Hello,

I am a cashier at a liquor store in Los Angeles area, the store owner is thinking of selling the store, I want to make him an offer but have no idea how much, would appreciate any help.

I have an estimate of the financials for the past 3 years (2010-2013) from the seller.
The total liquor sales were $1,400,833
Cost of liquor $1,081,190
That leaves a profit of $319,643

The store sales lottery and water.
Lottery commission were $55,664
Water sales $108,000

So total profit for 3 years is $483,307
Total expense $379,098 (rent, electricity, insurance, license fees and part time employee wage).

That leaves $104,209 or about $3000 per month for the owner.

Based on the info how much is the business worth, how much should I offer.

First you are using some wrong terms, of total sales is 2, and cost of goods is 1, there profit is not 1. so do not start using that word for that, all you have there is gross sales and net sales.

Profit is taken after all the costs of rent, electric and others are taken out.

Next you have forgotten about taxes, of that 3000 each month you will be paying about 900 or so in income taxes and self employment taxes.

so you may have about 2000 or so left each month to leave on.

This is a very low profit liquor store, the profit on sales should really be closer to 50 percent of gross, This is not much more than 10 to 12 percent profit.

So the business is a very poor income. So it has very little value.

The value would be for purchase, any stock on shelf,and the value of the selves and office items. That is about it. I would not see the value of paying for any "business" since you could be just as well renting a new space, getting your own license, and starting a new one.

If you truly want to buy, you have the owner show you his financials for the past three years. Not just an estimate. And a reasonable offer, is the profit for 2-3 years.

Check with sba.gov or score.org for more opinions on this.

Thank you for the reply and correct terminology.

The reason store is not doing well is because of empty shelves, since I am working at the store, I know all the customers and I feel I can turn around the store.

Based on the info what would be a reasonable offer? Most sites suggest 2.5 to 3 times the profit.

Since I am the cashier and owner if I buy the store should I subtract track wage from net or not?

Shimi

It would depend on the type of business entity this is. If you are a sole proprietorship you are not an employee of the business. You would make withdrawals from your Capital account to pay yourself. Your capital account will include your investments into the business and net income that is retained by your business minus cash withdrawals you take from the business.