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.

Rarely is there the individual who does not encounter an ethical or moral dilemma at some point in his or her business life. Whether that individual is the owner of a multinational corporation, a small business entrepreneur, or a new or established employee, everyone is likely to have to face such an instance eventually. Much like a personal ethical dilemma, an individual is faced with making a decision based on how it will affect not only himself, but on how it will effect the organization as a whole. One of the major problems when dealing with an ethical dilemma in business is that individuals are often swayed by business profits and the legality of a decision.

The Institute of Business Ethics, whose slogan is “doing business ethically makes for better business”, describes the term business ethics as such.

Business ethics is the application of ethical values to business behaviour. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, discretionary. Business ethics applies to the conduct of individuals and to the conduct of the organisation as a whole. It is about how a company does its business, how it behaves intrinsically.

As clear as this definition is, it is certainly open to interpretation. Therefore it must be understood that the application of business ethics to any situation is entirely subjective.

One can also understand business ethics, and ethics of any kind, as applying a sense of fairness to a situation. Even with a sense of clarity applied to the use of business ethics, reaching a just and moral decision can be a complex process for most individuals. The subject of business ethics has been a source of great debate in recent years as the heads of major (and minor) corporations are revealed as less than ethical characters both in the way they do business and in their personal conduct. However, it may be said that any individual who does not practice business ethics cannot be personally ethical even though the reverse may not also be true. Ethics in generally has a long history of applications. Centuries ago a man’s ethical practices defined who he was as an individual. However, as populations grew, the necessity for incorporating the best business practices into a company became somehow less important because there was always another customer around the corner and the owner of a business was rarely the focus of attention in a community the way he or she may have been in the past. A company’s administration took a seat in the background and hired representatives to deal with any fallout. Ethics rely on several factors, one of the most important of which is culture. Again, like the business person of the past, a culture’s ethics practices will largely depend upon the value that is placed on them. Business ethics have the unappealing conflict of often being contrary to what is legal. Often what is “right” is not necessarily what is legal, and a business must consider this conflict when making ethical judgments. Although there are many in the business world who believe that a business has no room for ethics if it is to function competitively, the numbers of corporate whistleblowers indicate that there is still room for ethics in business.

Western societies place a great deal of emphasis on success. However, in business, there are often conflicts between ethical behavior and business success. This disparity is often multiplied for the small business owner. To compete with larger businesses, it may be tempting to abandon ethics just to make an adequate profit. Additionally, the small business person is relatively autonomous in his or her decision making; he or she does not have to answer to a large employee base or a corporate governing board. It is also interesting to note that the small business leader often has his or her decisions impact a greater number of individuals than does the employee of the small business. For instance, a small business owner may have his or her decision affect his or her customer base as well as his or her employee base. The employee will likely find that his or her decision will only directly impact his or her immediate circle of coworkers. However, the pressure to succeed is both an internal and an external pressure and often leads individuals to make ethical decisions that are based more on those pressures than their own moral judgment. As consumers grow wary of those that they do business with, one must understand that there is just cause for such wariness. The cynical American consumer has learned, often the hard way, that there is little room in business for ethics. In a society where the customer used to be king, the consumer has more often than not experienced several distasteful experiences with business both large and small.

Some experts argue that any focus on profitability is bound to test the limits of ethical practices. They assert that to assume that the primary function of a business is to serve its client base in an ethical manner is idealistic and that the nature of a free economy dictates that ethics must take a back seat to increasing profits. Although it is rarely the conscious intent of a business to harm the public interest, reality dictates that the businesses ability to increase profits will determine its success. Publicly owned companies experience extra pressure in this arena. It is difficult to draw investors to a company based on its ethics. Investors are looking for a return on their investment and ethical performance does not equal dollars. There are economists that assert that, in any competitive economy, ethics are impossible to uphold; that a company can legitimately bypass ethics with the excuse that unethical practices are the only way to make a profit.

Unlike the larger corporations, the small business leader is in a unique position to shape the ethical practices of his or her business. Small businesses have a smaller employee base to police when applying ethical policies than do larger businesses. It is important to understand that, similar to the ethical dilemmas of the large corporations, although an individual surely knows the difference between the correct ethical decision and the wrong road, the choice to throw ethics to the wind is often made because the unethical choice is more profitable. This may, however, happen much less often in smaller organizations because the individual or individuals who are harmed by the unethical decision and someone is always harmed, is more visible to the small business. Major corporations and their decision making machines are often far removed from the individuals that their immoral and/or unethical decisions effect. This may make the wrong decision much easier to make.

The unique position that the small business owner is in regarding the formation of an ethics policy yields a great responsibility. A proactive business leader formulates a statement of organizational values that employees of the company are expected to embrace – at least while performing duties in the service of the company. An organizational ethics policy is an announcement to the employees, the customer base and the community as a whole that the business is prepared to conduct itself and its practices on an ethical level. Such statements invite the respect of all parties involved in doing business with such an entity. However, it is imperative that the small business owner not make the same mistake that larger organizations often do; the ethical policies that a business develops must not be in conflict with the organizational goals. It is unethical in itself to develop an ethical policy that an employee cannot possibly follow and maintain his or her employment. When faced with the decision between an ethical decision and his or her job, an employee will almost always choose the job.

Therefore the policy must be in reasonable alignment with the organizational goals of the business. It is equally important, and maybe more so, that the small business leader lead by example. Employees, especially in a smaller organization, are less likely to conduct themselves ethically if they receive implicit permission not to. The end result of such a practice is that the small business owner can be assured that he or she is conducting business in a manner that encourages the trust of his or her customers as well as his or her employees. And since consumers have become very wary of doing business with an entity they feel they cannot trust, the small business can enjoy the profits of a loyal customer base. The small business owner has an advantage over the larger corporations in that it can elicit the trust of the consumer by applying ethical business practices that give the customer the feel of an equal business relationship rather than one where the consumer buys based on need alone. There are many that believe that such practices are capable of drawing business away from the large corporate entities and back into a customer-focused business format.

The home-based business industry which is often referred to as network or multi-level marketing is exploding as of late. There are millions joining home-based businesses every month and hundreds of thousands per week. What is so attractive about a home-based business you may ask? More time to spend with family, more money, and a low-end investment in most cases. You can start a legitimate home-based business for less that $500 and make as much if not more money than you would starting a franchise.Having said that, you get all the benefits of using a franchise business model as you are able to use the company’s support infrastructure, marketing tools, and are able to use their guidelines to make sure of legal compliance. The only thing that exists in a traditional franchise that is not present in a home-based business is the huge franchise fee. When you couple the power of the home-based business model with the meteoric rise of free marketing strategies on the internet such as Facebook, Twitter, and YouTube just to name a few, you will be in the right place at the right time.Considering the state of the U.S. economy, with people getting laid off every time you turn around and the stringent requirements of the banking system with respect to those looking to start a traditional business, a home-based business opportunity is the way to go. I hope that you will take a leap of faith and join the home-based business industry, we would love to have you.