Do you have any tips for purchasing a small kids clothing store?

Question

We live in a fairly small city with only 1 kids clothing store and it's now for sale. Of course, we have Wal-Mart and a few other chains where people can buy kids clothing but if a person is looking for name-brand clothing or other speciality items, the kids clothing store is the place to go.

The clothing store is for sale because the lady who runs it is only doing it for fun and games. She opens the store whenever she wants to; does not advertise; does not run sales; and does not update her inventory very often.

We would love to purchase the store and move the location to a better spot (near Wal-Mart). I know we need to sit down with the lady and look at her books to see how the store is doing financially. I'm not sure how helpful this will be since she doesn't run the store very well but at least we can see her expenses. What else should we do or research?

We have the money to purchase and operate the store but want to do the whole process the right way. Thanks much!

Answer 1

I would not purchase without doing a comprehensive study on the clothing store business. There are some red flags for me. The owner opens when she feels like it? She does not advertise? She owns it for fun and games? Aren't there other ways to have fun? travel maybe. Expenses on cost projection and operating can be fudged. Look at her monthly receipts for the last 36 months as well as her operating receipts for the last 36 months. Look at her traffic flow during different times of day. Review her advertising budget. Also look at her inventory. Does she lease or own the building? Does a friend of her own the building? If you are astute at accounting review everything carefully. If not get an accountant friend to review. Review her client base as well. What is the market there for children's clothes? What will be the cost to lease space next to Walmart for 3 years? Remember these things are what you are purchasing. Price accordingly. I sincerely hope you have over $100,000 put away for operating expenses for 3 years. No this does not cover the cost of purchasing the business. If you do not, you might want to reconsider. Leveraging everything you own or borrowing for this is not the best way to purchase a business and certainly in the long run will not give you peace of mind as you revamp this business. Let me know how things develop.

Answer 2

if she is making enough to keep the store open at the current location, why move?
check with the tax agencies to assure you aren't buying her tax liabilities.
check with your insurance agent to see if any pending litigation is known. this can be done by trying to buy a surety bond for the company.
these are the 2 primary gotchas. vendor liens are possible. back rent is possible,
if back rent is due, it might be worth it to work with the landlord and assume the lease.
moving is expensive, it costs existing foot traffic.
to decide if a location is worth it, compare the condition of the entryways of the 2 or 3 shopping centers.
the dirtier the entry is, the more likely it has higher traffic.
move after you have established your clientele.
for the first 6 months, put a bare minimum of money into the business, and keep as much for reserves as possible.
to renew/update the inventory get as long a payment as possible.
do not hire help unless you cannot do everything yourself, then you do the least desirable work to assure it is done right.
keep accurate books, make your quarterly tax payments!!!!! the tax man has a cast iron heart, no sympathy, and an ugly disposition. in fact i don't think the guy can pronounce sympathy and has no concept of what it means. i know this from sad experience
rich isn't getting money, rich is keeping it.
good luck

Answer 3

I she does not have a well developed name brand and you going to more the store anyway, make an offer for the inventory only, so your not paying any extra. Then start from scratch.

Answer 4

Selling children clothes can be tricky. It has been my experience that selling clothing is difficult because of the amount of competition. If you do buy this store do not limit yourself to clothes. Also consider consignment.

Answer 5

Zara sounds extraordinary. you will possibly desire to think of with regards to the youngster's destiny and whilst the boss of a business enterprise possibilities up a job utility the 1st impact is what the guy's call is. commonly they does not hire somebody with a ghetto sounding call. %. something wide-spread sounding. the two Eva or Angeline. And "Valentina" is purely cheesy sounding.