How to Evaluate a Liquor Store Business
Accurate and complete evaluation of liquor store requires an expert business appraiser to determine the estimated value of the store. However, you can also do this process provided that you know several factors on how to evaluate a liquor store.
An evaluation is more than an equipment assessment and inventory as you also need to look at the financial picture of the store including its potential.
A proper evaluation is required before selling a liquor store business and this is beneficial for both owner and potential buyer. With evaluation, the owner makes sure that he doesn’t lose funds during the selling process and the potential buyers can purchase the store at fair price. There are numerous factors that affect the evaluation of a liquor store like the size and location as well as the different value of every liquor store.
Determine the Assets of the Business
Business assets include any property or item needed by the business such as computers and office supplies. While these assets can be added up, typically they are just a minor portion of the business. The worth of a business that has heavy assets but does not generate much profits is lesser compared to a business that has few assets but attracts numerous customers. Certainly, the major asset of a liquor store is the liquor itself and the worth of liquor is based upon the customer base and the location.
Research about the Recent Market Sales
Pay attention to the liquor’s supply and demand in the local area. If the location has high demand, the business will do well usually but it will fail is the demand is low. Another major factor of supply and demand of a liquor store is the customer base. The recent market sales of other liquor stores must be researched as it is another factor on how to evaluate a liquor store business. The market sales will determine the store’s recent market value. If there was liquor store sold within the previous months, it will serve as an excellent comparison of the recent worth of the business.
Think about Personal Needs
When knowing how to evaluate a liquor store with the intention of selling because of personal emergencies and other similar situations, sales prices usually drop lower than its value. This assures that buyers will become interested in purchasing the business. Consider the available time and the least price of the liquor store for sale.
Know the Prospective Buyer
The prospective buyer is an important part to consider of the selling process as their experience in running a liquor store can determine the available funding of the buyer. An experienced buyer with successful store can pay more compared to a buyer who is new in the business as he may not obtain more funds.