may make these small business financing methods even more cost-effective than they were in the past. For example, loans under $150,000 no longer have fees and short-term loans guaranteed by the SBA also feature rates lower than many standard bank loans. This means that brand new start-ups or businesses that are nothing more than an idea in a garage are possible for new borrowers.Small business loan applicants should remember that the interest rates on SBA loans aren’t set by the government, but are part of a negotiation between the bank and the applicant. However, there are maximum rates set in place so the interest on business and commercial loans will never exceed a certain amount. Since the bank has some leeway in setting an interest rate, it’s worth it for a small business owner to come to the table with a credit rating that’s as high as possible. Small business financing today isn’t a cakewalk, but getting a loan as a brand new business is possible in today’s lending environment.

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Bowhunting Teaches Many Lifelong Lessons

Hunting Lessons

People, as I have learned, need not to learn to kill during an archery hunt, but to learn more how to live. When I was very young, my Dad taught me the importance of learning how to enjoy “Mother Nature,” not just to hunt. I have passed this on to both of my sons and friends I’ve made throughout my life while bowhunting. By learning to live along side of “Mother Nature,” it can teach you how to become a better person in everyday life.

My Dad taught me how to hear not to just listen. When you listen carefully, you hear many things around, not just what you want to hear. In those moments you may hear the birds singing, the small critters on the ground start to scramble around or if you’re lucky, the footsteps that sound like a human walking on the forest floor, only to find out it is a deer starting to move slowly toward you. He taught me to see, not just look. To see what is going on around you. Next time you are out in your stand take look around you and see the clear blue sky or maybe how beautiful the leaves are on the trees. Sometimes the warmth of the early morning sun hits you just right and you feel good all over, inside and out. He also taught me to be courageous, not just to be satisfied with the way things are now, but to go out and explore the many new horizons yet to be seen. This could mean the next crossing of a small stream or maybe a new job.

I try to stay connected to the animals that I see during an archery hunt. I know when to shy away from something or to forage on, just like that monster buck that didn’t get to be a monster just by accident. He learned just as you did, from others or from his own mistakes where not to be or what not to do. In order to be successful in life, you must see and hear what is going on around you and your loved ones. To share and teach the care of our forest home and hunting heritage may just be the most important piece of education you have ever taught. Even though my Dad has been gone for awhile now, his lessons that were taught to me are now still being taught. The path he led me on, has helped me to determine who I am as a person and he has taught many others, who are still feeling and doing the same as I am.

The sport of archery hunting was passed on to me and I will continue to pass it on to others as if my Dad were still alive. Remember that hunting is less about learning how to kill, and is more about how to respect others and what “Mother Nature” has to offer.