A viable business

[Deadlydeany]

Hi im Dean

can anyone tell me what is a viable business? the reason i ask is i made an offer on a too good to be true newsagents which was accepted, i then asked 2 accountants regarding the figures and they both said leave well alone as the rent and rates are very high £20,000 rent and £5000 rates on a £110,000 turnover are they telling the truth because i cant understand that or maybe because im new to business.
Anyone with advice on what i should be turning over for these figures would be greatly appreciated.
Many thanks
Dean.

[tkessex]

Dean,

A viable business, in very basic terms, is one which is able to operate at a profit and provide the proprietor with a 'reasonable' living (or at least has the potential to if it is a start-up).

I would suggest ignoring the ratio of rent to turnover, and rates to turnover, and focus more on how much profit the newsagent generates. Whilst the figures you have given do cancel out a fair proportion of the revenue, they may represent a bulk of the expenses/overheads for the business.

If you can offer a little more information about the business's financial status, people will be far better placed to offer advice.

[Deadlydeany]

Thanks for the tip, the vendor reckons he is on a 75% g.p which seems high compared to most businesses ive seen.

[tkessex]

Gross profit only takes account of the cost of sales, that is the costs involved directly with product production/generating revenue (such as purchase of stock, sub-contracting etc.) and as such 75% isn't high at all. In fact, many of the businesses I have completed accounts for have had a significantly higher gross profit than that.

Do you have the net profit figure to hand - after all that is what you'll be taxed on - and a breakdown of the proprietor's spending?

[www.infoebookstore.co.uk]

I am surprised to see that sort of profit from a Newsagent, the turnover is almost £10k per month. Thats a lot of newspapers!

I have always wondered how so many corner shops and newsagents survive around our way, there is never anyone in them!

What sort of mark up do these places work to?