January, of course, is the season for new directions. If you think this is the year to buy your own business, the North American Retail Hardware Association offers 15 tips on things to consider. Today, the first five:
1. Experience: Consider your experience in the field you are considering. Do you know someone you could consult who is running a successful store?
2. Reason for sale: Why is the store for sale? How many previous owners are there? Is its sales volume rising or falling? Why?
3. Purchase Price: Is it negotiable? Have you checked fair market and replacement values as well as book cost?
4. Capital: Do you have or can you get sufficient capital for the purchase and for working capital — including a reserve for contingencies?
5. Profitability: Can you get audited financial statements for the past three years and/or copies of the seller’s income tax reports for that period? Is a sales tax report to support sales volume claims available?
Next week: The rest of the tips.