Don't be fooled by business brokers when they talk about the potential. Pay the price based on what the business is currently doing and not what it can do. Pay what it's worth but buy it only if you can see the opportunities to profitably grow.
Often you will see a business advertised as a Walk In Walk Out - WIWO
IN most cases - WALK OUT - sometimes RUN
What a WIWO means is that there will be very little information provided and the offer must be unconditional apart from a landlord approval, if required.There will be no
- Subject to finance condition
- No trial - so you can’t verify sales, and
- No due diligence - so you can’t investigate the business in detail
- Asking price less than $100k - so no borrowings
- Cash business - no records of revenue
- Typically reporting a loss - no tax payable
- Buyer wants out - losing too much money
This business best suits an experienced operator - not a novice. You don’t need someone elses problem.
If you are an experienced operator in the same line of industry and looking to expand on the cheap or feel the location may be suitable for your existing business as a bolt on, then maybe it’s an inexpensive way to expand your footprint.
If a first timer, avoid the brokers spiel of getting into a business at a bargain basement price or an opportunity to get your foot in the door.
Unless you have a desire for risk and want to lose money and possibly have an expensive lease hanging around your head from when you wake up until when you sleep and in between, well then maybe a WIWO is of interest.
Don’t be fooled by business brokers when they talk about POTENTIAL. Pay the price based on what the business is currently doing and not what you can do. Only pay what it’s worth but buy it because you can see the opportunities.