I am looking at purchasing an existing Resale Shop which has only been in business 1 1/2 years. How do I evaluate its value? They are asking $55,000. I am trying to figure out what to offer them. I know looking at their financials is a first.

Hello consignment person:

Well, it's not to hard really. It doesn't matter how long they've been in business. What matters is, do they MAKE MONEY. If they don't, and they probably DON'T, then all you'll be buying is some used dress racks, shelves and display cases, and they may even throw in some used dresses too.

Believe me, used dress racks ain't worth much. And, didn't they get the dresses for free??

IF, however, they ARE making money, I'd pay them no more than the amount they personally took home last year. Hopefully, they'll throw in the used crap for free.

excon

Yes, part of the issues is what is their cost, and profit, also are you getting the building, or just the inventory. If so, your cost would be the wholesale value normally less than 1/2 of retail value at most.

If you are not buying the property what is the rent, is it a lease, for how long, are you buying the lease. What is the cost of daily operation, help electric rent and so on.

But yes, often one looks at last years profit as a guide