How To Buy A Top Notch Liquor Store - By: Richard K Parker

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 include the effort put into the business by the owner, marketing plans, the demographic makeup of the clients in its catchment area, focus on particular products or services, the competence and skills of the staff and so on. 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.

All of the following issues must be considered when you are contemplating the purchase of a liquor store:

* its location.

* whether revenue and profits are stable and sustainable.

* 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. No two businesses may be the same and either may focus on particular areas, such as beer and wine, or cigarettes or premium products, while the other focuses 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 assessing the business financials and particularly the revenues, you must dismiss any cash sales reported by the owner unless these sales are backed up by audited accounts and are included 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. For example, a huge stock of winter ales will not sell well as you enter the summer months.

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

Article Directory Source: http://www.articlerich.com/profile/Richard-K-Parker/53039

Additional Articles From - Home | Business | Entrepreneurs