Factors to Consider Before Buying a Retail Business
Buying an existing retail business can be breeze. If you are lucky, you could end up with a business that has a great location, good reputation and strong customer base. In the same vein, you could buy a retail business that could make you incur heavy losses and send you into bankruptcy.
Before you purchase a retail business, there are some critical factors that you should consider. Here are 4 of them.
1. Play Sherlock Holmes
Before you purchase a business, perform due diligence and monitor it for at least a month or two. Find out why the owner wants to sell. Never rely on what the owner will tell you. He could be economical with the truth. Do not jump into buying a retail business just because you think you are getting a bargain. There could be more to it that meets the eye, refusing to investigate properly could land you in a pit of problems.
2. Will it Stand the Test of Time?
Never splash cash on a dying business or something that would not be around for the long haul. Do you have a choice to sell hard cover books or to own a coffee shop? You will need to consider the dizzying trend of technology. I-pads, Android tablets and e-books have taken over. Hardcover books are almost historic and are gradually going the way of the dinosaur. Under the circumstances, buying a coffee shop is a better bet.
Before you buy a restaurant ensure that the building is in good shape and everything else is in proper working condition. Imagine, paying up to $50,000 in cash and finding out that the air-conditioning is a relic from the 1980’s. The restaurant should be fully functional. If you do not carry out a proper inspection, chances are you would hit by a ton of bills by spend time repairing stuff instead of trying to turn a profit. If there are repairs that need to made, you can negotiate and take it out from the purchase price.
4. Image is Everything
When you purchase a business decide on how you exactly want to run it. Do you want to maintain the status quo or create some marketing buzz about the new ownership? If the business has a strong reputation or has strong brand presence, there really is no need to make too much noise. On the other hand, if the business is on the wane, you might need to give it a jolt in the arm. This might mean giving the place a face-lift, changing the company logo and even reinventing service delivery or management.
About The Author
Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps business owners learn how to sell a business so they can get the maximum value for their company. call us 416 364 5550 or CONTACT US to get in touch.
Date modified: 7-27-2019