When Len Rosenberg started thinking about retirement, he considered all options for his store, Pool & Patio Specialists in Westwood, Massachusetts. In the end, he threw a going-out-of-business sale.
NORM: When did you start your swimming pool and supply business?
LEN: In March 1977. The next year, I added skis to compliment the summer business. After three years, I stopped selling skis and added a Christmas trim-a-tree business.After 15 years in business, we moved to a 25,000-square-foot location and began selling patio furniture. We added pool tables and hot tubs. Patio furniture became the most lucrative. We carried mid- to high-end patio furniture, catering to upscale customers. Eventually, we stopped selling pools and pool tables and added a Halloween store.
NORM: What made you start thinking about selling the business?
LEN: After 30 years, a friend of mine who owned a pool and patio store with a similar operation was planning a going out of business sale. I listened and learned that in order to have a successful GOB, you must be running a successful company, be well capitalized, and have the ability to purchase inventory specifically for the sale. I knew I would keep the GOB format open as an option. In essence, I would be selling the business to the public.
In 2013, I learned the property I leased was being sold. I had two years to either find a new location or sell the business. Even though my employees understood the sales and purchasing part of the business, they did not have the ability to run the financial side. I felt that my company was too big for an individual to purchase and too small for a large company to buy. Even if I was lucky enough to find a buyer and we agreed on a fair price, I was not interested in financing the purchase. I could be back in the business if they failed to make the payments.
NORM: You have two sons. Were either of them interested in carrying on the business?
LEN: Both of my boys worked for me during their high school and college years. They were not interested in pursuing a family business. It was time for me to retire.
NORM: How and when did you begin planning for your closing?
LEN: I began planning about a year and a half prior. I enlisted a professional liquidator from New Jersey. A professional liquidator and good planning can help maintain excellent margins during the sale.
I had to establish my pricing strategy and order more inventory. Many states require that you record your inventory before you begin the GOB sale. The proper pricing strategy is critical, as customers need to perceive the value.
Components of the sale included professional signage and utilizing a mailing list of potential clients. Our direct mailing was to households with incomes over $100,000. We also spent a considerable amount of money on network TV advertising.
NORM: What happened on the first day of the sale?
LEN: We had over 150 people in line, waiting for the store to open at 10 a.m. We did almost a month’s worth of business in one day! In Massachusetts you can only run a GOB sale for two months, so I planned to end the sale in conjunction with the Massachusetts Sales Tax Holiday. This is a phenomenon in itself. The sheer number of people who came into buy that day just to save the additional 6.25 percent is amazing. We sold everything that was on the floor that day except for a few sets of furniture.
NORM: How and why did the GOB sale work you?
LEN: There are many reasons for a GOB sale. It might be bankruptcy, a lawsuit or a conflict between partners. If the owner is retiring, a GOB may be the best way to liquidate the assets. I saw the GOB as an alternative to selling the business privately. I used this sales opportunity to not only liquidate the inventory I owned, but I also brought in additional inventory because of the increase in sales that was expected. We planned to sell a LOT of merchandise. I did a year’s worth of business in two months.
During the years I was in business, we had a tent sale every summer to move merchandise. I was never afraid to mark down slow-moving inventory and turn it into cash. Keeping obsolete inventory is a real mistake. I was very fortunate in that I lost money in only one of my 38 years in business. I attribute my success to the fact that I was a finance person first, not a retailer.
NORM: After the sale, how did you dispose of all your warehouse equipment, fixtures and vehicles?
LEN: During the sale, individuals and various companies came into the store and asked if we were going to sell our equipment. We took their telephone numbers, and after the sale we contacted them. We sold everything. We never had to bring in a dumpster at the end. There was nothing left on the last day.
NORM: Any advice for readers that might be thinking of retiring?
LEN: Try to find a buyer or perhaps an employee you feel is capable of running the business. If you can’t find someone interested, I would do what I did: hire a competent liquidator and follow its program. In the beginning, you may not believe it will work, but it does. There is a formula for executing a successful going out of business sale.