Opinions on this business

Charityworker

Posting this for one of my daughters. She's got an appointment to view this business in a couple of days time. She's hoping to eventually sell animals in it as well. She will have to get a business loan to buy it.

http://www.rtabusinessesforsale.com/Business-Details/38615

InsideInsurance

There is insufficient information there to really give any meaningful opinion and doing research/ due diligence is a substantial task that cant be done with a 5 minute opinion from about 5 facts on the business.

Mistral001

Turnover, I see, is mentioned. Turnover is different from profit. As far as I know it is the norm to see at least three years accounts in situations like this, so you should be able to find out profit and note any trends over those three years. Also, you would be wise to show the accounts to your accountant.

colino

Her basic premise is wrong, even before looking at the financials of this shop. If she is looking to have a real pet shop, why tie herself to this pet-food outlet? It is a simple lock-up store that will be too small/no space for expansion into pets and would, depending on the local authority, need additional licencing and/or planning permission.
A bit like buying an old builders transit when you plan to sell ice-cream.

lincroft1710

£75K turnover may sound like a lot of money, that is why that figure is quoted rather than net profit. Colino's point is very relevant.

However what could be the killer is if there is one of the big discount pet supermarkets already open or about to open, even as far away as Gt. Yarmouth.

paddyrg

£75k turnover, but don't forget that includes buying stock, wages, power, rent, rates, shop fittings, shrinkage, pest control, taxes, insurance, etc. Also, check the lease terms - easy to find yourself responsible for replacing the roof in 10 years, even if you've not been trading for 5!

Pennywise

Can't see it being worth anything like the asking price TBH. £75k turnover will end up virtually minimum wage level profit for the owner - about £10k p.a. if you're lucky! If it's built up, you'll hit the VAT threshold which is another cost, so you'd have to build it up a lot to around the £100k mark to make the same profit as it does now at £75k. The big business sales agents have a reputation for over-valuing small businesses. To be brutally honest, it's probably not worth more than £10k. Seeing the last 3 years accounts is absolutely essential.

capeverde

first she has to ask herself why she wants it. Does she see herself expanding into a chain in 5 years or just to giver herself a wage from a single shop. Personally I wouldn't go near a high st shop and certainly not at that price given such a small turnover and low margins on product sales. If its been there that long and still only doing a couple of hundred quid a day, how is she going to increase revenues. Adding live animals will reduce space for other items and I imagine bring a whole raft of other problems. If she is still intent, does the price include stock and what is the value of this. Why not just lease an empty shop close by and start afresh 35k better off.

paddyrg

^^^Remember, the shop stock isn't that valuable! Anything in stock is sitting in the shelf, and that potentially means lines that aren't selling well.

tracey97

I used to have a neighbour who had the misfortune of dealing with this agent. The asking price will have been plucked out of the air and the vendor will have had to pay a substantial upfront payment to the agent. That asking price will be nothing like the actual value.

Charityworker

Ok thanks for your replies. I will keep it all in mind and let you know how it goes.