Buying a vape shop business in Sheffield
- Thread starter Newbie looking for advice
- Start date
If you’re only paying for stock and fixtures that can make sense. Paying for customers in a retail environment is risky
You really need to dig deep into what/why they are selling and what/why you are buying.
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Do people buy vape kit and liquid in shops or online?
I guess (I'm not a vaper) that the optimum business model is to sell vapers a vapouriser but more importantly, to sell them liquid/juice on a repeat or subscription basis. If correct, you're more likely to do that online than via a shop.
Two thoughts on premises:
I guess (I'm not a vaper) that the optimum business model is to sell vapers a vapouriser but more importantly, to sell them liquid/juice on a repeat or subscription basis. If correct, you're more likely to do that online than via a shop.
Two thoughts on premises:
- ...because for one reason or another, it hasn't worked out as well as expected for the seller, and
- bricks and mortar retail is really difficult now; if you look around you may find other shops available on better terms!
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- Original Poster
- #11
In terms of reason for selling it is stated as "vendor wishing to concentrate on other business interests"...............There is no real way of knowing if that is factually correct in my mind and this is the same for any reason given by anyone selling any business.
Can you elaborate on "Paying for customers in a retail environment is risky" please..not sure what you mean.....
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If you are able to talk to the owner, some well-aimed questions might reveal the reason. Is it is, the sub-text is that the other businesses are performing better, or are less hassle
So, what value would you put on a customer? Because in reality your way is probably as reliable as anybody else’s but they key here is not to overpay. Passing footfall, loyalty, trends, legislation etc are all considerations
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Customers - that you may keep or that may go elsewhere once the owner sells the place.
Often people buying a business have their own ideas how to improve things, how to increase sales, how to increase customer spending per sale.
Trouble is, customers may not like the change and go elsewhere.
So do not overvalue customers. You keep them only so long as you can keep them.
If you already have a website selling to customers then great, can integrate the shop stock with that.
Stock - that will include stuff the seller has purchased a while back and not shifted yet, purchased on spec and failed so far.
You may well have your own ideas about stock - just remember its not what you like, its what your customers like that is relevant.
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With how many staff and how much is the rent? Check how much the gross profit is, probably 40-50k. 110k is a pretty awkward figure, not that much over the VAT threshold.
I had 5 shops from 2014-16, sold them as I got nervous about the the EU regulations coming in. It's a good market, you can easily sell online aswell. The juices you can probably even sell on ebay at decent margins, too many VAT dodgers to compete on the hardware.
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I think that selling e-juices online is still a pretty good business, because you can get nice margins, especially if you know what your customers demand. You can see businesses like Dampfabriek doing it and shipping to all the EU, USA, AU, CA and UAE. They're also a physical store, so if you really plan to buy it, then you should combine both commerce venues.
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Do they have an online store? Its getting harder to compete as retail as theres no margins on hardware. and alot of the wholesalers also sell on the likes of ebay for practically the same they will sell to you for.
We had a popular brand in our store which cost us £8.50 at wholesale and would retail for £18. but once the brand gained popularity i had a few customers coming in telling me its available on amazon for £10 delivered.
theres also lots of fb groups which are constantly sharing deals. Once your customer comes across these kind of groups they may not be willing to come in and pay store prices. We used to do decently online but with so many now online and bedroom sellers. Online shops have clearances all promoted on these groups its become a hard market place to crack. I see alot of sellers selling for £1 or 2 above wholesale prices. people are starting to expect retail shops to match.
Most our 50mls are £7 onwards but i have competitors selling 50mls at £2.
We are slowly moving away from relying upon our vape sales as we are more than just a vape shop and other stuff now.
We had a popular brand in our store which cost us £8.50 at wholesale and would retail for £18. but once the brand gained popularity i had a few customers coming in telling me its available on amazon for £10 delivered.
theres also lots of fb groups which are constantly sharing deals. Once your customer comes across these kind of groups they may not be willing to come in and pay store prices. We used to do decently online but with so many now online and bedroom sellers. Online shops have clearances all promoted on these groups its become a hard market place to crack. I see alot of sellers selling for £1 or 2 above wholesale prices. people are starting to expect retail shops to match.
Most our 50mls are £7 onwards but i have competitors selling 50mls at £2.
We are slowly moving away from relying upon our vape sales as we are more than just a vape shop and other stuff now.
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Does it matter about wholesalers selling on ebay?
Look at most new items, can usually find multiple sellers and there's often one or more that is cheaper.
Unless being the cheapest seller is the goal then ignore what others are selling at online.
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T
The Byre
Our daily "I want to buy a business, but I don't really know what I am doing!" posting.
Welcome to the Twilight zone!
OK, here we go -
1. Read everything here - http://ukbusinessbrokers.com/gallery/
2. Get proper advice from someone who knows what they are doing when it comes to buying and selling a business and what to look out for. Tip - that is definitely NOT an accountant or a lawyer, they come a bit later, but you'll need them too.
3. Get someone to look at the books properly.
4. Get someone to give you a realistic valuation of stock and fittings.
5. Remember to separate out the income that you must be paid to manage the place and the profit. These are two different things!
6. If the shop is rented, remember that you are now sitting on the wrong side of the real estate desk.
7. If you have never run a business before, learn how to FIRST.
8. Physical shops are struggling.
9. Do some basic market research in and around any proposed business.
10. Perform due diligence on the person(s) selling the shop. You need a list of all their present and past business interests, their personal and business credit ratings, a list of all the other people that are involved with and the backgrounds of those people as well, inc. partners and other cohabitants. Anything dodgy like a list of closed companies or enforced notifications of closure by Companies House and you must drop the idea of doing any kind of deal with them immediately. Ask for business references for things like suppliers - do they pay on time? Are they honest? Check everything!
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It does, when a customer comes in and says "I can get it online for £10 delivered" when your selling it at £18
They might be happy to pay a few £ more but not £8 more
But it's impossible to get near there prices.
A few months back I lost my highest spending regulars to this. They may come in time to time but In the end they just buy them on eBay and stock up in advanced. straight from the manufacturer for less delivered to there door. At a price there's no way I could match. Or even get near.
If people come into a shop they would spend 10-30 mins selecting which flavour they want. I wouldn't be able to pay my staffs wages on £2 or so profit.
There are still some good profitable stuff out there but most shops sell quite cheap to try and not lose there customers to going online. But it's not always viable.
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So is them saying that preventing online sales?
Someone else wants to sell it online at £10 let them. Set your own price online.
My best selling range of items on ebay is more than 50% higher than the cheapest on ebay.
Have done tabletop events where someone has pointed out they can get a certain item for £15 cheaper on ebay. Cannot complain too much, I use same prices at tabletop and on ebay - and sell out of the products.
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stuff like this really annoys me
wholesalers screwing their trade customers by selling direct can kill a trade
the internet has made it simple to cut out the middle-man, but it's not always the best thing for customers (even if they do save a couple quid)
in retail, some customers do seem baffled with the concept of buying a thing and selling it for profit. some will say "but I saw this being sold online for £x?". to which I'd like to ask them if they have a job, and if that job gives them money, and if they would stand here and listen to idiotic comments from a customer like themselves for free?
... but it's a minor greivance. most are respectful, and it's on you to add value to the customer experience to justify your price-point and success
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stuff like this really annoys me
wholesalers screwing their trade customers by selling direct can kill a trade
the internet has made it simple to cut out the middle-man, but it's not always the best thing for customers (even if they do save a couple quid)
in retail, some customers do seem baffled with the concept of buying a thing and selling it for profit. some will say "but I saw this being sold online for £x?". to which I'd like to ask them if they have a job, and if that job gives them money, and if they would stand here and listen to idiotic comments from a customer like themselves for free?
... but it's a minor greivance. most are respectful, and it's on you to add value to the customer experience to justify your price-point and success
If a wholesaler sees opportunity for more profit why should they not take it?
Yes it's annoying. I daresay wholesalers get annoyed at those of us who contract with manufacturers to import goods directly. Cutting the wholesalers out.
The world is different than it was 50 years ago.
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With low cost items you see on EBay many are with a free 3 week delivery from the far east, so it gives quite a lot of flexibility to change a much larger price by UK companies supplying a next day service, you can even buy from them and resell at the higher price with the quicker delivery
This may well be what D is doing
This may well be what D is doing
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No, 50% higher than someone selling from London.
I prefer going for profit rather than turnover. For one thing its a lot less time for the same money.
There will always be a portion of customers who want to buy cheap. Those are not the customers my business targets.
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H
HostOX
I agree, easy business and easy 50% margins even still - Can buy 100ml wholesale for £5 to £8 a bottle and sell for £20 with nic shots.
Kind of a crazy business, but people are killing profits fighting on price.
Selling online is easy as you say too, just the postage aspect.
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Don't get me wrong, I'd be doing exactly what they are doing if I was in their shoes.
The technology and marketing tools at our fingertips make it a no-brainer to cut out as many middle men as possible. A bit annoying for the little guy stuck in his ways, but industry must adapt.
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These days we can all, if we so choose, order in bulk from China.
One of my suppliers started as a retailer and then moved on to ordering in bulk, supplying wholesale what she cannot shift herself.
What she would buy at 70p as a retailer she buys at 10p including all costs of importing the stuff. As a wholesaler she has additional costs but makes a lot more money, as a retailer she is selling at £3 what she is paying 10p for. While those buying from her are also selling around £3 and think they are making decent profit.
Best of all worlds for her business.
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If you are buying one branch from a chain, be very wary with their accounts.
Check supplier prices that would apply to you as a stand alone business - Their deal buying for a chain of shops may be much better than yours.
You will have one set of fixed costs to consider for one shop, whereas their fixed costs can be spread across all their stores - not that you should be bothering too much with fixed costs when examining their accounts. Work out your own figures.
£110k turnover looks fairly low to build a sustainable earning business.... and grill them hard on why are they selling this particular branch?
Check supplier prices that would apply to you as a stand alone business - Their deal buying for a chain of shops may be much better than yours.
You will have one set of fixed costs to consider for one shop, whereas their fixed costs can be spread across all their stores - not that you should be bothering too much with fixed costs when examining their accounts. Work out your own figures.
£110k turnover looks fairly low to build a sustainable earning business.... and grill them hard on why are they selling this particular branch?
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1. What experience do you have in the business you are proposing to buy?
2. Have you researched suppliers, prices, trends?
3. How will you grow the current business?
4. What does the offered selling price include?
5. Check the current lease and ALL it's provisions. There may be a rent review. The current lease holder may not be able to sub-let. The landlord may not want you as a tennant. A lease is a liability.
6. If you do decide to go ahead, make sure you have a solicitor check everything.and ensure the seller will not be competing with you in the same area.
7. Given you said they have 15 shops and opening a new one in London, seems they are getting rid of the site which has least turnover and profit.
8. Unless the shop is in a fantastic position with a low rent (both doubtful), I would walk away.
9. Start your business online and only think about a B&M store if you feel it's required and you can manage it financially & have the manpower.
10. Research ALL aspects of the business you want to get involved with. This can take 6 - 12 months. (Minimum)
Good luck.
2. Have you researched suppliers, prices, trends?
3. How will you grow the current business?
4. What does the offered selling price include?
5. Check the current lease and ALL it's provisions. There may be a rent review. The current lease holder may not be able to sub-let. The landlord may not want you as a tennant. A lease is a liability.
6. If you do decide to go ahead, make sure you have a solicitor check everything.and ensure the seller will not be competing with you in the same area.
7. Given you said they have 15 shops and opening a new one in London, seems they are getting rid of the site which has least turnover and profit.
8. Unless the shop is in a fantastic position with a low rent (both doubtful), I would walk away.
9. Start your business online and only think about a B&M store if you feel it's required and you can manage it financially & have the manpower.
10. Research ALL aspects of the business you want to get involved with. This can take 6 - 12 months. (Minimum)
Good luck.
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