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How to diagnose a business?
Phase for anyone wishing to buy a store, the diagnosis of a business requires discipline and precision. This preliminary step allows to thoroughly checking all items that will determine the success of your project.
The location of a business is the key to success. Is it located on an axis of strong passage, in a shopping street or in a tourist area? Its facade is visible? Can benefit from carrying signs nearby? Is it easily accessible on foot, by car or public transport? The environment may be changing: check with the planning department of the municipality, if development projects are under study (new traffic plan, site urban renewal) to determine to what extent they may affect the activity of trade. Refer to the Traders Association: its representatives are often better able to gauge the vitality of the neighborhood.
The development of your business depends on the presence or not of competitors, but also the eventual implementation of new entrants or the creation of a commercial area. Try to determine if there will be room for everyone. You can also analyze the balance sheets of your competitors practicing under statute LLC. Their income statements are available on the internet with free sites that specialize in the company information. The unions are a source of relevant information. They usually have to research on market conditions and outlook for their industry.
You must identify the role played by the vendor in the running of his shop. His personality can often take a central role in the success of his business through his customers, he knows personally? If so, you must ask yourself whether you will have the breadth and going to replace it. You can provide the seller with a transitional period during which he will accompany you and introduce you to suppliers and customers.
You should study carefully the evolution of the turnover of trade, the latest balance sheets and income statements (the seller is required to provide these accounting). The review shall assess whether the case has already reached its maximum turnover, if it is growing or is declining. In three cases, it is to find the origin of the situation to estimate the potential for business development and to consider actions to be implemented upon its acquisition.
Note: beyond the accounting, consider also the commercial lease (remaining duration, renewal, and rent reviews) and the various contracts taken up the business (contracts of employment of employees, insurance, equipment rental ...).
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