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I really need your help to make a best decicision?(your answer is greatly apreciate it)

I have to make decicision soon ,between these 2 store that I want to buy,
Both store making Gross income $5000-7500/week, and located in good spot.
the different are:
store 1. Sale price is asking for $110K, with about $ 7500 total rental per month(including CAM), the problem is only about 7 years lease remainings with NO option to renew at all. Only need 3-4 , employee, located 12 miles from my home.

store2. Sale price is asking for $310K, with only $2500/mo rental expenses NO CAM needed, the lease good for another 15 years. posible to renew. Need 7-8 employee, located only 4 miles from my home.

How much do you think we could negociated the asking price with Seller? because bot h seller keep saying this is a steal deal....

Your answer are greatly appreciate it

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Answers (3)
Bill Fritz, MBA
Fritz Capital Funding, LLC
Managing Director

I am an accountant. I like store #2. Business valuations that are performed by CPA are very different from valuations that business brokers perform. The value of a business is typically the cash flows discounted back to present value PLUS intangibles like 'good will' (reputation with customers). The later is much more difficult to quantify. In the real world, a business is worth what someone will pay for it. In addition to the cash flow, you may wish to ask both property owners if they would consider a purchase at the end of the lease. With (low) CAP rates in AZ, the residual value of the real estate (compare both locations) could certainly give you the correct answer. Call if you like and we can crunch the numbers fairly quickly. Best regards, Bill R. Fritz, MBA- Fritz Capital Funding, LLC- 870-897-2357 - SKYPE: bizmstr

Jun 9, 2009
Susan Tanko
WCI Brokers
Maricopa County, AZ

I agree with Steve. What is the Cash Flow vs. price? Cash flow is King and the business with the highest cash flow usually wins because that is what is buying the business back. Also, what state you are in can deternmines a fair asking price along with how much Inventory and hard Assets (if any) are included. A good Accountant can sort it out for you.

S Tanko
WCI Brokers

Jun 8, 2009
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Sharp Business Opportunities
San Diego County, CA

I looked at your question the other day and I think the reason no one answered is because you are leaving out the most critical part. How much are they making? The higher rent could mean better exposure with lower advertising cost. Businesses are usually valued by net profit. Many landlords don't offer options but that doesn't mean you can't be there 15 years from now. Tell us how much each is earning (verifiable) adjusted net profit and I'm sure you get your answer.

Jun 6, 2009

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