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Posted on June 22, 2015 by odessaapartments

How To Properly Value A Liquor Store For Sale

To the right kind of person, a liquor store can be an amazing opportunity if they’re seeking to become involved in the area of entrepreneurialism. For quite some time, liquor stores have been seen as purveyors of "necessary items," with quick turnover and
fake oakley sunglasses nice margins. However, undertaking a liquor store valuation can be a complicated endeavour. Most of the industry is still somewhat reliant
cheap oakleys on antiquated barometers, and it’s more than likely that the owner may attempt to offer you the business based on those old traditions rather than actual real world factors.

Due to these traditions, the industry has a somewhat veiled view of measures used to assess actual, individual business values. No two liquor stores are the same, as they have different footprints, different specialities, the existence or absence of certain subsidiary products
fake oakleys cheap which can represent substantial values in themselves, etc. Always remember that you need to focus on the claim of profits and not by reference to given percentages or to the fact that the business may have solid sales, but sales in and of itself means nothing.

While you can of course review percentages given to you and use them to interpret any abnormalities accordingly, the best method of business valuation, liquor store experts all agree, is based on cash flow or owner benefits. Often they will refer to a figure which represents a "multiple," and this multiple can be three, four or five times. What does the multiple refer to?

The most common figure used represents the owner benefits. This refers to the money that you will have left after you have taken all expenses into account and essentially represents the funds you will use to service the debt, pay yourself accordingly and to build the business. When looking at the books your owner benefit is defined as net income added to the owner salary, perks, depreciation and interest less capital expense allocation. The latter element refers to any major alteration or investment you will need to make in the foreseeable future, by installing updated computer systems or redecoration, as examples. Always be sure that any "add backs" are appropriate and reasonable.

As you are buying the business at a premium, in relation to the "multiple" attached to the value, you must of course be sure that it is being sold as an ongoing concern. This claim is particularly appropriate when it comes to the inventory
cheap oakley sunglasses wholesale of the business. Make sure that you buy this inventory at terms which are realistic to you. Often, buyers will seek to remove the cost of the inventory from the valuation and add it on separately. It should always be treated as an integral part of the valuation and not used to inflate the seller’s position. Typically an inventory is turned over by a liquor business between eight
fake oakleys and 10 times per year and you should ensure that your particular stock does not include a large element of items which may be
cheap oakley sunglasses unsalable or seasonable.

Be wary of an owner who claims a large amount of cash sales, as if they cannot prove it, you should never pay for it. In other words, they should not benefit twice first when they fool the tax department and secondly from
oakley sunglasses discount an inflated business sale value.

Remember that you must have a good conversation with the leaseholder or management company, assuming that the business occupies a rented space as is most common. Understand before you go any further what you would need to do to assume the lease or to qualify for a new one.

A word on owner financing, which may be offered. Generally speaking, you may add the value of between 30 and 50% of the amount financed by the seller and consider that to be a premium to the stated business value, versus an all cash transaction.

Be on the lookout during times when you
cheap wholesale oakley sunglasses meet with the owner, visit the premises or otherwise conduct your due diligence. Consider the number of patrons that you see going in and out of the store and use this as a benchmark, bearing in mind the time of day of your observation. Do you see many family members of the owner working there or watch the owner working excessive hours? Ask yourself whether you want to replicate the situation and how you can truly arrive at a value for the work input by the family members, especially if they are being paid off the books. As President and founder of Diomo Corporation The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream to buy a business.Articles Connexes：

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