Hello Everyone, I am purchasing a pre-existing shop in the NE United States and I’m meeting with the owner later this week. Can you guys suggest any key questions I should ask him about to see if the business is favorable, the numbers are correct and if he’s selling for a legitimate reason?
I’m using some example numbers here, but the place has been around for a long time, it’s a neighborhood staple. And it seems busy when I walked in on a Saturday morning. The shop was available earlier this year for 440k from a previous owner who moved out of state. He claimed gross sales of 1.2M with 250k net. COGs are around 250k.
Now fast forward to now, the NEW owner is selling the business that he just bought earlier this year, for 360k (they say he paid this to the original owner), claiming that due to personal issues he can no longer commit.
Now this seems odd to me, but I don’t want to immediately write it off because it seems like a well run operation.
Can you give me examples of some questions I could ask? Also what percentage of the food bills should be used to validate numbers? I appreciate all of your help!
The COGs number that they gave is no way true. No way 20% food and paper cost. More likely 30%+
20% profit is possible. But not easy. You have to be on your game and that would most likely have to be with a working owner/manager.