AN ACTUAL CASE STUDY. THE LYNCH METHOD VS THE JOINT VENTURE METHOD OF OUR COMPETITORS.
I am a former retailer who owned 4 successful, high end furniture stores in the United States.
My father wanted to try somebody else, after using the Lynch Sales Company many times and with great success. We fell for the idea of turning our inventory into what we thought would be instant cash. Things didn’t go as planned….
My inventory from my two stores was fairly clean, so we expected to get dollar for dollar using the “joint venture” approach of a well known liquidation company. I had $1 Million at cost. The liquidator agreed to pay me just $740,000 as follows: 50% after the first week of the sale and the balance weekly over the next three weeks. Other expenses I incurred were the customary nine percent commission the liquidator receives on all sales made and housing expenses for their sales people and office help. They promised to share any sale “profits” with me on a 50/50 basis.
Here is what happened…..
The sale generated $4 Million (one years worth of business) however, they claimed they only made $100,000 in profit. Therefore, after the dust had settled, I received just $790,000 on the entire deal!
Here is what would have happened if I had used the Lynch Sales Company….
Lynch Sales would have sold my floor sample inventory for $1,450,000. A Lynch Sale would have obtained about $500,000 in high margin special orders and another $150,000 in oriental rugs that Lynch provides on consignment. THE BOTTOM LINE IS THAT A LYNCH SALE WOULD HAVE EASILY DONE $2 MILLION (PLUS) at an expense of 12%, LEAVING ME WITH WORKING CAPITAL OF $1,760,000!
The difference between a Lynch Sale and the one I actually had amounted to me leaving $970,000 on the table! The liquidator made all the money! Never again will I fall for such a con game.
Name withheld at the request of the author.
Details upon request by contacting Lynch Sales Company.
December 5, 2012