Wedding boutique advice please..

[Mon]

Hi All, I have recently come across an opportunity to purchase a small wedding boutique business. It's a dress agency (wedding & prom dresses) and the lady who runs it also sells a small selection of accessories (shoes, bags, hats, etc). She has run the business for around 5 years and is now ready to retire thus looking for a buyer.

So far I have been provided with a couple of financial statements for 2013 & 2014, which show a profit of around 10K per annum. I have been informed the profits for last year haven't been very good as she was preoccupied with personal troubles and therefore didn't put much time into the business. The boutique is located in a good spot in high street, but doesn't have any online presence (no website, no social media activity). I think with the right online marketing it might potentially grow and start generate better profits, but would be grateful for some opinions from people who are already involved in a similar kind of venture, please... Many thanks in advance!

 

[MikeJ]

Is that £10k with or without her taking a salary? What is the deal on the property - leasehold/freehold/terms, etc?

 

[suitontherun]

starting point for you Mon:

Is there anything that her business has that you couldn't copy/create yourself?

From what I know wedding supplies business is very much about the person running it, their connections and ability to market themselves (you aren't buying that!). Doesn't sound like the kind of business you should buy! Perhaps better to wait for her to close and then pick up the lease to her premises although doubt exact location is key so may not be worth it. Hardly passing trade you are looking to attract.....

 

[Mark T Jones]

With only 2014 figures to rely on what you are buying us the lease on A shop and stock, unless there are clear. Demonstrable income streams or strong introductory sources.

Value the business on that basis and stick with it!

 

[Mon]

Many thanks everyone for your replies. The only financial details I have been given so far are as follows:

31st March 2013 – £4,636 (loss)

5th April 2014 - £10,373 (net profit) - the accounts document only mentions expenditure and profits, but no salary, thus I assume this is before her salary.

Asking price for the business - £10,600 (this was apparently reduced from 20k in recent past)

She currently has over 100 dresses in stock, however technically they don't belong to her as she only sells them on behalf of her clients and receives 45% commission per sale. Her own stock includes some jewellery and shoes, which she said would retail at around £2,500.

In regards to the property, it's a lease (£7,500 pa) and she has 4 more years on it.

I've been told the business has been on the market for 2 years and she said she'd had one serious buyer in the past, but unfortunately due to poor health the lady had to pull out. Other people apparently want bigger premises (this shop is very much on the small size).

What's attracted me to this venture is how it could be developed with the right marketing strategy (website, eCommerce, social media). The current owner only advertises at the local dry cleaners and occasionally does wedding shows. She also said the business has a good potential with prom dresses and she has started contacting some schools of recent. I was also thinking of introducing a wider range of accessories and possibly partnering up with wedding organisers / cake makers / etc whom I could pass enquiries to from my customers for a small commission (just an idea).

I don't mind taking risks, but I'm currently expecting a baby, so feeling a little cautious about spending the only savings I have on a venture that may be in some way flawed or very difficult if not impossible to develop into something sustainable.

Many thanks again for all words of advice, it's much appreciated!

 

[deniser]

I don't mind taking risks, but I'm currently expecting a baby

It would be very brave to take on a business when you are about to have a baby. Have you thought this through properly?

 

[Mon]

It would be very brave to take on a business when you are about to have a baby. Have you thought this through properly?

With all due respect deniser, the only advice I have asked for was people's views upon the feasibility of the business based on the financial information I have provided without questioning my thinking behind wanting to take on a business at this moment in time, but thank you nonetheless for your input.

 

[simon field]

Why mention having a baby?

 

[MOIC]

Profits stated make this business not worth buying.

What experience do you have in this field as well as running this type of business.

A baby on the way is a big factor, irrespective of whether you want people to comment on it. The fact you raised it, makes it a factor, especially when running a business.

Good luck with your decision.

 

[Mon]

Why mention having a baby?

Simon, the answer to your question is very clearly stated in my second posting - I am concerned about the feasibility of the business and potential financial losses, which would have been majorly undesirable, especially now when I am expecting a baby. However nowhere in my posts have I mentioned needing advice in regards to whether or not I should take on a business (any business for that matter) whilst expecting a baby, as this I believe is purely my decision.

Thank you for your comment, though I was hoping for somewhat more relevant answers on what appears to be a professional forum, which unfortunately in my view is being let down by those posting somewhat purportless messages.

Many thanks however to all those who have understood my question and replied with helpful answers. It's much appreciated.

 

[Mark T Jones]

g - I am concerned about the feasibility of the business and potential financial losses, which would have been majorly undesirable, especially now when I am expecting a baby.
T.

So is it relevant or isn't it - I'm deeply confused

 

[deniser]

With all due respect deniser, the only advice I have asked for was people's views upon the feasibility of the business based on the financial information I have provided without questioning my thinking behind wanting to take on a business at this moment in time, but thank you nonetheless for your input.

I'm sorry that you have responded in such a hostile way. I am in the wedding industry and have children so have some experience which would have been useful to you.

Whether the business is viable depends very much on what you need to get out of it ie:
1. you have other sources of income and this is a hobby business or
2. you need to create a wage for yourself and have childcare organised for free or
3. you need to create a wage for yourself as well as covering childcare costs or
4. you don't intend to work in the boutique at all but hope to employ staff

 

[woodss]

This just immediately screams "bad idea" to me.

Small shop with large lease for 4 more years
You'll need to pay a decent amount of cash for a GOOD website, not £50 on Wix
Only 10k profit for one year before you take a salary, but no track record since "due to ill health"
Doesn't own much stock
Doesn't have much of a customer base
Everything is "potential" this "potential" that. So is bankruptcy.

On what basis is she claiming its worth 10 grand? I don't see it.

 

[Mon]

This just immediately screams "bad idea" to me.

Small shop with large lease for 4 more years
You'll need to pay a decent amount of cash for a GOOD website, not £50 on Wix
Only 10k profit for one year before you take a salary, but no track record since "due to ill health"
Doesn't own much stock
Doesn't have much of a customer base
Everything is "potential" this "potential" that. So is bankruptcy.

On what basis is she claiming its worth 10 grand? I don't see it.

Thank you very much for your post and truly constructive observations, which is exactly what I was after! The points you mention are very much the concerns I have had right from the start. Whilst I have a lot of ideas for improving the shop's current offering (I have considerable experience in marketing and also good contacts with European suppliers of high quality, unique, and competitively priced wedding accessories), I am concerned about the long lease and no solid financial track record for the first two and the last year of the business.

I still believe with the right marketing strategy and some innovative ideas in regards to introducing a more interesting line of products (alongside wedding dresses), this business might have a good 'potential', but I too am finding it difficult to justify the current asking price of 10K.

Many thanks again for your valuable input. It's much appreciated

 

[Chris Ashdown]

Are the stock items sale or return for the ones not owned and how upto date is this stock, brides do seem to want next years dress rather than last years although their future husbands will probably not know the difference

If it all went bottoms up after a year you still have £22,500 to pay in rent plus building insurance and any repairs the lease may require, (which can be very expensive on some leases especially if not checked over by a lawyer when signed)

Try and go to a large wedding trade show and see if anyone would supply dresses to you as a startup, you also need a good person for alterations etc and a very presentable shop

Work out if buying or startup works better for you but based upon stock at valuation on what she owns that is still in fashion and nothing for any loaned dresses

 

[Mon]

I'm sorry that you have responded in such a hostile way. I am in the wedding industry and have children so have some experience which would have been useful to you.

Whether the business is viable depends very much on what you need to get out of it ie:
1. you have other sources of income and this is a hobby business or
2. you need to create a wage for yourself and have childcare organised for free or
3. you need to create a wage for yourself as well as covering childcare costs or
4. you don't intend to work in the boutique at all but hope to employ staff

Dear Deniser, I am sorry you have perceived my comment as hostile, as I believe it was nothing but adequate to the tone of your posting. Whilst I appreciate and welcome comments regarding the viability of this business based purely on the financial aspects provided, I didn't require suggestions / advice for me to 'think things through properly', as with all due respect this type of 'recommendation' may come across somewhat patronising and thus not only unhelpful, but completely uncalled for. I also assumed people would understand that by 'feasible' I didn't mean a business which I need to fund working elsewhere and having other sources of income, however I do apologise if I failed to communicate that clearly enough. Thus in answer to your questions:

1. I do not intend to have other sources of income to sponsor the boutique venture.
2. I would like for the boutique to generate enough money to pay overheads & my wage; I don't need to pay for childcare.
3. As above
4. I intend to work in the shop myself with my husband covering some of the days; no I don't intend to employ staff.

I hope this gives you a better overview of my intentions for the business and my expectations from it. Many thanks again for your input and best of luck with your retail endeavours.

 

[deniser]

as with all due respect this type of 'recommendation' may come across somewhat patronising and thus not only unhelpful, but completely uncalled for.

I apologise if I came across as patronising. It wasn't my intention at all.

 

[Chris Ashdown]

With quite long sales talk to customers you will have to think if alone on how you deal with any second person who walks in whilst you are dealing with another customer, Options may include appointments only or a sales assistant,Appointments may seem a easy answer but does to a extent negate the reason for a shop

 

[The Byre]

This just immediately screams "bad idea" to me.

Small shop with large lease for 4 more years
You'll need to pay a decent amount of cash for a GOOD website, not £50 on Wix
Only 10k profit for one year before you take a salary, but no track record since "due to ill health"
Doesn't own much stock
Doesn't have much of a customer base
Everything is "potential" this "potential" that. So is bankruptcy.

On what basis is she claiming its worth 10 grand? I don't see it.

This! And in spades!

So she's got a pile of used wedding dresses that actually don't belong to her, a pokey little shop and she has been running the business into the ground.

It is one of those businesses that I would pay good money to NOT own!

 

[Neil C-W]

Hi Mon,

Just a suggestion - could you just buy the stock that she owns at cost price and take over the selling of the clients' stock with the clients' permission of course instead of buying the business? That way you are not tied into a lease agreement and your exposure to risk is greatly reduced. You can then chose where to trade from whether that be online or offline or both and market your own brand how you see fit.

It sounds to me like the business is worthless apart from the stock.

 

[Paul Norman]

Based on the very small amount of information available, you need to assume that you will receive zero remuneration from this business in the first year. In contrast, it will require investment to get it going.

The issue for you, therefore, hinges initially on this question.

Do you need an income from this business in year one? If the answer is yes, you have to walk away from this.

The second question is this. Do you have access for funding to invest in getting the business going?

Again, if the answer is no, you have to walk away.

 

[Root 66 Woodshop]

Most people know that I say it as I see it... but with Mon, I'll refrain a tad and hold back...

Attitude - stinks - Sorry, but it does...you've come onto a business forum - asked for some help, two people have asked simple questions - which are in fact relevant to your situation and you've jumped straight on the high horse and become all hoity toity for absolutely no reason at all...

Firstly, Deniser asks if you've thought it through - as you clearly haven't considering you're already questioning your thought process by actually posting the fact that you're expecting - as she's replied with her answer to your hoitiness (is that even a word! ) and you've attempted to smooth things over once she's given you vital information i.e. she could have been a great contact for you... you then reply with a condescending tone about how you assumed this, assumed that... blah blah blah...

Simon asked why mention the baby - seriously, if you being pregnant was not an issue for you... then there really was no need to mention it... it's not a factor in your business... according to you... but again, hoity toity attitude for no reason at all.

Perhaps it's the hormones as a pregnant woman's emotions can be quite up and down - some even say spinning in circles... but hey ho it's not a factor in your case...

So in answer to your question... Yes it's a feasible business - Yes it's a possible risk... but No... you shouldn't take on the business, because you appear to have no people skills...

The first time another woman asks for your opinion on a dress she's trying on could be fatal to your business with the attitude that you've shown here... I can almost hear the answer...

Yes, it looks great because it's my dress but on you? Really?...

Take this as you will, personally I couldn't give a toss as I'm done with wedding dresses... none of them fitted me perfectly, my thighs were far too large for the garter belts and the thongs didnae half give me a bad rash.... The tiara was far too small and the handbag didn't match my tights... but overall I had a lovely day for the third time lucky.

 

[The Byre]

Take this as you will, personally I couldn't give a toss as I'm done with wedding dresses... none of them fitted me perfectly, my thighs were far too large for the garter belts and the thongs didnae half give me a bad rash.... The tiara was far too small and the handbag didn't match my tights... but overall I had a lovely day for the third time lucky.

We had a bloke like that in the Parachute Regiment!

 

[Root 66 Woodshop]

It wasn't me Honest!

Actually, at one of the companies that I use to work for years ago, there was a lovely lovely chap called Bob - who every friday night would go out to his local... with a bright red hand bag... he was a bruiser of a chap but quiet and polite really nice fella as it goes... just looked really really odd with his red hand bag!

 

[Caz33]

HI am interested to know if you bought the business and how is it going? you have some strong comments on your post.