Purchasing a retail business
May 28, 2008 7:31 PM Subscribe
Specific questions, and general advice and suggestions, on purchasing a very prominent, locally owned, retail business.
posted by anonymous to work & money (4 answers total) 6 users marked this as a favorite
For the past decade, I have been a regular customer at a local retail business. It's a single location, but it's very prominent and well known in both our city and on a national level (think in terms of The Strand in NYC). The owner has recently announced that they are looking to sell the business and retire, and have retained a local business broker to manage the process. The price has not been made public, nor have the financial records of the business (both will be to serious bidders), but the owner says it is very profitable and in great shape. They have also said that they will not sell to a chain, but only to a local person who will keep the staff and not make substantial changes to the business.
I have non-retail business experience, strong ties to the community, a familiarity with the store and industry, and no desire to substantially change the business or the (fantastic!) staff. But, as much as I know about business, I know next to nothing about buying a pre-existing one.
A few questions:
1 - If you've purchased a pre-existing business (retail or not), what’s the best advice you received in the process? What do you wish you had known ahead of time that you learned the hard way?
2 - I'll need to take out a business loan to cover the cost of the purchase. In a situation like this, generally how much, if any, of the total cost is the buyer expected to put down? Is a loan for the total cost of the business normal, or even possible? (Not yet knowing the cost of the business, I want to understand my full spectrum of options!)
3 - I can get general financial information from D&B. I can get general operational information by watching the business for a given period of time. What else can I find out before approaching the broker or owner and starting a conversation with them?
Any other advice, suggestions, or words of wisdom would be appreciated. Emails can be sent to a throw-away account at AskMeBusiness@gmail.com. Thanks!