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BUYING A SMALL BUSINESS

The American Dream: Business For Sale -- Texas Pet Shops
 

An overview of a business for sale including a price rationale and some pros and cons of the purchase.
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The Business These two full-service pet stores marked a 50-mile radius as their territory five years ago. Since then the two animal kingdoms have kept all wildcat competition from straying into their solid customer base. A well-earned reputation for knowledgeable staffers gives the stores a leg up on poachers. Both stores stock more than 75 breeds of dogs, cats, and domesticated exotica, and offer food, supplies, and grooming and boarding services. Ten employees with considerable experience wish to stay on after the sale, but the right buyer, an animal lover, ought to have retail-business experience. The seller is dog-tired of running to and from these and other business interests.

Financial Summary 1992 1993 1994Gross revenues $293,374 $460,333 $564,919Recast earnings before $47,631 $102,125 $100,846depreciation, interest,taxes, and owner compensation

Price $130,000 (cash)

Outlook Last year approximately 10,000 independent pet stores swallowed a $3.6-billion bite of the $17-billion recession-proof pet industry. A robust new breed of pet superstores are nipping at the heels of small stores elsewhere, but they have not yet hounded either of these two shops. The owner has established solid relationships with reliable breeders, so the stores are in a good position to guarantee the animals' health. But by doggedly relying on word of mouth and repeat business, the current owner has barely scratched the surface of the potential market. An aggressive advertising campaign might well lure new customers from the largely untapped population of approximately 396,000.

Price Rationale The seller set his price by taking 1993 recast earnings, subtracting owner's compensation, and multiplying the difference by two. Inventory worth $70,000, equipment, fixtures, and furnishings are included in the purchase, and experts say this hardy business could handily fetch $200,000 -- or double that should the owner finance the deal.

Pros Puppies frolicking, kitties purring, birds singing, children smiling. Great price!

Cons Barking, yowling, squawking, and squealing. Ready cash is a must. -- Robina A. Gangemi

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Affiliated Business Consultants, 719-540-2200.

Last updated: Sep 1, 1995




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