Tip how to buy business which is on lease?

Question

I am new to buying a business. i have seen one liquor store online which has $1700 lease and owner is asking $1,10,000 $70,000 inventory.

could somebody please give me a tip when a business is on lease then why asking price is $1,10,000 and for what? what should i ask him?i think inventory is o.k

Answer 1

When you are buying an established business you are buying the income plus the inventory.  

The cost of the lease doesn't figure into the value of the business, except as a reduction of profits.

Don't concern yourself with the amount of the lease.  Look at the profit the store is making and then determine if that would yield a satisfactory return on your investment.  

If it does and you can verify the income via financial records and can verify the value of the inventory -- go for it.

If the income isn't there it doesn't matter what the amout of the lease is -- find another opportunity.

Hope this helps

Jerry-the-bookkeeper