What To Ask Before I Buy The Store?
I think I have founda great deal on a small convienence store. Owner will finance and I have down payment. Since I am new to this, what questions do I need to ask? I have figured out how much employees will cost already. Also, where online can I look at wholesale grocers to compare pricing on items I will need to stock? And, if anyone owns a convience store, your input would be great!
You need a transactional lawyer who handles sales of businesses (not just houses).
There is something called "due diligence". It's the process of making sure that everything the seller is saying is true, that all the deposits are switched over into your name, that all the creditors are paid, that there are no lawsuits outstanding or contemplated, and a whole lot of other things.
This is one of those areas of the law that requires a detail-oriented approach so that all your bases are covered, pro-rations occur on a fair basis (do you really want to pay part of the seller's last month's utilities?) etc.
Also, you'll want the contactual documents to have approprite recourse if there are problems. And probably to hold back some of the purchase price in escrow for a period of time to be applied toward surprises.
I would first ask why he is selling. Is he getting held up? bad business? are the customers getting to me? does he just need the money. The best way to make an unsuccessful business a successful one, is find out why it failed, fix the problem, and learn from it
[addsig]
Have you considred just purchasing the property and locating another investor to set up a store in and and pay you rent?? Running a business takes a lot more time than owning real estate. I'd be careful.
Just my 2 cents
Convenience stores will make or break you. Youre pricing is either dictated by your franchise, or you will need to negotiate it out with your local suppliers if it doesnt have a brand name attached to it. The prices change so there are no websites escept the larger wholesalers. Also make sure you read Flacorps post, it is imparitive you have someone on your side to look at the intricacies, and to cover all angles when you buy it. Just some things you will need to cover:
Utilities bills, franchise fees, franchise qualifications and current stock, taxes, licenses, liens on business or property, current contracts with suppliers, equipment owned, equipment rented, Zoning(for Gas), environmental report (tanks under ground from last gas station?) etc etc etc.
It is definitely worth getting into because the profit margins are almost criminal. But when you buy one you need to CYA in a major way, as there are so many ways to get stung.
Good Luck,
Kyle
I like the idea of renting out the store. It is difficult to get comps in the area. How do I come up with a number? Also, do I just put it in the classifieds, or how do I find someone who will be interested in renting? Is there a "free" classifed area where I can post an add to see what kind of response I get before I buy? Also, can any of you comment on how I can do a trade? They want 139k, I have a house they want, but I owe 125k, asking 142k. How would a trade be possible?
How would one locate a "transactional attorney"? What specialty would they be under in the yellow pages?