Buyer Beware When Buying an Exisisting Business

Buyer Beware When Buying an Existing Business

By Bob Hamilton

Opening a dollar store is not without risk. When examining an existing store to purchase there are also risks and extensive investigative due diligence must be completed. After all, one of the last things that an entrepreneur wants to face is a long list of unexpected problems and surprises after making the purchase.

After examining the financial side of an existing business, there are several other aspects that also need to be examined. The list includes:

Current inventory and inventory mix.

Understand how much inventory exists. Also understand the value of that inventory. If the mix is incomplete, calculate the added inventory investment that will be required to get the store fully stocked and running correctly.

Personnel practices and personnel in-place.

Don’t inherit someone’s problems. Be sure that there are not disenchanted employees just waiting to take out their frustrations. Be sure that there aren’t pending legal problems waiting in the wings. Be sure that there isn’t a record of driving off good employees.

Look at the marketing and advertising.

Were expensive advertising campaigns used to drive sales higher without any customer retention strategies being in-place? Was any advertising done to help build the customer base for the business? What were the long-term marketing plans for the business?

Customer Service.

Customer service can make or break the success of the business if you are opening a dollar store. It is much harder to regain lost customers who were treated poorly. On the other end of the spectrum are repeat customers who are currently happy shoppers. The bigger the existing customer base the better your odds of success when opening a dollar store.

All of the above can have a huge impact on your bottom line results when opening a dollar store.

Be sure to always conduct thorough investigative due diligence before purchasing an existing business. While buying an existing business can greatly streamline the process of opening a dollar store, there are risks to be considered. Minimize the risks and enter the transaction fully informed.

To Your Dollar Store Success!

Bob Hamilton is an entrepreneur, author, writer, consultant and trainer.