THE CASE
A home decor brand and store chain is available for purchase. To keep its identity anonymous, we’ll disguise the name… let’s call it Thai Pot Trading… that should do it.
The question for you to answer is, DO YOU BUY IT?
Here’s what you know:
Selling seasonal home decor – somewhat similar to Hobby Lobby, but with a unique display/retailing method
Most customers are middle class women from ages from 35-65 yrs old
Pricing is middle class too… not Walmart low but not too high to drive away bargain shoppers
Approximately 60-70%+ annual sales occur between mid October and mid January
Ecommerce presence, but it accounts for almost no sales
Locations in Logan and a major city in Utah County, with favorable leases
Previously also located in 6 other markets in the western US
Merchandising requires awareness of trends and stocking several thousand SKUs per year
Employees are wonderful and dedicated
You may not personally have the money needed to buy it, but you have friends willing to put up the necessary funds. You’re essentially leading an investment group.
You may not have experience in retail, but you conveniently have wonderful friends who are pros and will happily give advice in your journey
Based on recent history, after all costs of doing business (inventory, wages, leases, etc), the two existing stores could result in a net income of $150,000 combined in your first year
You can purchase the company and existing inventory for about $360,000.
Use data that can help understand the customers and market involved. Demographic information can be very enlightening. What financial information can you discover regarding the industry? How powerful are local competitors? Data is the key. Without data, all you can offer is an opinion. You need to identify and support to some preliminary degree your recommendation.