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You might decide to buy an existing video rental outlet rather than start your own venture from scratch. Buying a going concern means that
the premises, fittings and equipment are already in place
there are established customers
the business can generate income immediately
suppliers have been identified and relationships established with them
the business has a track record which can help if you are looking for finance
staff may already be in place
However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up
Your market research into the video/DVD rental sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.
Other matters to consider include:
the state of the premises, equipment and so on. Will you have to spend money refurbishing or replacing assets. You might decide on a complete refit
existing staff rights
the quality and condition of the stock - remember that DVD has become the most popular rental format. If the stock consists exclusively of video tapes you will need to replace very many titles
does the business owe money that you will be responsible for
Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure that you budget for other professional fees such as legal fees and valuation and survey costs.
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