Curious about local business

[Annoying Twit]

A local florist is up for sale. With the asking price and the quoted gross profit (yes, I am worried about that not being net profit) it superficially looks like a good investment.

Where could I find more information about running a business? Is it plausible that a shop can be run profitably with a full time employed manager, or does it require an owner to be working full time to make the numbers work out? I have a well paid job, and would not want to quit my job to run a shop full time.

The florist piqued my interest, so I've looked around at other businesses. Some of the convenience stores in particular seem to have unbelievable net profit claims, with the initial asking price sometimes being similar to the claimed net profit. This triggers my personal BS filter.

However, I'd like to look into this further? Where can I get more information?

 

[fisicx]

Ask to see the books.

Or sit outside the shop for a day and see how many people come out with flowers and work out the profit: https://uk.finance.yahoo.com/news/the-real-cost-of…-a-bunch-of-flowers-150226216.html

 

[Annoying Twit]

Thank you very much. The business is probably about 300-400m from where I live. I'm used to seeing the business, but observing it over time such as a whole day would certainly give me a better view of the business. A florist is going to have peak times (e.g. Valentines day, Mother's day) and interaction with online sellers for local delivery may be interesting as well. The small block of shops where the florist is have struggled. There was a convenience store which closed, stayed shut, reopened briefly, and then closed again. Another shop next door has become a tattoo parlour.

In terms of seeing the books, how likely is it that the books will give an accurate view. I don't want to appear cynical, but I'd be investing a lot of money on the basis of accounts created by someone who wants to sell the store. I've already worked out that profitability has a big influence on valuation of the business. Even without anything tricky in the accounting, there could be things to watch for, e.g. if necessary equipment is reaching the end of its useful life, then profitability in a year when nothing needed to be replaced may not be the average profitability over a longer time.

There is also the potential that someone inside the industry may have a good idea of the bigger picture and how the industry/market is moving. That while the shop may be profitable now, something that insiders can see coming may mean that it's a good time to get out. While I as an outsider may not be able to see that.

There was a specialist cooking (etc.) equipment shop in my city that was closing down. A couple for whom it was their favourite shop bought the shop to keep it going. Though, I notice that over the years it moved, and then morphed into a coffee shop/cafe, while the original shop became a very specialist health food supply shop. (I have no idea what happened concerning ownership of these shops after the publicised purchase).

While the florists piqued my interest, there seem to be a lot of businesses for sale of different types, locations, and asking prices. There seems to be quite a few opportunities for starting business, not just the florists.

BTW: A lot of what I write here may seem negative. One personal flaw is that I can be overly optimistic about things. So, when faced with something to think about, I often deliberately start listing and considering the downsides, so that I can get a realistic view of any opportunity.

 

[MOIC]

I would never advise opening a shop unless you are going to have a hands on approach, initially at the beginning.

If you have little or no experience in the product you are selling, it will count as a huge negative.

What involvement does the current owner have with running the shop, including buying and administration?

Your second paragraph and the questions you raise is worrying if you are serious about opening a shop.

My advice is to do one or the other, if you want to create a successful business. (A full time employed manager does not constitute running a successful business......................managers come and go).

Wish you luck in what you decide to do.

 

[HazelC]

I agree, I personally feel you need to have an interest in what you do to be able to do it. It's that passion that gets you up in the morning when you may earn minimal money, it's the love that keeps you doing it when it's like a rollercoaster and it's that interest that makes you drive to make it bigger and better.

 

[mhall]

My first business was a florist and I can honestly say you need to be there. Your profit is mainly reliant on your ability to control the waste whilst keeping the shop looking fantastic. A manager will rarely have the best interests of your business at heart and, if they are any good, could easily make plans to start their own business and leave you in the lurch.

 

[kingblinguk]

Starting any business needs time and patience, if you can't give full time, you can't expect great results. Whatever your business is, you need to have interest and passion for it. That in turn brings the driving force.

 

[Stuart Bailey]

speak to your accountant

 

[John_Adams]

With some experience with floristry - I would have a good look at the operations. It isn't a simple thing; buying stock, waste, those crazy peak periods and the fact that flowers have a short shelf-life and are sent for very emotional reason, and have to arrive on a specific day (if delivery is being involved) make it a complex business to run.