Start an estate sale company by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your estate sale company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an estate sale company?
It could take a while for your sales commissions to catch up with your startup costs. You might have to hire a part-time employee or two and run ads for your first estate sale before you start to see a payoff on that first event. There might also be costs associated with designing your logo, developing your website and renting work space if it’s not in your home. There are also licensing and permit requirements, which will vary depending on where you’re doing business, as well as bonding and insurance costs.
Still, estate sales is a business that you should be able to enter with well under a $10,000 investment.
What are the ongoing expenses for an estate sale company?
Your workforce and employee-related costs will probably be your largest expense. The more you can figure out how to do alone or with a barebones workforce, the better your bottom line.
Who is the target market?
Your clients will be individuals who wish to liquidate most or all of the contents of a home or business. One customer profile would be the heirs of the estate of a recently deceased parent. Another could be a homeowner who wishes to quickly downsize upon the death of a spouse or financial burdens. Or a couple going through a divorce.
In fact, the industry mantra is that the clientele comes from the four D’s: Death, Divorce, Debt, and Downsizing. As a result, at least some of your clients might be emotionally raw and need to be handled with sensitivity. So diplomacy is an important character trait. It should also be noted that, though the term “estate” sounds like most of your clients will be wealthy, that’s not necessarily the case. Estate sale companies can handle assignments of all sizes.
How does an estate sale company make money?
Your compensation will usually be derived as a percentage of total gross sales, ranging from about 25 to 50 percent. If the estate is small, your compensation might also be based on fees for marketing the sale, staging the event, cleanup or other elements of the assignment.
How much can you charge customers?
Most estate sales companies charge a percentage of gross sales—typically somewhere between 25 and 50 percent based on the size of the estate and the complexity of the event. This will usually cover all of your responsibilities—appraising, pricing, promoting the sale event, staging the sale, hosting buyers, managing the event and final cleanup. But some estate sale companies price some elements separately, such as cleanup.
One way of gauging what you can charge is to do a little research into what your competitors charge and how they structure their fees.
How much profit can an estate sale company make?
Your profits will be based on the size of the estates and volume of work you handle and your efficiency using your workforce.
How can you make your business more profitable?
There are ancillary services you can offer along with—or instead of—an estate sale. These can range from cleanup and donation services when the size of the estate doesn’t warrant a sale to packing and trash hauling. Some business owners provide liquidation consultative services to larger estates.
Furthermore, if you have the proper training to be able to appraise valuable art, antiques, fine jewelry and collectibles, you can specialize in handling only the largest estates, with the highest commissions. But this means extensive training and the ability to make valuable contacts among probate lawyers and other referring parties serving this clientele.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your estate sale company is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, and it's easy enough to form by yourself, or check out the top business formation services.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: You can get $200 when you open a Chase business checking account with qualifying activities. Learn more.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an estate sale business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
Estate sale businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your estate sale business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
An estate sale company sells items on behalf of their clients, and as such, should write an agreement to specify the details of the arrangement between the company and the clients. A sample consignment agreement for an estate sale can be found here.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market an estate sale company
Make sure that your website looks professional, clearly states what you do and where you do it, and encourages response. Here is an example of a well-executed estate sale company website. You must also have an active social media presence, including a business page on Facebook and a presence on LinkedIn, at a minimum.
How to keep customers coming back
In addition to trying to draw customers directly through your website and social media, pick up the phone and introduce yourself to probate attorneys and real estate agents who handle estates. You can find this information online.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start An Estate Sale Company In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
You should be able to ascertain the true value of furniture, art, antiques, collectibles, electronics, books, household appliances, office equipment and other paraphernalia of an estate in transition. Sometimes this will mean taking time to research sale items for hidden value or proper pricing. You should also be able to sell yourself and your company to three separate market segments:
- The clients whose estates you’ll liquidate
- Referrers such as real estate agents and probate attorneys, who can recommend you to their clients who might become your clients
- The buyers who’ll attend your estate sales
These are three very different audiences, and all must be approached in very different ways. You might find buyers by placing ads in local media and in connecting with individuals who regularly buy estate items, whereas you could meet your referrers while networking in more professional settings.
And finally, you must have the organizational and crowd control skills to create and manage the sale, lead a team, and work well under pressure.
What happens during a typical day at an estate sale company?
No two days look alike, but here are some of your typical daily responsibilities:
- Meet, stay in contact with and build good working relationships with the individuals who can recommend your services to potential clients. These referrers might include real estate agents, appraisers and probate or bankruptcy attorneys.
- Write and run digital and/or print ads to alert the buying public about upcoming estate liquidation sales.
- Hire and train employees to handle the various elements of the business, from appraising sale items and attracting clients to organizing and conducting sales events and moving large items, as needed.
- Quote prices and get contracts signed for estate sale.
- Conduct estate sales.
What are some skills and experiences that will help you build a successful estate sale company?
Here are some of the leading skills and talents you should have in order to build your business.
- Sales and relationship-building instincts to make and maintain contacts among referrers and sales and promotional talents to sell your services to estates in what can be a highly competitive environment
- Sensitivity to the emotional state of your clients
- Organizational skills to market and conduct an estate sale to maximum potential
- Appraisal abilities to command the best prices possible and maximize commissions
- Leadership skills to manage your people and control crowds during sales events
What is the growth potential for an estate sale company?
Since families are generally smaller and spread farther apart than they used to be, it is more difficult for people to pick up, transport, and claim ownership of their parents' belongings after their parents pass. Therefore, there is an increase in the number of unclaimed items that can be sold by estate sale companies.
That’s good news, as this New York Times articles shows. Unfortunately, the word has gotten out, and you’ll also find more competition for estates now than even a few years ago. Therefore, while there are more estates in search of companies like yours than ever before, you must be aggressive about getting the business. Make sure you website stands out and attracts clients and that you maintain excellent relationships with referrers.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting an estate sale company?
The best way of jump-starting your business might be by buying a franchise of a successful company. After all, they can serve as your mentor, coach and partner, seeing that you avoid the mistakes they probably made at first. You’ll find one such opportunity through Blue Moon Estate Sales, and there are others.
If franchising isn’t for you, consider getting your start as a laborer in an existing estate sale company to learn about the industry from the inside. You’ll also find information and educational opportunities through the American Society of Estate Liquidators, an industry association.
How and when to build a team
You’ll probably need to build your team right from the start, as your estate sale company demands a multitude of talents. Unless your skill set includes the ability to network with business referrers, appraise consignments, contact estates, attract buyers through marketing and social media, price items, stage sales, lug heavy furniture and stuffed boxes from one place to another and cleanup after the sale, you need help. That need is multiplied if you have two or more estate sales in progress on the same day.