Nowadays, estate sales are a large business. In reality, the industry’s size increased fourfold in the years prior to the pandemic-induced economic crisis. In spite of the fact that there are now hundreds of estate sale companies in the US, there are still opportunities for the entrepreneurial spirit.
An estate sale firm will need to be started, just like any other business, with a lot of labor and understanding. The good news is that you’ve come to the right place because this article has all the information you require, from the legal requirements to marketing, from revenue possibilities to strategies for standing out in a crowded market.
Simply put, this is a step-by-step manual on how to start an estate liquidation firm and turn it into a successful enterprise.
Step 1: Find Out if this is the Right Business for You?
You must first comprehend the market dynamics before starting an estate sale firm. By doing so, you’ll be able to assess whether entering the field is worthwhile.
Positives Vs Negatives
| Low starting costs and straightforward setup Less rules and regulations to follow Simple and expandable business model You can choose to work from home or an office. | Incredibly competitive Security issues, particularly with on-site bidding. |
Industry Trends
- Industry size and past growth: According to industry analyst EstateSalesNews.com, the u.s. estate sale industry has grown fourfold in the previous five years. ((https://www.certifiedestatesales.com/boom-u-s-estate-sale-industry/))
- Approximately 15,000 estate sale enterprises are active in the US.
Cost of Starting Estate Sale Business
An estate sale business will typically need between $2,000 and $15,000 as startup capital. Most estate liquidators invest $8,500 on average to launch their business.
A sizeable percentage of this money is used for marketing, branding, advertising, and the purchase of equipment.
Investment Items:
- PC, paper, pens, etc.
- Both a cashier and a desk or table
- A truck for moving goods to the auction site
Is Estate Sale Business Profitable?
The amount of money you can make from an estate sale varies greatly because high-value items will increase your earnings.
Most estate sale companies charge their clients between 25% and 50% of the total selling price of all things, making an average fee of 38%.
The typical American family’s net worth is reportedly at $750,000, according to the Federal Reserve. The net worth decreases to around $100,000 when the real estate value is excluded.
Each estate sale should bring in $25,000. This is based on a commission rate of 25%. Your first year’s earnings would be $300,000 if you handled one per month. You’ll have a 50% margin after costs and expenses, which means you’ll make about $150,000 in pretax profit per year.
As soon as your brand takes off, you might manage three estate sales per month. Your margin may now drop to 30% if you decide to rent an office and recruit personnel. More than $1.3 million in revenue might be produced annually if you can reach a 38% commission rate. You would earn a nice $400,000 profit if your margin was 30%.
Keep in mind that larger estate sale companies are able to close 10 or more estate sales each month and make more than $1 million in earnings per year!
Entry Barriers
- Estate liquidators must pay substantial marketing costs due to a low rate of repeat business.
- Convincing estate owners to use estate sale agencies rather than avoiding them
- Establishing a dependable brand and reputation
Step 2: Create a Strategy
Identify a Gap
Having the capacity to spot chances before your rivals will be crucial to your success as a seasoned estate sale business. Finding a market need or pain point, or turning your love of estate sales into a business, are some of the finest methods to spot business prospects.
In this field, you have a good chance of success if you:
- Have a background in sales, marketing, or advertising is a must because this industry revolves upon advertising your services.
- Excellent interpersonal abilities
- Have previous experience selling antiques
- Utilize your relationships to speak with and persuade new clients
With your estate sale enterprise, you could try to fill a market gap. Using this as an example
Specifically target baby boomers who will soon be retiring or families who are trying to downsize during the current economic crisis.
Solutions
- An estate sale
- Auction for estates
- Hybrid
- Offset auction
- Cleaning up an estate
- Constructing the auction website
- Selling onsite customers refreshments
- Acquiring products in large quantities and profitably reselling them
- Moving estate goods
- Consultation
Pricing
Estate sale firms charge a commission of 25% to 50%, depending on the size of the estate, the value of the goods, the need for additional services like post-sale cleaning, the type of assets, and the level of onsite security.
It’s best to assess the costs you’re likely to incur for a successful liquidation of your client’s estate in order to establish what to charge. For instance, if the client requests that you clean the home and dispose of any unsold items, you can negotiate a greater commission.
It’s significant to know that many estate liquidators provide daily discounts of 15% to 20% to encourage purchases. Accordingly, things purchased on the final day of the estate auction will receive a smaller fee. Therefore, before you and your client agree on the commission percentage, be sure to take into account the anticipated sale price.
To make sure that your pricing is in line with industry norms, you should also look at what your rivals are charging. The Step By Step Profit Margin Calculator can be used to calculate your markup and final price points once you have an understanding of your expenditures. Do not forget that the prices you use at launch should be flexible if the market requires it.
Target Market
Choosing the appropriate target market for your company is one of the most important aspects of any marketing plan. The four Ds—death, divorce, debt, and downsizing—are the main causes for people to wish to liquidate their estate. The heirs apparent, recently divorced, insolvent households, and those wishing to downsize will thus be the main target markets for your estate sale firm.
Location
To cut costs in the beginning, you might wish to operate your company from home. But if your company expands, you might need to rent an office space and hire personnel for a variety of positions. On websites like Craigslist, Crexi, and Instant Offices, you can uncover rental opportunities for commercial space in your neighborhood.
You might want to abide by these general guidelines while selecting a commercial space:
- Accessible by public transportation in a central location
- With plenty of natural light and ventilation
- As your firm expands, your lease might be made more accommodating.
- A space that is ready to use and doesn’t require any substantial upgrades or repairs
Step 3: Write a Business Plan
A plan is important for any business. This will help you guide your new business through the launch process and keep your eye on your main goals. A business plan also helps possible partners and investors understand your business and its goals better:
- Executive Summary: A brief outline of the whole business plan that should be written after the plan is done.
- Business Overview: A summary of the company’s goals, vision, purpose, assets, and control structure.
- What we make and what we do: Explain in detail what you’re selling.
- Do a SWOT analysis and look at market trends like changes in demand and growth opportunities.
- Competitive Analysis: Look at your key rivals’ strengths and flaws and make a list of what makes your services better.
- Sales and Marketing: Look at the unique selling points (USPs) of your business and come up with sales, marketing, and promotion plans.
- Management Team: An overview of the team’s tasks and professional backgrounds, as well as a business structure.
- Operations Plan: Your company’s operational plan includes how it will get supplies, where it will put its office, what its most important assets and tools are, and other practical details.
- Financial Plan: A three-year plan for money, including start-up costs, a break-even analysis, predictions of profits and losses, cash flow, and a balance sheet.
- Appendix: Add any other papers related to money or business.
Step 3: Create a Marketing Plan
Some of your business will come from passersby or people who find you online, but you should still spend money on marketing! Getting the word out is especially important for new businesses because it will bring in more customers and make people more aware of the brand.
Link your website to your social media accounts once your site is up and running. Social media is a great way to market your business because you can make posts that are interesting and sell your goods.
- Facebook is a great place for paid ads because it lets you target specific groups, such as guys under 50 in the Cleveland area.
- Instagram has the same perks as Facebook, but it’s for a different crowd.
- Website: Search engine optimization (SEO) will help your website show up higher in appropriate search results, which is a key part of making more sales. Make sure your website has clear calls to action. Try changing the size, color, and placement of calls to action like “Book Now” This could bring in a lot more customers.
- Google and Yelp: Getting mentioned on Yelp and Google My Business can be very important for getting people to know about your business and buying from you.
- Competitions and giveaways: Create excitement by rewarding clients who take a certain action, such as charging half commission on the first estate sale of each month.
- Signage — Put up enticing signs at both your store and website.
- Flyering — Hand out fliers throughout your area and at professional gatherings.
- Post a video — Post a video describing your estate sale company. If you use humor, it might gain popularity.
- Find recommendations — Provide incentives to encourage existing customers to recommend new customers.
- Paid social media advertisements — Use sites that can help you contact your target audience and run focused ads.
- Pay-per-click-marketing — Use Google AdWords to rank higher in search results. Do some keyword research beforehand.
- Create infographics — Post them, then use them in your content.