Thinking of buying a business

[Aliboy]

Greetings peeps.

My girlfriend and I have just been down to look at a newsagents that has been put up for sale and we were quite taken in by the whole thing. The location is great (it has accomodation situated above the property which is nice but needs a wee bit of modernising). We want to express an interest to the estate agents on Monday but seeing as we have never done this sort of things before do you know what sort of questions that we should ask? Do we get someone to look at the accounts for us or can we rely on the sellers estate agents to tell us exactly what the shop is making?
Here is a little linky to the place (which has some figures in there but they don't really mean anything to me just now )
linkypoos
It's the last part where it tells you how much the shop made that has me stumped
Any advice would be greatly appreciated

 

[Aliboy]

Piggy, if you could get me some general info on what to expect then I would really appreciate that. Thanking ye kindly
The woman who is selling is doing so because she wants to retire. Her husband died 7 years ago and I think she just doesn't want to carry on with it anymore. They have told me that the estate agents have the books if we want to have a look at them, so would it be a good idea to take along someone to go through the books and let me know how things are or can we rely on the estate agents to keep us straight? (initially, or at least until we have a suvey done on the place).

 

[Aliboy]

Hmm going by the quoted figures, you could expect a gross profit of £64,902.30 PA... not bad, not bad....

So out of that how much can I expect to stick in my back pocket?

 

[Aliboy]

Thank you very much for the replies peeps
I think that I should note a formal interest in the property just so that the seller is aware that there is a potential buyer interested. She has had a few surveys done but they have only been on the business side of things and don't include the property above the shop. I'm hoping that because I'm interested in both sides of things then that should put me in a better position than the others. I'll get as much information from the estate agents when I speak to them on Monday about what steps to take next. I'll also speak to my solicitor about what I should be doing next to see what he says.
The shop is in a real tourist trap and does have the option of opening on a Sunday also which would help bring in the pennies. The only downside for me is that there is no proper garden with just a pokey little space out the back of the house. Oh and no garage to keep my motorbike which I may end up having to sell **majorly gutted**

Al

 

[Aliboy]

It's in Melrose, which is hardly the hip and happening joint you would expect.

That's exactly why we're looking to buy out there. It's extremely scenic and even on the quietest days it can still be quiet busy. Take a drive down there one day and try and find a parking space, and for it being such a small community take a look at the number of coach parties that you see.

Are there any other shops around and are Tesco planning or could build a shop near it.

Not that we're aware of, although this is something that we have thought about and will be looking into that.

Newsagent = Slow Painful Death

This particular shop has been a newsagents for just over 80 years, so if it's a slow painful death then it's certainly taking it's time

i hope you're not going to actually work there yourself..how boring is that?

Yup, I'll be working there This would be my business and I would only be limited by my imagination as to what I could do with it My girlfriend would also like to try her hand at making her own collection of greetings cards, so this would also be an ideal platform for her to try that out

 

[Aliboy]

Now that I've had time to sleep on it I have to say that I'm not as 'blinded' as I was when we where there yesterday. Thanks to everyone who replied though as it certainly has given me more of an insight than I had before about what to do. I will certainly still have a look at this though as I do think that the business has more potential to unleash and may just benefit from some fresh faces and ideas.
The only real concern is the property above the premises. With a little bit of modernising it would be a lovely little house but it doesn't have a garden. It has patio doors which lead out onto a very very small area of 'patio' but seeing as we have 4 cats this has made us think about what would they do
2 of the cats would have no problem hopping over the high wall at the back and roaming about there but the other 2 are lazy podgies and couldn't jump to save their lives It would almost feel like they would be prisoners in their own home.

 

[Aliboy]

It strikes me you're focussing more on the 'house' than the business - be careful

Nah, the house does play a part in the whole thing though Beansprout. We wanted to move to that part of the country first of all without even thinking about the business and it was just by chance that we found something that I could do whilst my girlfriend commuted to work each day. Having the property as well is a bonus, but if we don't think the business would work then we certainly won't be interested in the house. It's just that it would almost be like killing two birds with one stone if you know what I mean

 

[Aliboy]

Ali my man, I don't know enough about running a shop like this but I've picked up a little knowledge. I think you have to be a certain type of person to do it and you have to forgoe some of life's niceties.

Yeah, those thoughts have crossed my mind too Desmo. I don't see this business venture as a life long thing, just more of a stepping stone to give me the capital to do what I really want to do. I know that it's going to be very hard work and that there will be days when I just can't be arsed, but I have the mentality to stick in and give it my all I've been weighing up the pros and the cons of going into something like this and I think I'd be silly not to do it as the pros outweigh the cons. The fear factor is there but I can't let that hold me back. I don't want to go around thinking 'what if' all the time.
I've contacted the estate agents and noted interest in the property and they are sending out the last 3 years of accounts for me to look at. Better get on and look for a decent accountant to see what he/she thinks of it all
Here's hoping
And it goes without saying that you can help yourself to as many penny sweets as you like

 

[Aliboy]

And Readers Wives.

And tissues

 

[Aliboy]

There is simply no way that a business like with a gross profit of just £65k and numerous members of staff is going to 'give you the capital to do what you really want to do'. It isn't profitable enough

We don't know that yet though Fox

 

[Aliboy]

I quoted that so you can't go back on it

Better make sure I only stock up on haggis flavoured toffees

 

[Aliboy]

I've just received the last 3 years balance sheets from the estate agents today and at the very bottom of the sheet it has the net profit for the year. My girlfriend reckons that there may be some more money (ie, the tax that the owners would pay on there own salaries) to come off of that figure. I say that the net profit is cold hard cash after everything that has to be paid is paid.
Who is right? Me or the girlfriend?

Al

 

[Aliboy]

Here's a copy of the profit and loss account sheet that we received today.



The thing that gets me is the wages and salaries expenses of this place. The woman who owns this doesn't actually work in the shop anymore and is living off of the net profit that the shop produces each year. She has 4 part time members of staff that run the place in her absence. The wages bill is about 11% of the turnover in sales but in reality it should be running around the 5% margin making the wages and salaries about £11k and adding around £14k to the final net profit for the year.
The price is negotiable and the chartered surveyors have hinted that if the figure has a two in it then they think she would accept it but she may go for something slighly lower
We're going to go back down and have a second more constructive look at this place before we make up our mind, and if we think we can do it then 'let the mind games begin'

Al