Many who are opening a dollar store for the first time begin to understand just what a test they have decided to take. First all of the major decisions, such as how much funding will be required and where they are going to obtain that all important funding, need to be answered. Next comes creating a plan for the dollar store business. And then there is finding the perfect location. And of course there is a mountain of small details to handle such as getting the utilities started in your business name, coming up with sources for store fixtures and suppliers for the merchandise to be offered. The endless list associated with the start up just keeps going. And that is just to prepare and initially open the business.
Next when opening a dollar store comes the tasks required to keep your new business operating as it should be. These include buying products, merchandising, staffing and staff management, customer service and so much more. It is no wonder some would-be dollar store business owners begin to think about purchasing an existing store to help reduce the planning and preparation workload rather than opening a dollar store. While this might be a good decision in some circumstances, in others it can spell disaster. Read on for some of the critical concerns to vigilantly look at before making the decision to purchase an existing store.
Reason for Selling
This is extremely important to question AND verify the reason(s) for selling. There are some cases where a legitimate set of issues may be driving the sale of a solid business with a great deal of potential remaining. However, there are also many cases where the owner has run into problems which were never solved. As a result, the business has been driven to the point it is worth less than the price of the inventory. Certainly someone who is new to the world of a dollar store business should not walk, but run, the other direction in many of these types of situations. You will likely be better off to either find another healthy, existing business or to go about opening a dollar store from scratch. Rebuilding a troubled business takes money, time and skill.
Check the Books
The financials should (must) validate what the owner is saying in their story. Check timelines, and look for all of the indicators of problems. If things seem to make sense and you are still interested, bring in your accountant or CPA to take a hard look at everything before making a decision.
If you and your account agree this business is worth examining further, then look carefully at the following criteria. It is likely you will have other areas to investigate as well – just add them onto the list and make sure they pass your investigation.
- Right Products Mix
- Existing Business Strengths
- Existing Business Weaknesses
- Existing Customer Base
- Current Customer Care
- Surrounding Businesses (Competition)
- Surrounding Community
If you are opening a dollar store and feel the right action is to purchase an existing dollar store business, then proceed with caution. Carefully investigate each and every criterion you feel will be relevant to your success. Seek the help you need to get to the real truth. Do not make the mistake of blindly assuming an existing business is profitable.