Start A Business: Buy Government Surplus

Military-Surplus-HelicoptersBloomberg Businessweek showcases an interesting way the government can assist start-ups: selling government surplus. Entrepreneurs can purchase just about anything needed to start a business at steep discounts:

Chesapeake Bay waterman Doug West had been pining for a second boat for his business transplanting oysters for the University of Maryland’s Horn Point Laboratory Oyster Hatchery. But he figured the kind of sturdy, shallow-bottomed, crane-equipped craft he needed would cost around $75,000, a steep investment for a self-employed contractor with about $100,000 in annual revenue.

In October, he found a half-price alternative: He successfully bid $36,000 for the 65-foot U.S. Coast Guard Cutter Blackberry, which was built in the 1940s. Because she had been well maintained and frequently refurbished, he only had to scrape and repaint the bottom before putting her to work. “The lab is ramping up production, so I hope to double my activity in the future, and deals like this one don’t come along all that often,” says West, who transplanted upwards of 600 million hatchery-bred oysters in 2012.

He is one of 90,000 active buyers on Government Liquidation, a website that sells surplus vehicles, equipment, and scrap metal for the U.S. Department of Defense. The Great Recession prompted a spike in entrepreneurs across industries using the site to hunt for deals for existing operations and new ventures, says Tom Burton, a president at Liquidity Services (LQDT) in Washington, D.C., which operates the site as well as seven other government and private liquidation marketplaces.

Opening bids for every item, including Navy warships, start at $50 to $150. “We have half a million items in 650 categories, everything from musical instruments to kitchen sinks,” says Burton. “We are a small business incubator: If you’ve got an idea, this is a place you can come and see if you can turn it into a business opportunity.”

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