How Much Profit Is Acceptable?

[snyderkv]

I'm new to business and thinking about buying one already off the ground that profits xxk a year.

This business costs xxk (clothing boutique with xxk worth of inventory left) and for the last 2.5 years has been profiting half the purchase price NET a year with very little marketing other then some myspace and Adspace.

I know a little about real estate and what a good deal should be but with business for some reason I never hear about number crunching, ROI exc.

Given the numbers above does this sound decent or should I run?

Is their oppertunity for franchising looking at the numbers? I know nothing about weather this is a good deal or not.

[GRPFunding]

Why are they selling the business?

Does the $60k include the $50k in inventory?

Is the $50k of inventory what they paid for the inventory, or the retail value of the inventory?

[snyderkv]

Ok the price does include all the inventory and everything else like the website/register/card swipe/friniture/fixtures exc.

Now am I paying retail? Haha I hoe not. I'm just going to assume no on this one because I don't see how someone could do that to me.

[St0n3y]

If the inventory costs $50K and the business profits $30K, then a sale price of $60K looks real good. But you need to look at the books, to make sure it all pans out on paper.

[snyderkv]

Oops clothing inventory is 50k and 10k for everything else so 60k totall.

Ok well good to know I'm not getting ripped.

Thanks

[IneedProfit.com]

Ok well good to know I'm not getting ripped.

It sounds good with the information that you have provided, but I wouldn't assume anyone can give you a fair assessment without knowing a lot more. It's always best to do a lot of research and proceed with caution.

[Nordstrom]

Originally Posted by St0n3y

If the inventory costs $50K and the business profits $30K, then a sale price of $60K looks real good. But you need to look at the books, to make sure it all pans out on paper.

I have to agree with this and add - would someone really sell it for that price?
$50k Inventory then sell it for $10K more when it averages $30K a year. They are selling the company to earn one third of a years profit.

Read those papers thoroughly. Congratulation if it's all good.(Stupid people exists so don't dismiss it.)