I am looking into buying a bar. A bar is a cash business in many ways and therefore what will a 5 year audit from an accountant show me? In this due dilligence process what else can be done to be sure I am making a good deal. I have all the tax records for five years, the equiptment is priced and valued, and I have a decent sales and proffit log. What else can I do? This is a difficult investment but I think this bar can do far more business then it does as the entire upstairs is not being used, any tips would be great!!!
2007-07-12 08:55:52 · 6 answers · asked by Anonymous in Business & Finance ➔ Other - Business & Finance
If you are buying a business you want to make sure everything that you have been given is factually correct. A third party auditor will check their numbers for accuracy (intentional or unintentional).
I would highly recommend having a third party audit done.
2007-07-16 06:44:45 · answer #1 · answered by Shred Guy 6 · 0⤊ 0⤋
The audit process is to ensure that all tax records and financial statements are up to date, and that there are no claims against the business.
The due dilligence process is slightly different...its essentially to ensure that there are no surpises, and that the past performance of the bar can be expected to continue into the future.
You should make your decision to purchase ANY company not on what it is currently worth (assets - liabilities) but on the future cash flows that the business will generate for you. If the asking price is less than the value of the future cash flows, its a good buy. Your assumption is that the future cash flows will be relatively equal or stable compared to the past cash flows. Due dilligence ensures that assumption is correct. Is there a competitor moving in next door? Are all of your customers paying on a tab? Are there any pending lawsuits? Are insurance premiums expected to rise? Are liquor sales expected to fall? Are costs expected to stay the same? etc. You need to know all of this information and take it into consideration!
2007-07-12 08:58:31 · answer #2 · answered by jjsocrates 4 · 0⤊ 0⤋
You can use the up- stairs portion for a small get together party etc., for a small group of people exclusively on that day time etc., and you can earn some amount. You can also tell them that you give the upstairs for free rent provided they buy eatables from your shop , That will give you an additional income.Regarding the business you have bought you have some regular income as against your investment and you are happy too. You can also introduce new business tactics by just announcing prize winners ,discount for the amount of sale Bill.etc. All the best Yours VRVRAO
2007-07-12 14:12:44 · answer #3 · answered by Raghavendra R 5 · 0⤊ 1⤋
You could talk to customers and see what they like and dislike about the place. Ask them what other bars they go to. Then you could check out the competition. See how they compare.
As far as the audit, you never know what it can turn up. Maybe nothing. Maybe something important.
2007-07-12 09:03:10 · answer #4 · answered by hottotrot1_usa 7 · 0⤊ 1⤋
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2016-12-10 10:11:47 · answer #5 · answered by meran 4 · 0⤊ 0⤋
if you have no idea about how to do it i recommend you a best thing that you should visit
www.safehirings.com
here the reference is
http://safehirings.com/business-due-diligence-services.php
2013-12-18 20:30:29 · answer #6 · answered by Anonymous · 0⤊ 0⤋