Fire Sale a Hot Method for Converting Merchandise to Cold Cash
Q: I have a small sole proprietorship that I started in 1992. I have some product in inventory that I need to sell to raise capital for new projects. I would appreciate any guidance you may give me on how to liquidate my inventory of pillows and T-shirts. The total wholesale value is about $4,000.
--Jennifer Irani,
Manic Impressions, Newport Beach
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A: Assuming that the inventory is good and still of value, I’d recommend that you consider holding a fire sale to try to convert these items into cash. If your goal is to try to recoup your money, and you have clientele who purchase basically the same goods, marking them down is your best bet.
Your other option is to sell the merchandise wholesale to a liquidator, who buys out-of-season goods and sells them to discounters such as swap meet vendors. A liquidator will probably not want to pay more than 10 cents on the dollar, so you’re better off liquidating to your own customers.
--Robin Cornwall,
business analyst,
USC Business Expansion Network
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Q: I have a great recipe for a specialty dessert pie (at least my friends and family think so). The pie freezes well, and I’d like to market it frozen to consumers. How do I find a company to mass-produce the pie, procure packaging and obtain a year-round supply of the main ingredient, pumpkin?
--Andre Roberts, Santa Barbara
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A: Because pumpkin is a seasonal crop, I think you must find a source of frozen pumpkin and contract for it on an annual basis.
But before you look into that, you need to back up a few steps. You’ve got a good recipe, but that’s just the start. It’s a big, time-consuming effort to bring a new product to market, and it can be very expensive. Even if you found a co-packer at this point, most of them wouldn’t be interested because you don’t have a customer base.
When I started in the specialty food business, I began by figuring out my food and packaging costs. This is crucial, because you must know what it costs to produce your product so you can price it to make a profit. Packaging for frozen pies always includes a picture, and photography can get expensive.
Then you need to see how the pie does in the real world. Try selling your product to gourmet shops and high-end independent grocery stores, maybe starting with a fresh pie to simplify the process. Use clear packaging, which is cheaper and makes the product look homemade.
Once you’ve found out what it costs and whether people like the pie enough to pay for it, you might try to arrange to have a catering kitchen produce it.
Remember, too, that pumpkin is usually a seasonal dessert, and that means you’ll have special considerations to keep in mind.
Seek some advice from other business owners and from a professional consultant, if you can afford it.
--Vicki Huxtable, founder,
Huxtable’s Kitchen, Vernon
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Q: I manufacture my own line of skin-care products and cosmetics for all nationalities. How can I find someone who knows the cosmetic industry to help package my line and get it into department and grocery stores?
--Derek Brown, Four Seasons
Cosmetics, Inglewood
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A: It sounds as if you need to contact a marketing consultant, who can help you figure out whom you want to sell your cosmetics to. Very few companies manufacture cosmetics--even the big labels are mostly manufactured by a few large corporations.
Small cosmetics manufacturers face a huge amount of competition and must find a niche where they can target their products. Once you determine who your customers are, you can figure out how to package your products and where and how they will be sold. But if you don’t narrow the field, you’ll spend a lot of time and money throwing spaghetti at the wall to see what sticks.
Check with your local business networking groups and see if other businesspeople can recommend an affordable marketing consultant who has experience in the retail sector.
--Margina Dennis, owner,
Image by Margina, Fullerton
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Q: I am a cartoonist, animator and inventor, and I’ve come up with an idea to decorate computers with what I call “PC Tattoos.” Retail distribution is in progress, and Web marketing is next. Do you suggest self-promotion or the use of a Web marketing firm?
--Mike Browne, Calabasas
A: If you’re skinny on cash--as a lot of start-ups are--but have extra time, you can learn how to market yourself fairly easily if you have a basic understanding of HTML, or hypertext markup language, which is the language used on the Internet to display text and graphics.
If you choose to do it yourself, there are some sites that explain “meta tagging,” which is the process of creating code within the body of your Web site so that it can be found by mainframe search engines. Do an Internet search using the term “meta tagging” (make sure you include the quotation marks), and you should be able to find some Web sites that show you how to do it.
On the other hand, if you have the money to pay a company, then you should search on “Internet marketing” to find a list of firms that can do the job. Unfortunately, the Internet is still new enough that the quality of firms offering this service ranges from god-awful to quite good, so check references before you sign up with one.
And remember, Web marketing is not just getting your site positioned with search engines. It also means using all your conventional marketing resources to make sure people have access to your Web site, including your business cards, advertising, brochures and other materials you send to people about your company.
--Robbins P. Bogue, certified
management consultant and
president, Marketing Excellence Inc.,
Arcadia
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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.
