Should I buy a local stained glass supply store?

Moon is very cynical, and Andy is a by the book guy. Both are right in a way. I hate to be disrespectful to my fellow posters here, but most of those figures are meaningless. I'll tell you why. This is a bigtime cash cow, like most retail businesses. I'm sure Andy & Moon report every dollar to the state sales tax, and pay the required income tax as well. You simply cannot always put a pencil to realworld figures, and find out what's going on. Based on what you're telling me, their asking price is reasonable, but still not what you're going to offer. Here's how you should look at it. How much will they raise without selling the business to you, by selling off as much of their inventory as they can at say 60% off retail? My guess is that they'd be lucky to sell off 75% of it and that may take months. That will be your real inventory figure to offer, because that's what it's worth TO THEM. What's the breakdown of the $110,000 expenses? $10,000/month? Sounds high to me, but could indicate healthy sales. What's the lease look like? Utilities? Foot traffic? Finally what would it cost you to open up a new store across the street by yourself? When you look at buying an existing business, isn't that the real criteria? How much will you pay for the luxury of having alot of the stuff already done for you?

I'm sure it's difficult to for you to differentiate between "reality" (been there-done that) and "cynicism". I'm not a cynic...I'm a realist.

Almost 22 years ago, in an entirely different industry, I bought a retail business. I plunked down $280K of MY cash money to buy this operation which had reported sales of over $1.2MM. My friends in the industry all advised me to not do this, but all I saw was the big cash flow. And unfortunately, I made a major league bad investment. The seller had cooked the books, faked printouts on sales, didn't disclose real estate lease obligations of the company in their entirety, and several other things that, if not illegal, were certainly unethical. By the time I got that swamp drained, I was upside down not only in the business I bought, it dragged the other 2 businesses I had down with it. The swamp was infested with alligators, and looking at the "cash flow" ended up costing me almost $750K before I got rid of the problems. It took me years to dig my way out of that hole.

As President Reagan once said about the Russians..."Sure, I trust what they say. But I'm going to verify it."

I'm certainly PRO- entrepreneurship. I just don't want to see that young lady get toasted like I did.

WOW... Where did you get $280k, 22 years ago Moon? That's alot of cabbage for 1984. Well now I can see where your cynicism comes from. I once had a girl break my heart, but I soon found another one that did the same thing.... eventually I found one that stuck. I didn't swear off girls. Buying a little retail business is hardly like the major gamble you made 22 years ago. She'll invest a few bucks in an ongoing business, and after a year, she'll either love it, or bail out and sell it to someone else with a dream. Either way she won't get burned in a major way like you did. She going to basically buy the inventory plus a few bucks. This my opinion fashioned from my experience. It's up to her now to take all she's heard and act on it.

Wow, didn't mean to start a huge argument here. Thank you Moon for looking out for my financial interests (chivalry is not dead!). I too am a pratical, realistic person and the points you bring up are certainly valid and must be considered carefully. I certainly can't afford to get into the trouble you had. And anyone who quotes Reagan can't be all bad :).

Thanks also to Glassman for the encouragement to dream a little and to act on the dreams. I need to keep that in mind too whatever I decide to do.

Cathy

Kim,

Believe me, I'm not by the book....and of course I report all my earnings...don't we all! :-)

What I'm saying is that...this may well be a good business to buy and could provide a decent income however...the buyer needs to get all the information she can and getting professional opinons from folks from SCORE or SBA and the like is a good path to walk. If this store is grossing $250K or more, then expenses of $110K may not be that out of line. If gross sales are only $160K, for example, and they have employees...then they are hardly making any money unless one of the owners has an outside job.

Andy

Glassman wrote:

Just wanted to thank everybody again for their input, especially those that gave detailed and specific advice. I'm going to keep a printout of it in case I'm ever in the position of considering a purchase again. I went by the store today and casually asked if they had gotten any response from the notice yet. They said several people had responded and it is now under contract already. I'm okay with this. I had already pretty much decided that it probably was not going to be right for me at this time. In the future, who knows? Maybe I'll win the lottery and buy out the new owner :)

Cathy

Keep an eye on it over the years, and you can either pat yourself on the back, or kick yourself in the butt! Hey my shop's for sale Cathy!

Methinks you just "did" win the lottery. Sometimes the best deals are the ones we don't make.

Northern suburb of Chicago.

Wow, I'm in the western suburbs of Chicago, ...and this has been one of the best threads I've ever read in this newsgroup. As a late contribution, I will say that I think that to survive in the retail stained glass business in our suburban area these days, you have to offer extras. Primarily classes and supplies, etc. That opinion was pretty much given to me by the owners of the very few, stable, SG retailers that have survived the economy of the last few years.

Their time is numbered as well.....