Profiting from the liquidations boom

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(FORTUNE Small Business) -- Dear FSB: I'm an independent contractor for sign walker/human billboard companies in the Houston area. I provide the walkers and supervision. The clients are mainly doing ads for turnaround or insolvency companies. I have decided to start my own sign walker/human billboard company and I'm ready to take the next step in landing those first few customers. I'm not afraid of the competition, but where do I compete with them? How have they landed their customers? Did they market to insolvency or turnaround professionals? How did they market their service to liquidation companies such as the Gordon Brothers Group and the Great American Group?

- Jorge Arenivar, Houston

Dear Jorge: Congratulations on your new venture. Your experience on the ground floor of the industry will no doubt serve you well, but marketing is a challenge for anyone starting a new business.

"As someone who has hired sign walkers for numerous liquidation sales in the past, you need to really understand what your potential customers require," said Robert Blumenfeld, an investment banker with Bryant Park Capital, a New York City financial services firm.

"In many cases, liquidation sales are held in numerous locations at the same time, so you must prove that you have the breadth to be able to monitor the temporary workers you hire and service each location with sign design and printing," Blumenfeld said. "There are also numerous local laws that you need to know regulating sign placement and sign walkers. This is a service business, and one slip-up can cost the client lost revenue."

Blumenfeld also recommended developing a personal relationship with a number of liquidation firms.

"Any credible liquidation firm will belong to the Turnaround Management Association, so joining and participating in TMA would be a great way to network your business," he said. "You should look to invest in attending both TMA national events as well as events for other associations like the American Bankruptcy Institute or National Association of Bankruptcy Judges. You will find liquidation firms in attendance at these conferences."

And don't forget about the services you can provide healthy retailers, Blumenfeld said: "Focus on a market and research various retailers' annual large sales - look at last year's newspaper archives - which could benefit from sign walkers. Also, it makes sense to know your competition, as they may be able to throw business your way when they have engagements that are too large for them to handle."

Peter Davidson, a lawyer who handles bankruptcy and insolvency matters as a managing partner at MDFS Law in Century City, Calif., said marketing leads might be as close as the Yellow Pages.

He recommended finding out who provides basic bankruptcy services in the Houston area, and researching local auctioneers - two groups likely to be interested in your services..

Other avenues for advertising include your local Pennysaver, the Houston-area Craigslist, or your local daily and weekly newspapers.

Finally, an informative and cleanly designed homepage on the Web never hurt anyone's marketing efforts. If you don't have a website yet, it's fairly inexpensive to build one - less than $500 for a straightforward design (even cheaper: post a flyer outside the graphic arts and Web design classrooms at your local community college and have a student do the work) and a monthly fee for hosting.