"Seven guns, a handful of rods and reels, and a few flies." That's the inventory that this retail business in a remote pocket of New England started with back in 1986. In the years since, the owner has expanded the product mix to insulate himself from severe seasonal dips in cash flow.

Today, a gas station and convenience store ensure a steady flow of customers. And the main retail store--a massive, 50,000-square-foot building put up in 2004--offers everything a visitor or a local could need, from staples like lumber, food, and clothing to big-ticket items such as snowmobiles, ATVs, and guns. Health problems and another business interest have led the owner to offer the company for sale.

The business has posted incremental growth in revenue and profit over the past four years. But there are some financial concerns. The owner estimates that he turns over inventory only twice a year. Marketing is another part of the business that could improve. The company spends little on advertising outside the local area, even though its mailing list and gun registration data indicate that half of all customers reside more than 30 miles away.

Company Financials 2004 2005 2006 2007*(projected)
Gross Revenue $7.1 million $8.6 million $9.4 million $9.8 million
Seller's Discretionary Cash Flow $265,585 $415,712 $701,691 $749,262
Gross margin 17.7% 19.2% 20.3% 20.3%

The Asking Price: $6.185 million, which includes the building (valued at $2.4 million), inventory ($4.5 million), accounts receivable ($200,000), and furniture, fixtures, and equipment ($250,000). The seller expects that a buyer will assume $1.8 million in accounts payable. He will consider financing part of the deal.

Price Rationale: A multiple of nearly nine times EBITDA is "too rich," says Bob Turner, a certified valuation analyst at Moore Stephens Apple in Cleveland. He would shoot for a multiple of five or six, adding that a buyer should take cash-flow forecasts and discount them according to present value to come up with an alternative price.

The Pros: This business is the only game in town. The nearest Wal-Mart is 25 miles away, the nearest mall, 75 miles. And with an enormous array of brand-name products, the company has a way of tempting shoppers to spend more than they intend. "You can drop some serious cash there," says one local.

The Cons: High unemployment has led to a recent exodus of residents, reducing the local pool of customers and potential workers. The fact that inventory turns over slowly suggests that some of it may be shopworn. Furthermore, a traditional lender may not be willing to finance more than 35 percent of inventory.

The Bottom Line: If you can get the owner to bring the price down, this could be a good deal for a person who doesn't mind long winters and would enjoy being a big shot in a small town. To expand the business, a buyer should consider beefing up marketing and narrowing the product mix so that inventory turns over faster.


Inc. has no stake in the sale of the business featured. The magazine does not certify the accuracy of financial or other information provided by the seller. Inquiries should be directed to Gregory Caswell of Country Business (gcaswell@countrybusiness.net or 207-773-1745).

Inc. also publishes paid business listings in the back of the magazine.