How to buy a shop?
The UK retail sector has suffered some setbacks over the last few years which have caused the large chains dominating the sector to close down some of their stores.
This is creating market space for independent retailers. While the industry looks tough, there is a lot of room for new ideas and more localised businesses.
This article will take you through the factors you need to keep in mind if you are looking to buy a shop.
Running a shop will require you to have knowledge of how to balance your accounts and keep account of your stock.
You will have to be adaptable because you will need to be thinking about what you should be selling which will change as per the market trend. These change from season to season. However, you should be vary of simply following trends as long term consumer behaviour is significantly more important.
As a shop owner you will have to face some challenges regardless of which kind of shop you buy. You will have to work the weekends and holidays.
Location of the shop
Location is perhaps the most important factor when it comes to having a shop which has a steady flow of customers. The shop needs to be situated in an area which has a high footfall.
You can have the right stock, ideas and expertise, but if the location is not right, it will make it more difficult to keep your business successful.
Which stock you should keep?
Selecting and buying stock will the other most important part of keeping your business successful. You will have to choose your stock carefully so that you are not stuck with stock which you cannot sell.
While thinking of which stock you will be keeping, you need to keep your customer base in mind at all times.
If you offer a product range which is focused to appeal to a specific audience, you will be able to target your marketing. It will also allow you to keep on top of what you are selling and manage how to streamline selling it.
Who is your customer?
While it is virtually not possible for independent and small shops to compete with big chains when it comes to prices because of volume oriented sales. However, there are other way that independent shops owner can keep up.
You need to think about which consumers you want to target and how you will solve a problem for them. By offering individual attention, you can set your business apart from the bigger chains.
If the shop, you want to purchase is a corner shop, you will have to find out what your customers need and which hours suit them the mist.
Lastly, if you are addressing a local need, it will keep your business relevant and get customers coming back to your shop.
Challenges to retail sector
There is a lot of competition in retail industry. To set themselves apart, many shop owners are aiming at making their shops have an online presence.
This pushes the sales and increases their customer base. You will also have to consider what your social media strategy will be.
Click here to find out how the high street will look like after the pandemic.
The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.
Click here to find more about due diligence.
If you buy wisely and do thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This make ensure that you know what you are getting into.
You need a solid contract
You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement if you are purchasing a shop.
Warranties which are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.
Other documents you need
Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.
If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.
We can help you find exactly what you need for your circumstances if you contact us and ask.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
We would love to hear what you think about this article and how we could improve it. Please do let us know. However, we shan't be able to reply to your specific questions. If you have a question about a document, please contact us.
If you have noticed a bug or a mistake on this page, or just want to give us feedback, we'd love to know. Nothing is too small or too big. Send your message on this feedback page.