Once you have decided that the life of a convenience store owner is for you, you need to start looking for a suitable business to buy. It sounds easy, but there are several decisions that you will have to make along the way.
First of all, where do you want to locate? Not just which part of the country, but also do you want to run a rural store or one in a residential area of a town? A store situated in a countryside village will often take centre stage in the community. This means that as well as simply stocking food and drink, you may also be expected to act as a newsagent, bakery, Post Office and even video store. You will get to know everyone and assume a pivotal role in the community.
When you locate in a more populated area, however, many of these additional functions may already be covered nearby, allowing you to concentrate on supplying food, drink and cigarettes.
You will also need to consider how much money you have to spend. As with house prices, the location will greatly affect this, as Mike Carr explains.
“We’ve seen similar businesses with up to a 50% price difference because of their locations. The reason for this is that, firstly, more people want to live in a nice location. Also in these locations there is often less competition. And because of the first two factors, more people want to buy the business, pushing the price up.”
You should also think about how much work you want to put into the business at the start, says Paul Williamson of business transfer agents Ernest Wilson. “If you are looking to buy a relatively cheap business and build it up yourself, you will want somewhere with lots of space and that was badly run before. It is usually people who have bought businesses or have worked in retailing before that take this route. First-time buyers tend to go somewhere that is already well established, with good trade and earning a good living from day one.”
Also affecting the price, and how much of it you will be able to borrow, is whether the business is freehold or leasehold. Freehold businesses are more expensive, since you will own the business outright. Leaseholds involve the ongoing expense of paying rent to the landlord on top of the initial purchase price.
Whatever option you choose, it is more than likely that you will need to approach a bank or commercial mortgage supplier for funding. But what percentage will you need to provide yourself? “If you’re buying a leasehold business, you will need to have half of the purchase price. If you’re buying freehold, you’ve got to have between 25% and 30%,” explains Mike Carr of business transfer agents EM&F.