Choosing to invest in a small business is an important decision and many prefer to buy an existing business because of the tremendous opportunity available. While buying an existing business can seem like an easier endeavor than starting from the ground up, there are considerations to keep in mind.
For example, not all industries are the same. Liquor stores are famously risky enterprises to take on, but those who educate themselves about this decision are able to buy with confidence.
If you are considering buying a liquor store, here are three things you need to know.
Choose your location wisely
You may imagine that finding a customer base for a liquor store will be completely effortless. After all, liquor and alcohol are commonly part of both our daily lives and for our special celebrations. However, just because there is a booming market for liquor doesn’t mean a store will be a success.
Research the area of the store you are contemplating; you want to find a neighborhood without too many other liquor stores. A good location includes a dense population (such as near a college campus or apartment complex) and is surrounded by other successful businesses to make sure you get foot traffic.
Examine the business records of the previous owner
You might have your eye on a liquor store that you’ve been familiar with for a long time. Maybe you’ve observed that it gets a lot of customers and always seems to be busy, or perhaps you are impressed by the work the owner does to maintain the property. Just because a business looks successful from the outside doesn’t necessarily mean that it is turning a profit.
It is imperative that you examine the books for the business. If the current owner has been failing to make a profit, it is unlikely that you will manage to turn things around. Don’t fall into the trap of assuming you will be vastly more successful than the current management. If a store is not turning a profit, it’s time to move on.
Learn the ins and outs of liquor licensing
Obtaining a liquor license is notably more difficult than obtaining many other types of business licenses. The process of getting one is often costly and complicated, and failure to follow proper procedure can sink your store before you even get started.
Whether you are considering buying a liquor store as a first time business owner or to add to an existing portfolio of small businesses, we can help educate you about the process. Contact us to speak to one of our experienced business brokers today about how you can buy with confidence.