- Original Poster
- #1
Hi all,
I'm new to the forum (though I've been lurking for a while, and finding many of the threads here really helpful) and I want to ask for some views/advice.
We're looking seriously at buying a going concern, a bricks-and-mortar business in the upmarket food sector (not strictly a deli, but close enough). It's a business that's been running for over a decade, well known in the area, and that we've known as occasional customers and at one point as suppliers for most of the time it has been in existence.
It's got a prime position in a thriving market town, where there is a high level of footfall both from locals and a strong tourist industry that operates virtually all year round. The nearest direct competition is in a village about fifteen minutes drive away, and is a much larger store that itself draws customers into the area (many of whom then come into the town and even to the shop we're looking at - that's what I call healthy competition
).
It's in a leasehold lock-up unit; the lease comes up for renewal in 2015, and at the moment is a sub-let from another leaseholder - there will be the opportunity to either continue on that basis or to take on a separate lease at the renewal date.
The owners have stated that the business has never made a loss, though its clear from the paperwork we've seen so far that things got pretty tight over the last few years, not surprisingly. The latest figures show a reasonable profit for the last trading year, and our accountant is on the case to check out the full story.
At the moment the business is run by the two owners with occasional part-time staff; we would plan to run it with one of us working in in the business - but more crucially ON the business - full time, with more regular part-time staff. The owners appear to be selling in order to semi-retire abroad (and I suspect it was always part of their plan to sell the business at around the ten year mark but they probably had to hold on longer than intended thanks to the recession).
The shop could do with a refresh on its design and branding, but otherwise it appears stable, and sustainable - it certainly doesn't feel as though it's down on its luck or struggling, and it appears to have a loyal core customer base.
There is a website, but no real online business as such - the website's not great, and this is clearly an area that we could make some improvements. We're told it gets a high hit rate and huge traffic in the run up to Christmas, but it's poorly designed, not kept up to date on stock, and although there is a facility for on-line shopping it is not an attractive proposition and the owners have done nothing to maximise trade through it. They say that most people look at the website and then come into the shop, but we think there are opportunities to capture trade that is currently being missed.
There is also, we think, an opportunity to expand the business to other suitable locations, probably up to a chain of two or three stores.
So, so far so good.
BUT - what I'd like from you guys is this: can someone please play devil's advocate and point out everything that could possibly go wrong? We are by nature optimistic and positive people, who tend to assume that we can make a go of whatever we turn our hands to (and usually do) - and this will be a big investment for us, and we really need to test our thinking. Please fire away - we need to make sure we've thought of everything
Also, does anyone here have experience of expanding from one successful shop into a chain? Would be good to hear about all the pitfalls and beartraps before we commit ourselves to anything!
Many thanks
I'm new to the forum (though I've been lurking for a while, and finding many of the threads here really helpful) and I want to ask for some views/advice.
We're looking seriously at buying a going concern, a bricks-and-mortar business in the upmarket food sector (not strictly a deli, but close enough). It's a business that's been running for over a decade, well known in the area, and that we've known as occasional customers and at one point as suppliers for most of the time it has been in existence.
It's got a prime position in a thriving market town, where there is a high level of footfall both from locals and a strong tourist industry that operates virtually all year round. The nearest direct competition is in a village about fifteen minutes drive away, and is a much larger store that itself draws customers into the area (many of whom then come into the town and even to the shop we're looking at - that's what I call healthy competition
).It's in a leasehold lock-up unit; the lease comes up for renewal in 2015, and at the moment is a sub-let from another leaseholder - there will be the opportunity to either continue on that basis or to take on a separate lease at the renewal date.
The owners have stated that the business has never made a loss, though its clear from the paperwork we've seen so far that things got pretty tight over the last few years, not surprisingly. The latest figures show a reasonable profit for the last trading year, and our accountant is on the case to check out the full story.
At the moment the business is run by the two owners with occasional part-time staff; we would plan to run it with one of us working in in the business - but more crucially ON the business - full time, with more regular part-time staff. The owners appear to be selling in order to semi-retire abroad (and I suspect it was always part of their plan to sell the business at around the ten year mark but they probably had to hold on longer than intended thanks to the recession).
The shop could do with a refresh on its design and branding, but otherwise it appears stable, and sustainable - it certainly doesn't feel as though it's down on its luck or struggling, and it appears to have a loyal core customer base.
There is a website, but no real online business as such - the website's not great, and this is clearly an area that we could make some improvements. We're told it gets a high hit rate and huge traffic in the run up to Christmas, but it's poorly designed, not kept up to date on stock, and although there is a facility for on-line shopping it is not an attractive proposition and the owners have done nothing to maximise trade through it. They say that most people look at the website and then come into the shop, but we think there are opportunities to capture trade that is currently being missed.
There is also, we think, an opportunity to expand the business to other suitable locations, probably up to a chain of two or three stores.
So, so far so good.
BUT - what I'd like from you guys is this: can someone please play devil's advocate and point out everything that could possibly go wrong? We are by nature optimistic and positive people, who tend to assume that we can make a go of whatever we turn our hands to (and usually do) - and this will be a big investment for us, and we really need to test our thinking. Please fire away - we need to make sure we've thought of everything
Also, does anyone here have experience of expanding from one successful shop into a chain? Would be good to hear about all the pitfalls and beartraps before we commit ourselves to anything!
Many thanks
).
