The 2021 Economic Challenge
The economic hardships resulting from restricted workplace activity caused by the COVID-19 pandemic has affected all of us, be it in our personal lives or in business. Since the dramatic economic deterioration experienced in April 2020, the situation is slowly improving, with some projecting the South African economy to grow somewhere between 3.4% and 6.7% in 2021. However, this projection is dependent on how we, and the rest of the world, successfully manage and navigate through the effects of the virus, the success of the vaccine as well as other economic and energy supply factors. With so much uncertainty surrounding the future, it is wise to manage cash flow with caution.
One way to manage cash flow is to establish a well planned and executed asset control strategy.
At What Point Should I Consider Selling My Business Assets?
One of the best ways to increase cash flow, reduce costs and improve profitability is through an effective business asset management program.
Bad stock management will cost you money, whereas good business asset management will reduce costs and boost cash flow. To achieve success, its critical to get the balance right.
Holding excess business asset levels not only ties up cash that could be better invested elsewhere in the business, it also carries unnecessarily high storage and maintenance costs.
Furthermore, technology is forever marching forward, leaving outdated equipment less and less efficient and more expensive to run than its more modern counterparts.
Cash flow within your business is dependent on how you source, manage and dispose of your assets. Asset holdings should be regularly assessed and aligned to current business demands and sales forecast. Any surplus will only eat into your cash flow reserves, effectively converting your cash into, ever diminishing, non-cash assets.
An effective on-going asset control strategy will help you manage the lifecycle and performance characteristics of your business assets. The optimal result you are looking for is maximum performance output at minimum cost. However, over time, equipment efficiency decreases while operating and maintenance costs increase. Therefore, it is essential to understand and identify the point when output levels begin to diminish, and costs begin to escalate. Forever diminishing in output and value, your equipment will ultimately reach an inflection point, where the asset becomes nothing more than an ever expanding cost.
This is the Time to Ask Important Questions:
- If I replaced my aged equipment now, would I increase my businesses performance and profitability?
- Are my assets now costing me more than what they are worth?
- By delaying aged asset disposal, am I losing out on the highest possible returns?
- By disposing of my aged, under-performing or non-core assets, could I fund areas of my business that has greater need?
Asset management solutions will help align your business with the assets your organisation needs. By staying abreast with the demands on your business, we can help tighten asset levels, reduce surplus and promote ‘just in time’ strategies to optimise space, time and cash flow, ensuring working capital to fuel your future growth.
How to Efficiently Dispose of Business Assets and Generate Maximum Returns?
Having identified the reason to sell your assets, there is no doubt that you would want to generate maximum returns within a predictable timeframe.
Two outcomes resulting from the COVID-19 pandemic weigh in your favour.
- Increased interest in the second hand market
- An explosion in eCommerce activity
Growing Participation in the Second Hand Market
Themselves experiencing contracted levels of working capital, emerging companies are actively looking for pre-owned equipment and are happy to pay above average prices for quality items. From scrap to high end, high quality assets, the second hand market has legitimate buyers waiting to scoop up the right deal.
Not only can buyers find the right equipment for their immediate needs at current market value, the second hand market also promotes sustainable and environmentally friendly behaviour.
Global Scope and Scale
eCommerce is a rapidly growing shopping trend because it offers unparalleled convenience and security for sellers and buyers.
With more people than ever buying on the internet, it makes sense that your assets will gain maximum exposure via an online eCommerce marketplace.
Choosing to dispose of your assets via an online marketplace will expose them to the widest possible audience. Buyers from around the country, and indeed the world, are free to browse your assets from anywhere at any time.
What Factors Affect the Selling Price of Your Assets?
Pre-owned Buyer Market
Due to the global reduction in machinery production volumes, there is increased interest in the second hand market. More buyers are looking for used equipment to fuel their immediate work requirements. More buyers mean increased competition which drives prices higher.
Models and features
Specialised equipment not only tends to fluctuate more in price than standard models do, they also attract a smaller interest group. It is, therefore, essential to ensure marketing efforts attract the largest possible buyer audience. As with any product, features play an important part in determining market value.
Many buyers lean towards a particular brand and are willing to pay for it. Although these preferences may influence the outcome of a on-premise sale, an online marketplace is available to all potential buyers, no matter their location or demographic.
The age and condition of equipment on sale is one of the primary factors influencing price. However, if equipment is in good condition, one can reasonably expect the item will sell for good value. It is therefore important to present the equipment in the best possible condition, whether this involves repair, a paint job or a thorough clean. Service records and ownership related documentation are equally important as they increase buyer confidence and appetite.
The Right Time
A buyer urgently looking for specific equipment will be willing to pay a higher price to secure the purchase. In such cases, in an auction setting, the influence of the competitive environment will often drive prices well above expectation. It is, therefore, important to maximise the number of participants to increase competition and improve sales results.
View and Test
Buyer confidence is greatly improved when the possibility of first inspecting equipment before purchase. This will in turn influence what a buyer is willing to pay when purchasing equipment. An open channel of communication between buyer and seller is an important part of the sale process.
A Trusted and Experienced Advisor
Since our beginning in 1999, Liquidity Services has operated its business online, providing flexible disposition options to improve our client’s cash flow. As a trusted advisor, we have built a reputation of delivering results that consistently exceed expectation.
Right now, we are seeing unprecedented demand for used equipment with buyers paying higher than expected prices. Our clients are experiencing great returns on equipment sales on our global online marketplace AllSurplus.
We have 14,000 clients enjoying our robust database consisting of over 3.8 million registered buyers from around the world. The time to act is now while conditions are ripe for sales. No other marketplace gives you a bigger audience of legitimate buyers and more asset categories.
Whatever your asset, whatever the market conditions, we will help you find the right buyer and price for your goods.
Contact us now and let us help you recover vale.