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Buying a Top Quality Liquor Store

View PDF | Print View | Html View Written by: Richard K Parker
Total views: 1 | Word Count: 596 | Date: Tue, 9 Feb 2010 | 0 comments

Buying a business of any kind involves a complex set of metrics due to the dynamic nature of the purchase. The business is composed of a series of tangible and intangible elements and while there are certain benchmarks, often quoted by those seeking to sell at a favorable price, each situation is very different. As such, it can be very difficult for a prospective buyer to value a liquor store for sale, especially when he or she looks at what appears to be a similar prospect nearby at a significantly different price. On the face of it, each appears to be somewhat similar in style, size and type of location, so why the difference?

When you buy liquor store business interests, understand that the purchase is composed of many different assets and the entity's position at any one point in time is dependent on a large variety of factors. These will include marketing plans, the effort put in by the owner, client demographics within the catchment area, product or service focus, skills and competence of the staff, etc. It is therefore particularly important that you glean as much information as you possibly can, conduct comprehensive research and be especially diligent before you begin to decide whether it is right for you.

Each and all of the following areas must be considered when you're thinking about buying a liquor store:

* its location.

* whether profits and revenues look to be sustainable and stable.

* customer database and expansion potential.

* the terms and condition, portability of the lease.

* demographics and population shifts.

* any planned road construction.

* employee situation - working for favors or Cash in hand, such as with members of the family.

* whether there any opportunities or threats that could considerably impact future revenues.

Bear in mind that the liquor store industry tends to want to focus on industry benchmarks and while this is fine for some outline information, you cannot rely on it. You will find that no two businesses are the same and each may look at different areas, for example cigarettes or premium items, beer or wine, while the other looks elsewhere. Look for abnormalities or something that really jumps out at you and make sure you understand why this should be. At the end of the road, however, look at the bottom line to determine how much the business is worth to you.

When you are looking at business financials and especially revenues, do not count cash sales that the owner refers to unless such sales are incorporated within audited accounts and can be seen in tax returns. The outgoing owner cannot expect to receive the value for these "under the counter" sales, as he or she may well have not reported them for tax purposes in the first place.

The inventory must be relatively fresh and saleable and not be mainly composed of products that are not popular anymore or likely to sell. As an example, a large stock of winter ales will not go down very well during the summer.

To establish a base upon which to value and then decide to buy a business, look at net income, add owner salary, any perks, received depreciation and interest and then deduct any allocation for capital expenses. This latter item refers to any perceived payments you may have to make in the short to midterm in relation to improvements, upgrades or necessary investments.

About the Author

Richard Parker is the President and founder of the prestigious Diomo Corporation - The Business Buyer Resource Center. His celebrated materials, seminars and consulting have encouraged thousands of aspiring business buyers from around the World to pursue their dream to buy a business. Want to discover more about impressive business buying success strategies that really work, then look no further than=> http://www.howtobuyaliquorstore.com