Auctions provide business owners an inexpensive way to obtain business furniture, fixtures and equipment. But, before you make a bid, it is helpful to know the basic procedures.
An auction of business items usually results from a bankruptcy. A bank or finance company takes possession of property pledged as collateral for a business loan. If a company literally pledged all of its assets against the loan, the bank sweeps into the company's place of business to literally "lock it up" after the loan goes bad. The employees are sent home by the company's management, but are permitted to remove personal possessions.
An auction company will generally assist the process. A list of all the assets is entered into the auction company's computer system and a code number is assigned to each major item. Frequently, assets are grouped together for sale as a unit, such as a pile of 10 calculators -- buy one and you get them all.
Location: Auctions may be held right at the business site. Alternatively, the assets could be collected and sold along with those of other defunct businesses at one place such as the Maryland State Fair Grounds.
When you attend an auction at the business site, it is similar to a walk through a ghost town. Phone messages are still at the receptionist's area, old food is in the refrigerator and files are still in desks. A disadvantage to this type of auction is that a business such as a bed manufacturer will have lots of beds in the auction, but only a limited amount of business furniture, fixtures and equipment. To get a better selection of goods, attend the larger multi-company auctions.
Finding auctions: The auctions of business assets are advertised most frequently in the classified section of major newspapers such as The Evening Sun, The Sun and in trade journals. Occasionally they will be promoted on television or radio broadcasts. You can also look in the phone book and call the various auction houses to ask about upcoming auctions that might have the type of items you want to buy.
Preparation: Major auctions often will have a time period before the bidding begins to permit prospective buyers to inspect the goods. This could be a few hours before the start or even the prior day. Call the auctioneer to discover what the arrangements are. In many cases you will be permitted to test the computers, start the cars or use the photocopiers to make copies. Take advantage of this opportunity to ensure that the machinery works before you bid on it. Remember, there are absolutely no guarantees that anything purchased at the auction will work, so inspect it closely.
A numbered ticket will be attached to each item. Make note of the item number, called the lot number. Also find out how payment can be made -- cash only, credit card, personal or business check or bank draft.
The auction: Arrive a little early so you will hear the initial announcements. The first step is to register. You will need your driver's license and possibly your business card. At registration you will be given a card with a number on it. When you win a bid, you hold up the card so your number can be recorded.
Before you decide to leave and return later in the day, check with the auctioneer, who may plan for the lot items to be auctioned out of numerical order.
The bottom line: Attend at least one auction to see it in operation, then carefully plan to attend another where you will make some significant purchases.
Patrick Rossello, president of the Business Consulting Group, is a member of several local advisory boards, including the Technology Development Center. His column appears on the first Monday of each month. Send questions or suggested topics c/o Money At Work, The Evening Sun, 501 N. Calvert St., Baltimore, Md. 21278.