Posted: 1/9/2003 6:52:59 AM EDT
i'm thinking of buying a existing store. this is what he told me this morning
has 4 safes, various display cases and gun inventory
he is not sure of the total worth but said it to be around $70-80,000
gross sales last year $396,000
$1200 a month overhead
he sold about 800 guns last year
i just started on this today so i have some phone calls to make i will check back later. any info you can provide
it is located in Conway Arkansas 30 miles south of Little Rock
What you need to do, or have someone do if you do not know how, is a Break-Even Analysis. This tells you how much you have to make to break even.
Given the facts so far, he grosses $396K. If his profit margin is 10%, that means he makes $39,600 gross profit. The overhead is $14,400 yearly. That leaves $25,200. There is much else to consider, but if you work there 40 hours a week, that is 2080 hours a year. So you would be working for $12 an hour.
But wait, you had to borrow $80K to pay for his business. You have a note for that. How much is it? There are many other hidden costs.
The bottom line should be based on facts, not, "I sure like guns and stuff!" Be careful. Do your homework. Get someone to help you if you don't have the expertise.
Yes, like giving everyone on AR15.com a 15% discount on all purchases![bd]
Originally Posted By Old_Painless:
There are many other hidden costs.
the guy is figuring his profits and contents worth, i am to meet with him on monday so i'll know more then.
what percentage of gross do dealers typically make? 10%
Have him print out a P&L (Profit and Loss) statement and a chart of accounts, for the last three years. Take these items to a CPA or business attorney for analysis. Find out what the business' real net profit is. Will he continue participation (on a consulting basis) to insure smooth transition. Can all licenses etc. transfer? Is it an S corp. or C corp.?
Get third party advice! Don't try it alone.