Business owners/Sarge??

I have some questions from some of the people here own businesses. While on vacation I ran across a business thats for sale that I could run and could make a lot of money off of it. Here is some info without giving up too much info:

Turn key operation, everything comes with it to run it.
Price is $350,000.00 to own it.
Building alone was appraised this year at $345,000.00
Equipment plus full stock equals approx $75,000.00
Building comes with 2 apartments so I would have my living taken care of since its a 7 hour move.
Business GROSSES $800,000.00 + a year minus renting the apartments.
Business was established in 1950's
Owners will stay on 2 weeks for training and are retiring in the area for further help.
Owner didn't disclose NET earnings but said it was 6 figures
Owner gave me the bank he banks through, he now fully owns the operation.
Business has a strong hold on the area for what it does.



So thats a good chunk of info, my credit isn't that great but I have credit and only about $3000 in debt. If I had to, I would sell my Camaro/everything I could for help if needed. I'm thinking that regardless I should be able to get the loan off of the information the bank has. They should know what it makes every year. He has banked with them his whole life, would be my first time with the bank. What do all you owners think? Never did this before but would have no problems running it :true: It sounds too good to be true but I have other info that I don't want to disclose.

Do you know anything about the business? Are you going to need to hire people? It can be a lot of hidden cost in the overhead of a business.

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Originally Posted by Brian H Drifer

Do you know anything about the business? Are you going to need to hire people? It can be a lot of hidden cost in the overhead of a business.

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I have the people to run it taken care of. From what I have seen of the building, it looks to be in good ass shape. I know what is needed to run the business :yay:

I should note, the business employs 2.5 people. 2 full time = My buddy and myself with me being the sole owner and the part time will come with it. They have talked to him already and worked it out. I would be working 6 days a week for a good little bit but I don't fuckin care. Did 16 hour days 6 days a week for 8 months in Afghanistan so this wouldn't be shit.

workers comp insurance.... not sure about the trade or number of people but we pay close to 100k a year for workers comp.

Take my advice and have a well qualified inspector to look at the building. I bought my building and it turns out it needs a roof it's not that bad nothing 80.000 wont fix.Had I known anyting about commercial buildings especially older ones I would have negotiated a better price.

Kinda hard to help you out without knowing much, but you will never make any money working for someone else.

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Originally Posted by Trixter99

Take my advice and have a well qualified inspector to look at the building. I bought my building and it turns out it needs a roof it's not that bad nothing 80.000 wont fix.Had I known anyting about commercial buildings especially older ones I would have negotiated a better price.

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I was thinking about this but if it just got inspected before winter for appraisal, shouldn't that be good. I was in the trades and can do everything pretty much except roofs. Plumbing/electrical/concrete/framing/drywall I am alright at with my strong point being Plumbing. Plumber for 3 years before economy went to the shit:devil:

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Originally Posted by Brian H Drifer

Kinda hard to help you out without knowing much, but you will never make any money working for someone else.

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THIS :yup:

The banks not gonna give you $ based only on the income of the Bus. You'll need a vested intertest, like you got something to lose if you don't make it. Need to have a close look at the books. Make sure you don't inheret his debt and that he has no legal settlements against him or it willbe yours too.

do you personaly have in depth experience in this line of trade?

I may be wrong, but an inspection for appraisal is not the same as an inspection for purchase. When I had my house appraised for my refinancing, the lady came in and basically took pictures and asked questions on what I had updated since I moved in. She didn't "look" at everything. She was at my house for a total of 10-15 minutes.

An inspection for purchase would consist of a qualified individual checking things like electrical, roof, siding, structural issues, mold, etc. It would be a lot more in depth I believe.

If I were purchasing anything of that much value, I would go ahead and have it re-inspected anyway. If the inspector finds something, it could be cause for grounds of getting the property even cheaper, assuming it is nothing major.

Nothing is free. Generally anything too good to be true is exactly that.

I find it hard to believe he would be letting this business go for so cheap if it did this well. You can hire people to run your company, selling it makes no sense if it is doing that well.

I would look REAL close at the books like said above. Good luck!

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Originally Posted by gnomee

Nothing is free. Generally anything too good to be true is exactly that.

I find it hard to believe he would be letting this business go for so cheap if it did this well. You can hire people to run your company, selling it makes no sense if it is doing that well.

I would look REAL close at the books like said above. Good luck!

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I was thinking this same exact thing....

Just be careful and don't get in over your head. Take all the necessary precautions and do your homework. Sometimes there are good deals to be had out there, but the pickings are VERY slim.

Good luck.

You went to Michigan on vacation, and found a GREAT buisness opportunity? That right there is a Red Flag.

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Originally Posted by Hi-Po

You went to Michigan on vacation, and found a GREAT buisness opportunity? That right there is a Red Flag.

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:stupid:

I was reading about another guys account of starting up a business and one of the main expenses he missed when budgeting was that he had to match his employees taxes or something like that.

The guy probably has a lot of debt he isnt telling you about.

he probly killed a illegal immigrant and stuffed him in a wall, watch out for that too

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Originally Posted by Hi-Po

You went to Michigan on vacation, and found a GREAT buisness opportunity? That right there is a Red Flag.

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Not really, bunch of opportunities I found besides this :yup: Just gotta look, that and I am in a different area then you are :yup: I have a meeting/phone call meeting :lol: with the bank. They will know first hand about his debt......or atleast they should. He is giving it up because he is old and made his money. He has no kids to leave it to. There is some info left out but not enough to change anything. I will check on the debt thing tho! How much does it cost to inspect a building :dunno:

There is a Super Walmart in the area...but they can't sell what this shop sells, so I would even have Walmart beat :hint: :hint: :devil:

few hundred for an inspection/appraisal i think. maybe 250ish

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Originally Posted by blackSS01

There is a Super Walmart in the area...but they can't sell what this shop sells, so I would even have Walmart beat :hint: :hint: :devil:

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Sex shop? Creepy

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Originally Posted by wheeliE-maxx

Sex shop? Creepy

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Not even close.....and $250 bucks is well worth an inspection :yup:

You need to get a CPA and make sure he has always had an unqualified opinion from the CPA as well. Can't be too trusting of people.

You need to take a hard look at the local environment if the revenue stream is based on local income and run some "what if" scenarios.

We had a Walmart move into our area around 1990 or so... 19 years later our downtown area is pretty dead. Retail shops have mostly gone out of business and have been replaced by restaurants, our intown department store is gone, our in town gas station is gone, we have many empty buildings and the rent is extremely high.

The Walmart takeover was a long slow process that was very subtle. Because I perform IT services I have not been affected but I discontinued sales of hardware and software by the end of 1999 (except for corporate software licensing).

Now we have several mall areas and I do not see a revitalization of main street happening anytime soon.

Take a hard look at the area and the factors that stimulate customers to frequent the business. A single large employer in the area that has layoffs could send business into a tailspin overnight.

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Originally Posted by blackSS01

I have some questions from some of the people here own businesses. While on vacation I ran across a business thats for sale that I could run and could make a lot of money off of it. Here is some info without giving up too much info:

Turn key operation, everything comes with it to run it.
Price is $350,000.00 to own it.
Building alone was appraised this year at $345,000.00
Equipment plus full stock equals approx $75,000.00
Building comes with 2 apartments so I would have my living taken care of since its a 7 hour move.
Business GROSSES $800,000.00 + a year minus renting the apartments.
Business was established in 1950's
Owners will stay on 2 weeks for training and are retiring in the area for further help.
Owner didn't disclose NET earnings but said it was 6 figures
Owner gave me the bank he banks through, he now fully owns the operation.
Business has a strong hold on the area for what it does.



So thats a good chunk of info, my credit isn't that great but I have credit and only about $3000 in debt. If I had to, I would sell my Camaro/everything I could for help if needed. I'm thinking that regardless I should be able to get the loan off of the information the bank has. They should know what it makes every year. He has banked with them his whole life, would be my first time with the bank. What do all you owners think? Never did this before but would have no problems running it :true: It sounds too good to be true but I have other info that I don't want to disclose.

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first thing you need to do is get a lawyer if you're serious about this...

According to you you’d be buying tangible assets worth $420,000 and intangible assets such as the Goodwill and reputation the business has generated since the 50’s, customer lists, etc. all for the rock bottom price of $350,000. – Red Flag

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Originally Posted by 35th-ANV-SS

few hundred for an inspection/appraisal i think. maybe 250ish

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I think more. A house inspection in our area can run you as much as $400.

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Originally Posted by gwballin

According to you you’d be buying tangible assets worth $420,000 and intangible assets such as the Goodwill and reputation the business has generated since the 50’s, customer lists, etc. all for the rock bottom price of $350,000. – Red Flag

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Area up there is totally different from anything you would more then likely know. Shit is extremely cheap in that area. I found a 4 bedroom/2 bath house for $30,000.00 that looked to be in good shape (I am not a professional inspector but been in the trades a lil bit :yup:). I found a 2 bedroom/1.5 bath with 100 acres for $100,000.00. The price he wants is actually high compared to all other businesses that are for sale in the area. The area has VERY HIGH tourist (ie: Snowmobiles, ATVs, Dirtbikes, fishing, etc....) So I would be covered all year instead of having down time in certain seasons. I called the bank today but have not got a response yet. We will see.......

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Originally Posted by blackSS01

Area up there is totally different from anything you would more then likely know. Shit is extremely cheap in that area. I found a 4 bedroom/2 bath house for $30,000.00 that looked to be in good shape (I am not a professional inspector but been in the trades a lil bit :yup:). I found a 2 bedroom/1.5 bath with 100 acres for $100,000.00. The price he wants is actually high compared to all other businesses that are for sale in the area. The area has VERY HIGH tourist (ie: Snowmobiles, ATVs, Dirtbikes, fishing, etc....) So I would be covered all year instead of having down time in certain seasons. I called the bank today but have not got a response yet. We will see.......

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So what was the point of the appraisal, if the building is worth less than what it was apprised for? Shouldn't the appraisal have taken into account the area the building is located, condition of the building, comparable sales? Yes it should.

You suggested the building was worth $345,000 and the equipment was worth another 75,000. Is that not the case?

All I’m saying is that you have to be concerned when the asking price is less than the fair market value because why would someone sell something for less than it is worth?

You really need to look at and study the profit and loss statements for the past 3-5 years. A vague reference to "net income of six figures" does not cut it. Other than sex, the only other thing Walmart does not sell is liquor to my knowledge.

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Originally Posted by pajeff02

You really need to look at and study the profit and loss statements for the past 3-5 years. A vague reference to "net income of six figures" does not cut it. Other than sex, the only other thing Walmart does not sell is liquor to my knowledge.

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In some places Wal-Mart sells liquor. I've bought a 1/5 of Capin' in one. Cant' remember the town tho

Gas station with associated car fix-it shop?

as a rule of thumb a business is worth at least 4 times its net earnings.

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Originally Posted by blackcar

In some places Wal-Mart sells liquor. I've bought a 1/5 of Capin' in one. Cant' remember the town tho

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Well... then the Walmarts around here must all suck.

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Originally Posted by pajeff02

Well... then the Walmarts around here must all suck.

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gotta love PA

Off topic: Walmart is one of Americas largest problems

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Originally Posted by Hi-Po

Off topic: Walmart is one of Americas largest problems

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so is the government... hell the government should run Walmart

After thinking a little more about this I have to question how the company gets its customers.

From your posts, I believe this business makes products that are rare or special in some sense.

If this is the case, make sure there is a viable way to maintain AND increase the current revenue. If the current owner is the main sales driving force and every current customer is on buddy terms, you may have a problem when you take over.

Almost EVERY business is reliant upon how and who aquires sales. This is VERY big deal. Also consider how much is spent on advertising and if you feel you are going to be able to improve in this area.

Ding ding ding, Its a liquor store in between 2 colleges :yay: Can't lose....but no answer from the bank yet :suicide:

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Originally Posted by blackSS01

Ding ding ding, Its a liquor store in between 2 colleges :yay: Can't lose....but no answer from the bank yet :suicide:

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So... what did I win for my correct guess (Post #32)?

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Originally Posted by blackcar

In some places Wal-Mart sells liquor. I've bought a 1/5 of Capin' in one. Cant' remember the town tho

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My wal-mart sells johnny walker, makers mark, UV vodka, smirnoff vodka, several captain morgan varieties, everclear(151). Sambuca. And it's in the same aisle as their energy drinks!


As for your liquor store. VARIETY!! If you end up buying it, I can tell you a some liquors, you NEED to get. Oh, and get kegs, lots of kegs to rent.

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Originally Posted by blackSS01

I have some questions from some of the people here own businesses. While on vacation I ran across a business thats for sale that I could run and could make a lot of money off of it. Here is some info without giving up too much info:

Turn key operation, everything comes with it to run it.
Price is $350,000.00 to own it.
Building alone was appraised this year at $345,000.00
Equipment plus full stock equals approx $75,000.00
Building comes with 2 apartments so I would have my living taken care of since its a 7 hour move.
Business GROSSES $800,000.00 + a year minus renting the apartments.
Business was established in 1950's
Owners will stay on 2 weeks for training and are retiring in the area for further help.
Owner didn't disclose NET earnings but said it was 6 figures
Owner gave me the bank he banks through, he now fully owns the operation.
Business has a strong hold on the area for what it does.



So thats a good chunk of info, my credit isn't that great but I have credit and only about $3000 in debt. If I had to, I would sell my Camaro/everything I could for help if needed. I'm thinking that regardless I should be able to get the loan off of the information the bank has. They should know what it makes every year. He has banked with them his whole life, would be my first time with the bank. What do all you owners think? Never did this before but would have no problems running it :true: It sounds too good to be true but I have other info that I don't want to disclose.

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Get a business broker...due diligence is key....you are not the one to exercise due diligence as you are the buyer. You must have a uninterested third party....he also will exercise due diligence on you to insure you are right for the business. He will charge you 5%-10% of the purchase price and they are invaluable.

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Originally Posted by Sarge

Get a business broker...due diligence is key....you are not the one to exercise due diligence as you are the buyer. You must have a uninterested third party....he also will exercise due diligence on you to insure you are right for the business. He will charge you 5%-10% of the purchase price and they are invaluable.

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Will you be my investor Sarge??? :notworthy:

As a multi unit business owner let me throw out a few things to think about:

Right now no bank is going to loan money to anyone without a 20% commitment from the buyer. If one does then that's great. Similar to a housing loan they want buyer involvement. What can hurt you even more is that as far as the bank is concerned you have no 'experience' operating this new venture. The business may have been around a long time and make X dollars in sales but that doesn't give the bank the 'warm and fuzzies' that you can run the business the same way as the seller. No offense intended here it's just the fact.

Secondly, try to get some idea of your expenses:

Monthly loan payment
Property taxes
Property insurance
Workers Comp insurance
Electric
Gas/Oil/Propane (heating)
Telephone
What is weekly/biweekly payroll
payroll taxes
payroll processing fees
professional fees: accounting/legal
will your suppliers require deposits being the new owner


this is just a partial list. Ask the seller to show you real costs/invoices etc so you can really get what the monthly 'nut' is going to cost.

My family owns a large liquor store in South Jersey that does very well. Lots of work and monitoring of all the cash but they do well.

Do all your homework on this and get copies of sellers tax returns for the last 5 years. That will tell alot too. All the docs should be reviewed by an accountant and lawyer. You can do a deal like this without a broker, why pay a broker fee? Even with solid returns a large cash business can cause the seller to have misleading returns too, why declare all that cash....

Lastly, go to the town hall. Check with them about any leans on the property, make sure all taxes are paid up.

Good luck. That's all I can come up with now.
Erik