The inspection is one of the most important steps in the sale of a business. As a buyer, you are making sure that the business doesn’t have any problems that will stop its profitability. The inspection is an opportunity for you to ensure that you are getting the best deal.
Let’s take a look at some of the best business inspection advice for buyers.
Find out why the owner is selling the business
Sellers may have many reasons to sell – retirement, new priorities, relocation, cashing out for other investments. You need to know exactly why. Make sure that you are not buying a business that is hemorrhaging money or has some other fatal flaw.
Double, better yet, triple check paperwork!
A supermarket inspection is more than looking over physical things. Before you take ownership, the paperwork must be up to date. The business must be in compliance with local ordinances and federal law. The provisions of the lease are very important, as are the warranties on the equipment. In short, the seller should have all the paperwork in place before the inspection. The inspection will tell you just how well the business was organized over its lifetime.
Learn about the supermarket’s customer profile
There is nothing wrong with looking for immediate profitability. If the seller can describe the stores’ patrons and seasonal trends, then you can ensure making money immediately (or at least come up with a contingency plan for off-peak seasons). Use this opportunity to see how effective the owner has branded the supermarket. You may need to make some changes if there’s room for improvement, and this will cost you. You may be able to negotiate with the seller to take this cost out of the asking price.
Enquire about any challenges with the business
You need to know any weaknesses that the supermarket has. Some weaknesses destroy profitability, while some do not do as much damage. However, you cannot honestly assess the potential of the business until you know which ones need immediate attention. Weed out every bottleneck that you can.
Assess the current supply chain situation
No business functions on its own – the supply chain that brings in inventory and equipment is important as well. You need to know everything about how much products are coming in the warehouse and out into the shelves. You must look for holes in the supply chain. You may also be able to identify line items where the business is overpaying. Again, you will need to determine whether the shortcomings are manageable or if they will destroy your potential profitability.
The supermarket supply chain must also be uniquely concerned with quality. Are the fruits and vegetables getting to the store in a timely manner? Do the canned goods make it to the storefront without being bruised? Are the meats fresh so that customers do not have to worry about their health? Take an especially closer look at this aspect of the business and make sure that there are no loose ends here.
Imagine yourself as a shopper in your future business
Does the store lend itself to easy access? The storefront should be in a good location. Also, the floor plan should be as open as possible, with room to feature sales items and maintain a place for all items in the inventory.
An intelligent buyer will be asking all kinds of questions and checking every corner of the business before the sale. Prepare yourself to be a bit aggressive to get the answers that you need. There is nothing wrong with asking questions twice or three times until you understand. Remember that your money and business reputation are on the line. Protect them both as you compare opportunities to make a purchase.
As a buyer, you will be processing a great deal of information. Do not be shy about asking help from professional business brokers. Do not be pressured into the buy just because you have met your seller face to face – wait until your due diligence is complete. Taking your time will ensure the best chance at a profitable retail business.