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There are innovative strategies that anyone can implement with little or no investment to capitalize on the current interest (“craze”?) in the Storage Auction business. This opportunity has been launched by the several popular TV “reality” shows (Storage Wars, Auction Hunters and Storage Hunters for example). And these new business ideas are based on the business concept of leveraging.Properly applied, leverage creates “niche” opportunities that surround a larger “sun. What you will learn here is what business leverage is, how it works and where the big opportunity lies with Storage Auctions.Launching a satelliteThe vast majority of successful ventures position themselves as “satellites” to a large, thriving enterprise. On a simple level, this means the local, upscale consignment shop that locates near a new Wal-Mart.In fact, this strategy is the motivation for most strip shopping center stores to open where there is a high profile, high volume “anchor”; whether it is Wal-Mart, a “big box” category store like The Home Depot or a supermarket. What is less obvious is the “satelliting” of products or services.If you think about it, every iPhone app is a “satellite”. If you Google “calendars for Microsoft excel”, you’ll see that many developers have latched onto the success of the Microsoft Office suite. Business after business has been launched to organize, expand, protect or enhance the Garmin GPS accessory for your car!Entering a market that has been defined by a big player doesn’t guarantee success, or even the first dollar is sales. That’s where “leverage” comes in. You have to exploit the position that the satellite status gives you.Let Wal-Mart advertise for your traffic Leverage is basically business judo-you use another’s momentum to increase your strength and impact. If you open a specialty gardening shop in close proximity to Wal-Mart, you can run specials when shoppers are looking at their landscape and gardening plans for the coming season. Then have install window banners in your shop… or stage a “sidewalk sale”… or offer free gardening clinics… or simply hand out flyers near Wal-Mart’s entrance.If you learn the needs, wants and quirks of the “big dog’s” customers, you can carve off apiece of their business or sell supplemental products and services to them. Your goal is to become a “value add” to the money and effort the core customer expends in the market. You want to leverage the existing money flow.A word of warningIf you don’t take anything else away from this article, please “bookmark” this: THE LAST THING YOU WANT TO DO IS TRY AND CREATE A MARKET.Trying to create a market on your own is the exact opposite of judo-it’s trying to take a short cut by driving on the wrong side of the highway.A brief primer on the Storage Auction phenomenon If you found this article because you were searching for information about Storage Auctions then the next couple of paragraphs may be a little elementary for you. But soldier on through them anyway because they provide a little background on how I work and think as well as setting up the Storage Auction leveraging opportunity.In a nutshell, the Storage Auction business consists of buying the contents of abandoned mini-warehouses where people and businesses pack their spare stuff. Maybe when they shut down and office or received products that couldn’t fit in their warehouse or when a household downsizes or relocates temporarily during a renovation.Whatever the reason, tens of thousands of storage units are rented and filled up every month. And every month thousands of them go into default for unpaid rent. The renter signs a rental agreement that defines when and how much rent is due and what happens if they default. And there is a contractual and legal process that defines the consequences of non-payment.Ultimately, the storage facility owner “forecloses” and takes possession of the unit contents with the right (and obligation) to sell them to recover their lost rent. Their legal recourse is to conduct a publicly announced “absolute” auction in which each unit is sold to the highest bidder. These auctions are public and anyone may participate as long as they have full payment in cash.The buyer is at 100% risk as to whether the contents of the unit are worth the amount they bid. And they receive 100% of the reward if there is valuable business equipment or furniture or artwork or antiques and collectibles hidden in the boxes and containers stacked inside.Fundamentally, storage unit contents group into three categories: trash, donate and sell. Items that can be sold breakdown further into multiple channels: eBay and other online auction sites; Craigslist; consignment or dealers; flea market and yard sale. The objective is to sell everything for something and gross double or triple the purchase price. Then do it again the following week.So where are the Storage Auction Leverage Opportunities?One answer is NEWBIES. Newbies… folks that have learned about the business from the TV shows. In a world of chronic unemployment, diminished real estate values and euro-centric stock market swings, buying and reselling storage unit contents looks like a simple, direct, well-defined and “sure fire” path to income.If you follow the industry at all, you know that hundreds of “veterans” are selling advice and “systems” to thousands of Newbies. YouTube is alight with “How To” video series. And the forums and message boards repeat the same mantra:The number of auction attendees has exploded with new bidders
These Newbies have driven the cost of units through the roof
Most Newbies don’t have a clue, lose money and quickly quit
Newbies are ill-equipped to clean out the unit and move the contents
They aren’t prepared for the processing required to sell their itemsSo there’s the market: Storage Auction Newbies.And the lever is that the TV shows are concentrating the market at storage facilities across the nation everyday. And finally, the product has been defined over and over by the industry message boards and the information products that the veterans are selling.Newbies need Intelligence to support their bidding, Risk Reduction in bidding and Logistical Support in performing required operations. Intelligence, Risk Reduction, Logistical Support — the Business Leverage Opportunities for the Storage Auction marketplace.Storage Auction Intelligence: Units scheduled for sale must be advertised as a legal notice in an area paper. This notice will include the identity of the tenant. Generally bidders and especially Newbies don’t reference these notices because the general information about the auction is available from several sources.Profiling the tenant along with any detailed background regarding their interests and hobbies, business or job and situation can provide valuable information to support bids. Was the tenant a business? What type? Any info about their products? Is it an estate situation? Or a divorce or other household dislocation such as downsizing? There’s the need, you just have to figure out how to address it.Then there is the question of what are the contents of the unit worth and where can the Newbie sell them? Established players know where to go to get unusual items appraised and what the best “insider” channels are for selling them. What is a reasonable selling price on eBay, Craigslist or at a garage sale or flea market? Maybe inexperienced bidders would pay for a service that could inform then and guide them to a sales channel.Reducing Bidding Risk: Storage units are auctioned off after all the bidders get a brief peek inside. While you can see the items in front and sometimes identify larger pieces of furniture, generally the risk a Newbie is taking is on the unseen merchandise. Usually it is stuffed in trash bags, or boxed or stored in totes. So what to bid?Well with the explosion of attendance that is attributed to the popularity of the reality TV shows combined with the difficult economy, winning bids have gone up 200-500%. The “pros” are all over bulletin boards lamenting the passing of $150 bargain units and blaming it on-you guessed it-Newbies. And the problem they most often cite is that the new bidder comes in with too much money to target just getting one unit. While they may quickly exit the business, they still “poison the well” until they give up.Or the opposite situation may occur; the Newbie doesn’t bring enough cash to fund his best bid, the cleaning deposit and taxes if they are applicable. So maybe there is an opportunity to “arbitrage” into a half share in a unit by putting up a quarter of the bid or less. That’s real leverage.As to overbidding, there is the opportunity to carry a laptop programmed with an “Appraisal” program you build and then run for each unit as you pass it. If the Newbie has paid for a subscription, you show him the units estimated value ahead of the bidding.Logistical Support: Overwhelmingly, the commentary about new Storage Auction participants’ mistakes focuses on logistics. They don’t have enough help to clean out the unit and separate the contents. They haven’t thought through where they are going to store their “booty” and process it, including packing and shipping for online sales. Often they don’t have an adequate vehicle to carry the contents off.Labor, a processing facility and hauling… three easy things to bring to the party and three sources of quick income. What if you offer simply to complete the cleanout after the unit buyer has extracted the major items in exchange for the being assigned the deposit? Easy money.Think about it. Participation in Storage Auctions is exploding. A lot of dumb money is being thrown at the business. The actual operations of winning and processing a unit can be overwhelming to a newcomer. For everything from communicating where and when auctions are taking place to investing in co-bidding there are opportunities in the market that Storage Auctions have built. All you have to do is push on the lever arm.