What Does It Take to Finance the Purchase of a Duncan, OK Store or Shop?

The price of a running store or shop rests on what it earns for its owner. Buyers and sellers start from the seller's tax returns and profit and loss statements, add back the owner's own pay and one-time costs, and price the business from what is left. The equipment, the stock on the shelves and the name all sit inside that price.

A seller note is part of the price the seller agrees to collect later, in payments. It lowers the cash due at closing and keeps the seller interested in a smooth handover. An invented split, for illustration only: a $240,000 purchase with 15% down ($36,000), a $36,000 seller note over 36 months at 7%, and a $168,000 term loan over 84 months at 11%.

In this example the note payment is $1,111.58 and the loan payment $2,876.57, $3,988.15 a month together. If the business brings in $9,800 a month before those payments, as the invented records show, it covers them 2.46 times. A partner looks at that cover, in its own terms, before it decides.

A term loan fits a purchase because the price is one amount, paid off in level installments that the business's own cash can carry. The term can be longer than for working capital, since the business keeps earning long after the closing date.

What the price buys has to be written down: the equipment list, the stock at closing, the name and phone number, customer and supplier accounts, and the assignment of the store lease. The building and land, if the seller owns them, are real estate outside this site.

The same pattern shows up in other trades. The accounting firms page covers buying a client book or another firm, and the restaurant page covers buying a running restaurant business.

A purchase agreement can leave the seller's receivables and the cash in the till with the seller. The buyer then starts with payroll due and nothing yet collected. Those weeks are where working capital or a line of credit earns its keep.

Invented figures: payroll of $7,400 every two weeks and a 30-day wait before the first customer accounts pay. In this example that is 2 or 3 paydays, depending on the closing date, or $14,800 to $22,200, plus $11,500 to refill the shelves the seller ran down before closing.

County Business Patterns lists 1,080 employer establishments in Stephens County, OK for 2023, and 575 of them (53.2%) had fewer than five employees. ZIP Code Business Patterns gives ZIP 73533 735 employer establishments for 2023, 48.0% of them with fewer than five employees.

For a Duncan, OK store or shop the records list is the same as anywhere, but the buyer can check a few of them on the ground: the lease with the landlord, the sales on the POS reports, the equipment on the floor.

• Three years of business tax returns and the profit and loss statements behind them.
• A year of business bank statements, so deposits can be checked against the sales the seller reports.
• POS or sales reports by month, and the stock count at closing.
• The equipment list with ages, and any loans or leases still owed on it.
• The store lease and whether the landlord consents to an assignment.
• Payroll records and the list of staff staying on.
• Supplier and customer contracts that transfer with the business.

A partner reviewing an acquisition request can ask for the same papers. Call (580) 205-7694 or start with the request form; the blog has the other articles.