Long story short, I’ve been a customer of this local appliance store for the last five years. It sells mostly ovens/stovetops, washer and dryers, fridges, etc. I buy mainly for my rentals and I imagine a portion of his customers are RE investors, new home owners, and people who need updated or used appliances.
It’s ran by a solo-owner in his late 60’s and recently expressed interest in selling and moving to Florida (the business is in STL). He wants $50K for the whole building plus inventory.
I know nothing about the appliance industry or how this would scale but I am open to keeping my investment options open. The owner is older and not privy to new age marketing, website optimization, etc. so maybe that’s an avenue to explore as well.
Does anyone have experience in this field? Also, I’m interested in diversifying and having hard assets on a balance sheet.
What is the traffic count on street in front of the building?
I think the margins in appliances are really small, so you have to have the volume to make a go of it. That being said, we prefer getting our appliances from our local appliance dealer, rather than the big box stores. We can ask questions and get advice from salespeople who have been doing it for decades. We may pay a little more there, but we’ve always been happy with the service.
Agreed, big box retailers are the main reason I wouldn’t want to continue running the business but look to liquidate and see if I can make out with a profit.
Worst idea I have read in a long time. Appliances are now disposable and expensive as well. Most brands are junk. As others have said there are so many other red flags in this as well.
If the juice is worth the squeeze in liquidating everything and I can come out with a profit I’ll consider it. But yes, as stated I’m not considering purchasing it to run the store, only liquidate all I can to make a potential profit.
For $50k? Is that taking over the lease? Or is it a very small showroom in in a small town?
You definitely need to the see the financials for a few years on this one. Expanding? Diversifying?
There’s a reason you usually only see one or two used appliance/ refurbished places in every town. Bob’s Appliances depend on local traffic. Web presence is helpful but only to locals that don’t know about the place. Bob isn’t shipping ranges and fridges. Cost prohibitive.
Not enough info in your post yet.
There is a always a demand for appliances. Married with offers, marketing and promotion you can turnnit around. What you need to focus on extracting value in the business, and NOT just run it the way it is.
The issue here is that you do not have an idea of the business, or how to run it. But that can be changed provided you are willing to put in time, effort and creativity…
A pice of wood or a canvas is just that. Butbin hands of a skilled artist, both of these can sell 100x the cost.
The ideal way is to show ypur interest, ask the owner for a month or two for you to work and get to know and understand the business, and then takeover…
That said, understand the lease terms, inventory value, customer profile and get yourself upto date on digital marketing and business operations.
It’s unlikely the building is included for that price. There’s no reason someone would sell a business and building for less than the building alone is worth.