Finance to buy an existing business

colino

The figures make no sense at all and having had a client involved in country sports, the idea of a "10% markup on new goods" in this field is plain nonsense.
People have asked you to dig in to the audited figures and while it is difficult (if impossible run away) dealing with a long-established sole-trader in a niche field, you, or the next buyer have to see it in black and white. The net profits do not tally with this area of retail and the turnover seems to be bizarre.
Becoming a new Registered Firearms Dealer is not straightforward and of course is not transferrable, and overall it sounds like the exiting owner wants to maintain his income while someone else disposes of his unwanted stock.

bammers80

colino wrote: »

The figures make no sense at all and having had a client involved in country sports, the idea of a "10% markup on new goods" in this field is plain nonsense.
People have asked you to dig in to the audited figures and while it is difficult (if impossible run away) dealing with a long-established sole-trader in a niche field, you, or the next buyer have to see it in black and white. The net profits do not tally with this area of retail and the turnover seems to be bizarre.
Becoming a new Registered Firearms Dealer is not straightforward and of course is not transferrable, and overall it sounds like the exiting owner wants to maintain his income while someone else disposes of his unwanted stock.

The 10% mark up is on new shotguns. Most of the turnover comes from the sale of used shotguns/airguns and these have a 30% mark up.

I am aware of the process involved in becoming a Registered Firearms Dealer and know the problems you can face.

I am going to try and get hold of copies of the audited accounts if I can and go from there once I have been given some more advice from an accountant.

Once again thanks for the replies and information

Regards

Nick

bammers80

micky2phones wrote: »

Hi, as others have said about the figures not being right and not many people wanting the business.

My silly question is will or are there any changes in the law about guns e.t.c which stopping others wanting the business ?

Firearms laws are changing, and if the SNP or Greens have any say in things they will become even more strict than they are now, but it won't be without a fight from the shooting community.

I don't think that the way things are now though that it would put off any potential buyer.

colino

If indeed he is only getting 10% "mark up" on new guns, he shouldn't be selling them. He needs a better deal with the suppliers and he needs to properly finance the stock, not own them. Buying in second hand or selling on consignment needs to attract a much higher gross profit too. He is either lying or has perpetually muddled through with immense luck. Not the way you should be approaching a new enterprise and paddyrg is pointing you towards a sane way of entering this field without the encumbrance of someone elses failures/hoarding and lack of understanding of profitable retail. It's a business not a hobby.

Mistral001

bammers80 wrote: »

Firearms laws are changing, and if the SNP or Greens have any say in things they will become even more strict than they are now, but it won't be without a fight from the shooting community.

I don't think that the way things are now though that it would put off any potential buyer.

I won't want to be around when that fight breaks out!

sparkermarketing

Echo the comments previously. If he is closing down and you cant agree a deal with him the sensible course of action is to open a new shop in the vicinity, with new stock (not the old stock that he can't sell).

At the very least, you should tell him that is what you are planning on doing...and see if his position changes.

paddyrg

Thinking about this, those margins scare me. The good news is that you're not going to get significant Chinese internet sales undercutting you, so you have a protected market. If you have a protected market, those customers will pay 20, 30, 50, 100% markup because they don't have other options. That's the part of the business you should be making the money on, not scraping by! If the market REALLY WILL only stand a 10% markup, those goods need to be sale or return, or with a demo model in store and overnight fulfilment from the vendor.

bris

Impossible, the figures are ridiculous for a 75k asking price something is very wrong here.

bammers80

Once again thank you all for the advice, I think I will go and see an accountant and try and get some more up-to-date audited accounts from the vendor.

Nick

zygurat789

bammers80 wrote: »

Once again thank you all for the advice, I think I will go and see an accountant and try and get some more up-to-date audited accounts from the vendor.

Nick

Being a sole trader, the vendor has the right to prepare his own accounts and enter them on his tax return himself.