4 ms·

> The cost: $300k, plus the cost of inventory (~$100k) and a 0.5% cut to the store’s previous owners for the next 10 years — in total, less than ~$500k. Who kn

> The cost: $300k, plus the cost of inventory (~$100k) and a 0.5% cut to the store’s previous owners for the next 10 years — in total, less than ~$500k. Who knows more about grocery retail, and can say: What makes buying an existing store like this preferable to just starting a new store, and avoiding the $300K and 0.5% cut for 10 years?

kadoban 4y ago
It's already built, and the location is presumably decent. How much cash and time would it take to build a new one?
rdsnsca 4y ago
Likey it is the lack of retail space to build one.
avianlyric 4y ago
Think the same reason you buy any working business. The previous owner has managed to solve a great number of non-obvious operational problems. To name a few that come to mind: * Established supply chain - Working agreements with suppliers (no need to find and negotiate suppliers) - Working logistics. Scheduling of supplies is sorted, you have reliable delivery slots with all supplies * Employees. No need to find and train labour. * Working pay roll, accounting, taxes. No need to create that infrastructure from scratch. * Know good business model, with auditable accounts. You substantially de-risk the investment, because you have meaningful historical data to estimate future performance from. * Physical infrastructure already setup. No need to find a building, buy equipment (shelves, tills etc) and setup equipment. * Business generates revenue for new owner immediately after purchase. No time needed to solve all of the above problems, instead time can be used to grow or stabilise business.
- adammarples 4y ago
  Owning the only grocery store in town doesn't sound like a risky business model compared to the existing and apparently de-risked "only grocery store in town" business model you'd be paying for.
  - chordalkeyboard 4y ago
    you'd still have to set up the grocery store instead of begin to make money immediately
- jrochkind1 4y ago
  I normally think of the existing customer base and "brand" as the main asset, which isn't much of an asset here. But I don't have experience managing retail business, and what you say makes sense, thanks!

kadoban 4y ago

It's already built, and the location is presumably decent. How much cash and time would it take to build a new one?

rdsnsca 4y ago

Likey it is the lack of retail space to build one.

avianlyric 4y ago

Think the same reason you buy any working business. The previous owner has managed to solve a great number of non-obvious operational problems. To name a few that come to mind: * Established supply chain - Working agreements with suppliers (no need to find and negotiate suppliers) - Working logistics. Scheduling of supplies is sorted, you have reliable delivery slots with all supplies * Employees. No need to find and train labour. * Working pay roll, accounting, taxes. No need to create that infrastructure from scratch. * Know good business model, with auditable accounts. You substantially de-risk the investment, because you have meaningful historical data to estimate future performance from. * Physical infrastructure already setup. No need to find a building, buy equipment (shelves, tills etc) and setup equipment. * Business generates revenue for new owner immediately after purchase. No time needed to solve all of the above problems, instead time can be used to grow or stabilise business.

adammarples 4y ago
Owning the only grocery store in town doesn't sound like a risky business model compared to the existing and apparently de-risked "only grocery store in town" business model you'd be paying for.
- chordalkeyboard 4y ago
  you'd still have to set up the grocery store instead of begin to make money immediately
jrochkind1 4y ago
I normally think of the existing customer base and "brand" as the main asset, which isn't much of an asset here. But I don't have experience managing retail business, and what you say makes sense, thanks!