How I Built A $250K/Year Wholesale Liquidation Business
It was the 4th of July, 2017 in Toronto, Canada. I was a 24 year-old at my wits end. There was tons of trial and tribulation in my past, and I was tired of my current life circumstances. I had never run a proper business before, despite many failed attempts.
Table of Contents
| The Initial Sale My First Platform: MaxSold Scaling Up Buying Entire Properties Worth of Items 2018 Chairmageddon A Small Jackpot Closing the Condo Deal What I Did Wrong in my First Year of Business |
My resumé up until that point consisted of a few years of experience as a licensed mortgage agent, a few odd jobs, and a long and illustrious “career” from age 12 to 19 as a semi-famous internet animator under a pseudonym.
Everything seemed so complex. Everything was about software or technology. I’ve had on and off experience with coding for many years as someone practically raised on the internet’s Wild West days.
I needed something that would produce cash sooner rather than later.
I looked around my room. What could I sell?
The Initial Sale
I found a pair of 20-pound iron hexagonal dumbbells scattered on the floor. Spending a fraction of my net worth at the time every month on a gym membership, I could make do without the dumbbells.
The time I took to hurriedly take photos of them and pop the ads up on Kijiji, Canada’s Craigslist (we also have Craigslist) were negligible. At $30 for the pair, I believed they were a steal.
The next day, they were sold. I was $30 richer. What now?
So, I took out a notepad and began scribbling down items around my bedroom that I believed I could move, along with some price predictions.
The tally was around $1,100 in potential revenue. I stayed up for hours snapping photos of them all, making sure to get 4-6 quality shots with my iPhone.
I ended up selling almost everything in that list for a grand total of $960, a cool 87% of my projection. It took me 1 week.
My gut was totally sold – but there was another problem: My bedroom reserves had run out of options to sell, unless I sold my car.
So, I ended up selling my car for a pittance, which in hindsight was a mistake. Instead of a vehicle, I opted to ride my hybrid city/mountain bike everywhere for a few months to save on gas and insurance.
However, had I broadened my horizons, I could have used the car to hit more places and earn more money. Oh well.
My First Platform: MaxSold
Where was I going to buy more items? At the time, Facebook Marketplace was a rapidly growing platform. I saw it as a great end-user marketplace, not as a place to source items.
And before we go any further, Alibaba or any similar drop-shipping methods were never used in my business. I have nothing against it, I just never saw where I could truly add any value.
I never wanted to be in a position where I did not have control. Someone else was manufacturing it, someone else was shipping it, someone else was processing and fulfilling it – what was I doing?
I had heard from my family friend about this platform called “MaxSold”. It was an online auction platform for estate and liquidation sales. People would take their own pictures, write their own descriptions, and manage their own pick-ups.
Thus, I was hooked.
The first ever purchase was when I bought a small, generic coffee table for $31, and ended up selling it for $35. I quickly realized that I had paid too much (duh!) and begun to try and gain insights about data the auctions would give.
For each MaxSold auction, I would pay attention to:
- How many items were typically listed in an auction
- How many items were typically listed in an auction
- What sort of categories/themes did an auction fall into
- What were the top 5-10 items people would bid the highest in an auction
- What locations were more/less popular
- What sort of trends could be garnered from similarities in categories and items between multiple auctions
- Who was the sort of bidder on the other end of the screen for a given item
- What was a realistic price range for an item given its represented quality and age
These parameters took quite a while to hone.
So, I quickly learned that smaller items tended to do better, as more people were able to accommodate them in their typically smaller vehicles.
Electronics and brand names were hugely popular, as the internet and retail had already adequately commoditized the access and price range – there was little room to arbitrage an Apple product on price, for example, because every bidder could easily conduct a Google search and know what they’re trying to purchase.
My second ever item purchased online was on July 13, a full 9 days after my epiphany. It was listed as a “Marble Table With Glass Topper”, with a description that simply said “70X35.5X29”.
This listing appealed to me because:
- The item was gigantic
- The description was very poor
- It was obviously located in a basement
- People weren’t sure if the table was actually marble
- It was an auction on Old Forest Hill Road, a street in a fancy Toronto neighbourhood
The price was at $0.00. On a MaxSold auction, if no one bids on an item, you could win it for $1 once the auction officially closes.
So, I ended up winning this enormous marble table for $2. After struggling for 5 hours to get it into my friend’s SUV, whom I’ve paid $30 for the privilege, I was into this item for a grand total of $33.26, the $1.26 was an added fee from MaxSold, I believe.
Thus, I ended up selling the table on Kijiji 4 days later for $400. It felt like I had discovered fire.
Scaling Up
I had a lot of work to do. My life savings had been put down on a pre-construction condominium assignment in a big development project on Yonge Street.
It was essential that I had to be able to close on the unit in 1 year, meaning I’d finally be able to own my first ever property.
Therefore, it was a hugely ambitious goal for me at the time, and it basically seemed like it wasn’t going to happen. Alas, I had to try.
So, I realized that in order to keep succeeding in online auctions, I had to buy to my strengths, not to hope I’d get lucky. My focus was on:
- Larger furniture
- Larger commercial items that most people didn’t understand
- Technical equipment and non-electronic equipment
I had also learned that filing cabinets and luggage were like gold. When you think about it, most people are happy to pay $50 for a filing cabinet off of Facebook vs. spending $350 on a new one from Staples. Ditto for luggage.
Most people simply don’t care.
Any auction I’d see with filing cabinets or luggage, I’d bid them all up to $10/unit to hedge my bets on any other items I’d be scooping up.
I also had to begin coordinating pick-ups and sales. Most buyers were fickle and unreliable, while most auction pick-ups involved a lot of driving around and heavy lifting.
Another fatal mistake in hindsight was not buying a pick-up truck as a personal/business vehicle! I had built a great relationship with my local van/truck rental company and opted to rent 1-3 vans/trucks a week instead.
Most of my items would have been far too large for a pick-up truck anyway.
The clock was ticking, as I had to come up with north of $84,000 in cash for closing on my condo. I had never worked so fanatically in all my life.
Word got out that I was selling things online. People I knew began to reach out to me with things they didn’t want, and asked me if I could sell it for them.
I almost always turned them down because I didn’t want to consign anything. I wanted full control over my inventory. When someone bought something from me, it was my item. I had tested it, fixed it up, repaired it, and presented it nicely.
I also had the ability to negotiate prices without dealing with someone’s crazy expectations.
In hindsight, I could’ve used consignment for network expansion.
Most people believe their personal items are worth their weight in gold. News flash: your stained 15 year-old sofa is worth a fraction of the $1,500 you paid for it!
From July 4, 2017 to October 31, 2017 I had managed to save over $7,000, and was able to float all my personal expenses myself. I was also able to take some financial pressure off my mom.
It wasn’t good enough. Winter was coming around, and I needed a car. I ended up buying a 2005 Subaru Legacy sedan for $600 (!).
My friend, who was an insane negotiator, talked the seller down from $3,500. To this day, I am still not sure how he pulled it off.
The car had really squeaky brakes and a cracked windshield, but it actually ran beautifully, and handled really well in the snow.
Everyone knows the winter season is high-volume for online sales. I wanted to put my activity into overdrive.
Since I had some wheels now, I could scout areas, meet with more people, and even begin buying smaller-item auctions if I got lucky.
Buying Entire Properties Worth of Items
I had expanded my horizons off of MaxSold and into more commercial/technical platforms such as GoDove, and even the Canadian Government’s GCSurplus. I also began capturing emails and phone numbers from customers I’d sell to.
People could be sold to over and over again, especially small business owners, who were the buyers for a lot of my items. I gained a bunch of followers on my Facebook Marketplace account too, which I thought was peculiar.
Friends and family would begin referring me to people who had a lot of stuff to sell.
I made it perfectly clear that I don’t consign anything, and that if they wanted, I could give them an estimate and take things off their hands.
This worked exceedingly well. I had turned the garage into a budding enterprise – every few days it’d look different.
My “bread and butter” items were now:
- Filing cabinets
- Luggage
- Coffee tables
- Armchairs
- Sofas
- Dining tables
- Display cases
- Mirrors
- Technical equipment
- Restaurant equipment
- Anything made of steel
There was still a lot of variability. My first large purchase, referred by a client, was an entire restaurant that closed down on a farm. I had rented the largest truck I could legally drive, and hired 2 friends for a weekend of absolute hell on earth.
We did everything wrong.
It was pizza ovens, fridges, display cases, stainless steel tables, sinks, washing stations, pipes, and more.
We did not have the certified vehicle for the job – a uHaul is just a tissue box with some 2 by 4s for the walls.
We did, however, strap everything down with commercial straps, and that was the only thing that saved our butts.
The price was what surprised me the most – $600 for the whole thing, plus $300 for the hired help. They were essentially giving me the deep discount to efficiently, safely, and quickly remove this problem off of their hands.
It was my problem now.
It took about 3 weeks, but I ended up selling the entire haul’s worth of equipment, 2 truckloads filled to the brim, for close to $9,000.
The subsequent deals involved primarily farms, restaurants, plazas, entire houses, office floors, and the like.
I was still scouting MaxSold, GoDove, GCSurplus and others. Of course, I was still selling on Kijii, Facebook Marketplace, an app called Letgo, my own mailing list, and even eBay for a few sales.
The budget called for spending $600-800 a week on vans and trucks alone – which to me was mind-boggling!
2018
All I had to do now was stay on the same trajectory. It was grueling. So many mistakes were made, including but not limited to:
- Not opening a website (A lesson I’ve learned the hard way!)
- Not having a social media presence
- Not hiring part-time staff for moving and driving
- Not getting a physical premises to simply handle more volume faster
- Not leaning into creating a “brand” for my business
I had boiled the auction process down to a science. I was able to discern what auctions would perform well or not.
I’d look for auctions that were full of garbage, but actually contained 2 to 3 really good items. People would overlook the auction, and I’d be able to snipe the good items for next to nothing.
I also began buying liquidation overstock from local businesses – my biggest win here was brand new shoes that were “out of season”.
My thought process made me realize my buyers didn’t care that the new Timberlands or Birkenstocks I was selling were out of style!
I got these opportunities through personal connections, so it wasn’t exactly an actionable and methodical business science.
The summer was right around the corner, and I was actually making sizeable progress in making my nut. I had over $45,000 saved, which I could never have fathomed, but I was still falling short.
The business would also have terribly inconsistent dry spells where things wouldn’t sell, buyers would fall through, or there just wasn’t enough profit anymore.
The operation was generating about $10,000 to $15,000 in monthly revenue by this point, sometimes more, but the costs had crept up, and my time was pretty much maxed out.
Subsequently, I ended up taking a big leap of faith and investing substantially more money into inventory at a higher price per unit.
I bought distressed assets from jewelry stores, furniture stores, arcades, commercial kitchens, and the government.
I bought 3 entire storeys worth of filing cabinets, which was the motherlode as far as I was concerned. I bought the whole thing off GCSurplus for $250.
They were giving me the opportunity because they wanted the filing cabinets gone immediately. In most cases, it’s simply not worth their time to maximize the value of old filing cabinets, some dating back to World War Two.
The sales were piling up, my back was becoming increasingly strained, and summer of 2018 was right around the corner.
Chairmageddon
It was in mid March of 2018 that I made my most successful acquisition to date: An entire auditorium plus 4 storeys worth of wooden armchairs.
They were renovating this old building in Scarborough and needed someone to clear them out. It was my biggest project yet, one that involved almost 10 truckloads, 4 men, and 4 days. We had to negotiate the extra days.
The total count of the chairs tallied north of 1,500 if my memory serves correctly.
Upon walking into this building, I was mortified. The chairs were bolted together in groups of 2 and 3!
Someone had screwed these mahogany chairs together by the legs, arms, and back. Worse still, they were all absolutely infested with years-old pieces of gum.
It was a nightmare, but the MaxSold Mentality as I had come to call it persevered.
We loaded the chairs 30-40 at a time into the industrial elevator, stacked the chairs Tetris style into the 2 trucks, and drove on the 401 highway praying nothing would go wrong.
Some chairs were previously damaged, and I was happy to have the privilege of throwing them in the dumpsters outside.
It became a mind-numbing game for the five of us, and I couldn’t help but feel a bit guilty subjecting the people I had hired to such a grueling task. I had to make it up to them.
We ended up filling the garage, a 1,600 square-foot basement, and 3 large storage units to the brim. I was into the whole deal for under $1,200 including labour. Little did I know that the real labour had just begun.
To get maximum value from the chairs, we had to separate them, recolour some of them, and scrape all the gum off. It was a. Lot. Of. Gum. Thankfully I’m not a germaphobe.
I had spent the next 6 days of my life prying apart these chairs and scraping endless globs of ancient gum off the bottoms, handles, and legs.
This was my largest ordeal, to date, and being smashed in the face by toppling piles of these wooden chairs was an experience I’ll never forget.
A Small Jackpot
Throughout the subsequent weeks, though, I had proven there was ample demand for my chairs. I’d taken everything I’d learned about online sales and really pushed myself to get top dollar.
I took the finest 4 chairs I could find and staged them in a beautiful room in my mom’s house.
They looked classy, sophisticated, and clean – which I suppose they were, since I had committed many hours to making sure they would meet the standards of buyers.
The fateful chairs were up on Facebook Marketplace, Kijiji, Craiglists, and my mailing list for $20 a chair, and $60 for 4. I was keen on adjusting my prices (on the platforms) to see what the sweet spot was.
I sold 64 chairs on the first day, mostly 2 or 4 at a time. Every morning I’d wake up to an inundation of messages and emails.
People would ask me where they were from, and I’d tell them the truth. But I most definitely owned them!
Over the course of the next 4 weeks, I focused only on the chairs and the next deals I could find. I ended up selling all 1,500+ for over $27,000.
It was my biggest month yet, and it seemed like that condominium was actually in reach.
Closing the Condo Deal
Business had ramped up since the chairs, and I was sitting on a cash pile of over $90,000, which was like $90 million to me.
I had to pay $17,000 in taxes for the pre-construction assignment, even though I would be tax exempt on the eventual sale of the property as I was a first time home-buyer in Ontario.
I felt nauseous making that $17,000 draft – welcome to the real world, Max!
June of 2018 had come around, and I put another 5% down on the property. The fateful day was nearing – July 19, 2018 – which is like a personal holiday to me now. I had actually succeeded at my objective.
We went to the lawyer’s office on July 19, 2018, and I was super scared. The bank had a given me a $64,000 bank draft that now resided in my coat pocket, and I was not sure what would happen next.
Sitting across my lawyer as she ran through what seemed like 17 years worth of boilerplate, I was doing nothing but suffering from the largest bout of impostor syndrome imaginable.
I occupied the unit a few days later, and needed to wait a further 9 months to actually be able to get a mortgage on the property, due to the builder’s delays. I was paying the builder rent until the mortgage closed.
What I Did Wrong in my First Year of Business
It was the most incredible change I’ve ever made in my life thus far, and hindsight shows me the things I could have done better, as I didn’t implement any of these things until I eventually pivoted the business away from this market altogether.
1.) No website:
It could have only helped. I could have captured a lot more customers, built a lot more credibility with sellers and sources, and I would have eventually been able to scale and make connections off of platforms like Facebook and Kijiji.
2.) No social media:
To tell you the truth, I was a bit embarrassed by what I did for a living. I had this chip on my shoulder because of my prior failings, and I felt like a two-bit hustler, not a real businessman.
I was too embarrassed to put myself out there because I didn’t want to be “attacked” over this.
This was an unbelievably massive error, and could have helped me scale my business by orders of magnitude.
The leverage of social media would have eventually made the business far more legitimate, with longevity and actual market penetration in a category
3.) No real specialization:
Despite eventually honing in on decent markets, like farm equipment, kitchen equipment, and furniture, I didn’t build a brand and specialization around it fast enough.
I was known, but only to the small mailing list that didn’t go past 50 people.
These were all small business owners who ran a multitude of businesses.
Had I committed to one very specific niche with enough upside, I could have built my business far bigger and faster than I did.
4.) No salaried employees:
I only ever hired contractors or friends. I didn’t feel like a “real business owner” at the time, so I didn’t know how to bear the pressure of being responsible for people’s salaries.
Had I done this step better, I would have freed up a lot more of my time a lot sooner. Moving fridges and ovens around is no business sector for a “solopreneur”.
5.) No owned vehicles:
I kept renting vans and vehicles. I wanted to maintain my locus of control so much, I was blindsided by so much cost-savings and low-hanging fruit right in front of my eyes.
6.) Not investing in more expensive inventory:
I took pride in the fact that I was buying things for pennies on the dollar. My catchphrase among my friends when prompted with buying something innocuous like a shirt or a dinner was always: “Do you know what I could buy for $X?”
It was cute, and got results, but I was thinking so small.
My margin was always enormous, but at what cost? I truly believe, had I put myself out there for bigger ticket items and larger volume, things would’ve gone differently.
7.) Not taking enough chances – my worst blunder:
I came across a lot of unique and irregular opportunities in this business, things I didn’t even know existed.
From industrial lathes to cupcake machines, from 15 foot dining room tables to a 60+ foot purple lobby sofa, the worst blunder of my career was saying no to a sub-$1,000 sailboat.
I talked to anyone except my friend who was literally a boat broker.
I talked myself out of it by saying it was made of fiberglass, who knows what unknown mechanical gremlins it has, where am I going to keep it, how am I gonna move it.
When the auction closed, I asked my friend, who told me the boat would be worth, on a bad day, between $25,000 and $30,000. It sold for $800.
I complained about trailers and storage, and he said “I have a boat trailer and a garage you jackass.” That deal still stings to this day.
This first year of my business was absolutely unforgettable, and if I were to impart some wisdom on any entrepreneurs out there, it’d be to always focus on making something of value straight away and generating revenue as soon as you can.
Don’t make it an all-or-nothing esoteric bet.
You’ll find that you can test your initial hypothesis way better and actually get feedback from the market enabling you to grow better. Plus, you can sleep at night knowing cash is coming in.
My business eventually hit and stayed at roughly $250,000/year in revenue with a very healthy gross margin. But things could’ve been better.
Don’t repeat the mistakes I did and be fearful when the solutions for growth are quite obvious. I could have afforded to do almost everything I listed and would have been fine.
Who knows where the business had gone had I implemented those things sooner.
Follow me on Twitter: @maximumivy