Buy it Gradually?

Dave,

My father is semi-retired, and he approached me the other day about buying his small engine shop. He doesn’t make a lot of money from the shop at this point, but he has about $10,000 to $15,000 in inventory already stocked. He might just turn it all over to me, but I’d have to expand the shop and inventory to really make some money. How can I do this without going into debt?

Matt

Matt,

Let’s look at this realistically. Chances are, you could make almost as much money with it if you were going to start this business yourself from the ground-up. And if that were the case, you could just buy your inventory as needed, right?

In this kind of situation, you’re essentially looking at having to buy inventory in advance that you may not have bought in the first place. In a sense, you’d be buying a business that’s struggling.

Maybe you could try making an arrangement with your dad based on the inventory sold, instead of buying it all outright in the beginning. You could structure it to where you’d buy from him the first $10,000 of inventory that leaves the shelves. That way you don’t have to worry about financing the business and going into debt, because you’re buying it gradually.

Give it a shot!

Dave